Manitoba Pool Elevators reaped the rewards of cutting costs in 1996-97 and posted a record $28.1 million profit.
The co-operative was able to increase net earnings by more than five times over last year with brisk business in grain and chemicals, as well as strong returns from Western Co-operative Fertilizers Ltd.
But key to the bottom line was the absence of restructuring costs.
The previous year Manitoba Pool set aside $11.7 million to close one of its terminals at Thunder Bay, Ont. and several country elevators.
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Chief executive officer Greg Arason explained the company also cut costs by closing some area offices and moving to paid subscriptions for its newspaper, the Manitoba Co-operator.
In 1994-95, the pool put $12.3 million toward decommissioning fertilizer plants at Medicine Hat, Alta. and Calgary.
Last year, those big costs were gone.
Gross revenue in 1996-97 was $1.3 billion, compared to $1.2 billion in each of the two previous years.
The company made money at its country elevators, which lost $4.4 million in 1995-96 and $5.2 million in 1994-95. Volume was up by 27 percent.
“There’s a major turnaround in country operations,” said Arason, adding seed sales helped push results into the black.
“The swing was over $10 million (in) improvement.”
The company was worried about meeting grain handling targets, said Arason, but when farmers saw the prospect for lower grain prices in the current crop year, they started hauling to the pool’s elevators.
“The movement in June and July certainly made the year for us,” he said.
The transportation system also worked well through the summer, Arason said. The company was able to increase its throughput at its Thunder Bay terminal by 33 percent.
The only disappointing results were from the company’s investment in Canamera Foods. For much of the last crop year, the value of canola seed was higher than the value of canola oil and meal, making it difficult for canola seed crushers to earn money.
“The whole crushing industry is not having a good year, and certainly we did not have any earnings from crushing in this year’s results,” said Arason.
Made the news
The company made headlines this year when, with Alberta Wheat Pool, it tried to take over United Grain Growers.
The expenses involved with the failed takeover bid, and the profits from selling the shares, are not reflected in the 1996-97 financial statements, said Arason.
The company will release full financial statements at its annual meeting in November.
Arason said it also hopes to present a business strategy with new capital works and a proposal for a future elevator network.
