Viterra plans to boost its farm input business in the coming year by purchasing independent retailers across Western Canada.
Company president Mayo Schmidt told market analysts and reporters last week the firm is looking to expand its agri-products and agriprocessing divisions in 2010-11.
The agri-products division, which sells fertilizer, chemicals, equipment, seed, wool and financial services, generated sales of $1.8 billion in 2009-10, up nine percent from the previous year.
The company accounts for 35 percent of the market in Western Canada, but Schmidt said the company plans to increase that share.
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“We hope to reach 40 percent by acquiring independent retailers,” he said, adding Viterra has purchased seven such companies since the third quarter of 2009.
He said Viterra is also looking to improve the financial performance of its existing Agri-product assets, although he acknowledged the division did an excellent job last year, considering the difficult planting, growing and harvesting conditions.
Schmidt said there is always a risk acquiring new companies, whether large or small.
“But we’ll be patient and cautious.”
He said Viterra will also keep its eyes open for foreign acquisition opportunities, focusing on the United States, Australia and the Black Sea region.
Viterra’s goals are far from modest.
“We aspire to become the premier food ingredient company in the world’s food supply chain,” he said.
“Our products can be the foundation for global economic growth and help solve food supply and quality issues around the world.”
For the 12 months ending Oct. 31, 2010, the agri-products division generated earnings before interest, taxes, depreciation and amortization (EBITDA) of $154 million.
That compares with $386 million for grain handling and marketing and $104 million for agri-processing.
The company shipped 15.8 million tonnes of Western Canadian grains and oilseeds, down slightly from last year’s record of 17 million tonnes. In South Australia, Viterra received about 6.2 million tonnes of grains, oilseeds and special crops primarily in the first quarter of the fiscal year.
The margin for the grain handling and marketing segment averaged $32.83 per tonne for the year.
Agri-processing results were enhanced by strong profits at American companies, Dakota Growers pasta and 21st Century oats. Both were acquired during the year.
The company posted EBITDA of $20 million from its new International Grains Group, which opened new locations in Minneapolis, Hamburg, Germany, Naples, Italy and Kiev, Ukraine.
Total EBITDA for the company in 2009-10 was $518 million, up from $324 million the previous year. A big part of that was provided by Viterra Australia, which reported EBITDA of $176 million.
Viterra expects prairie farmers will plant crops this year on most of last year’s unseeded acreage.
Acreage declined by eight million acres last year from its average 60 million acres, said Doug Wonnacott, senior vice-president of gri-products.
“We expect about five million of that to be back in 2011, a lot of it in canola,” he said.
That will leave three million acres unseeded.
Wonnacott said farmers are already booking fertilizer and the company would like to see it moved to the farm as quickly as possible.
He expects to see significant demand for fertilizer if the weather is reasonable this spring.
Earnings per share ($)
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$0.45
