Viterra Inc. quarterly profit fell 23 per cent off the record high of a year earlier, hurt by weaker earnings in grain handling and processing.
The biggest grain handler in Canada and South Australia matched analysts’ earnings expectations, however.
Economic volatility and lower grain prices have cut into agribusiness profits.
Singapore-listed commodities company Noble Group reported sharply lower quarterly operating margins for its agriculture unit, while U.S.-based Cargill and Archer Daniels Midland have posted weaker-than-expected results.
Viterra’s profit fell to $77.7-million, or 21 cents a share, in the first quarter ended on Jan. 31 from $100.7-million, or 27 cents, a year earlier.
Analysts on average had expected a profit of 21 cents a share, according to Thomson Reuters I/B/E/S.
Viterra is the biggest of several major Canadian grain handlers that expect higher profits once the Canadian Wheat Board’s western grain marketing monopoly ends on Aug. 1.
The company also owns most of the port capacity in South Australia.
Viterra said it still expected the end of the Canadian Wheat Board’s monopoly would modestly add to its fourth-quarter profit and eventually boost annual earnings before interest, taxes, depreciation and amortization by $40-million to $50-million.
Viterra said it expected demand for farm commodities to remain strong through fiscal 2012, keeping grain prices relatively high.
Farmers in Western Canada, the main source of Viterra’s grain, look to boost spring plantings by 8 per cent to 10 per cent to 57 million to 59 million acres, the company said, as previously flooded land returns to production.
Western Canadian acres of canola – a fertilizer-intensive crop that is highly profitable for farmers and Viterra – look set to match last year’s record-high 18.5 million acres and may rise as high as 19.5 million, the company said.
Viterra said it expected lower contributions from malt operations in 2012 as weak economies in both North America and Europe result in sluggish beer sales in the near term.
Excluding its North American feed business, which is being sold, Viterra’s processing segment reported 37 per cent lower EBITDA due to weak performances from its pasta and malt operations.
Grain handling and marketing EBITDA fell 8.5 per cent in the quarter.Report Typo/Error
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