Alliance Grain Traders (AGT) saw improved results in its pulse handling and trading operations and the ramp up of its food business in the quarter ending June 30.
Net earnings jumped to $12.98 million in the quarter, up from a loss of $5.54 million in the same period a year ago.
The company’s increasing focus on food processing is prompting a name change. By the end of the year, the company will be known as AGT Food and Ingredients Inc.
The company thinks there is great opportunity in using pulse ingredients as an alternative to traditional ingredients such as soy, gluten, wheat and corn, said Murad Al-Katib, AGT president and chief executive
“I think that the trends in the food ingredient business are aligning to a point where the trends are irrefutable,” he told analysts on a conference call.
“These are not fad trends that we’re following. It’s a global race to protein. It’s non-GMO ingredients. It’s lower allergen concentrations.”
Total revenue was $359.79 million, up 46 percent from the same point last year and earnings before taxes, interest, depreciation and amortization (EBITDA) was $24.4 million, up 76 percent.
The company said its pulse business improved as western Canadian rail movement ramped up following wintertime disruptions.
EBITDA for the pulses and grain processing segment were $19.05 million.
Al-Katib said the company is using the experience of the rail constraints of the winter to try to educate buyers.
“We’re trying to work in our system to convince our buyers to buy forward more regularly, so that we’re able to deliver a much more reliable, logistical system for them.”
The company has a strong order book for the next few months. With harvest approaching, bringing new product into the pipeline, sales and exports should be strong, he said.
On the food side, the company has established relationships recently with Ingredion to distribute food ingredients and with Cargill to distribute animal and pet feed products.
EBITDA in the food ingredients and packaged food segment totalled $6.28 million.
The food segment is more profitable than pulse and grain processing with EBITDA per tonne at about $102 compared to $55 for pulse and grain processing.
AGT in May started commercial production on the second processing line at its food ingredients plant at Minot, North Dakota. It is studying the feasibility of adding a third line at the facility and is considering converting other existing facilities for food processing, Al-Katib said.