WINNIPEG – Thanks largely to earnings from joint ventures with other companies, Manitoba Pool Elevators pulled in net earnings of $5.5 million in 1995-96.
But its chief financial officer warned delegates to the pool’s 71st annual meeting held here last week that the company must start making acceptable returns on its investments in core operations to survive.
Gary Timlick told the meeting more grain has to go through fewer elevators at a lower cost.
He said there will be less grain to work with, since livestock operations are expected to use more in the future. And competition for the remaining grain will be fierce.
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Manitoba Pool had total sales of $1.22 billion, and total earnings of more than $22 million. But its net earnings declined by 45 percent from the previous year.
Part of the decline was due to a $11.7 million provision for restructuring costs.
Chief executive officer Greg Arason explained the provision includes current and foreseeable costs associated with closing a terminal at Thunder Bay, closing country elevators and reducing staff.
“I think we are positioning ourselves very well for the year 2000,” Arason told reporters.
No share offering
He later said the pool is committed to remain in business without a public share offering.
Net earnings of $12 to $15 million per year would allow for reinvestment and patronage dividends, Arason said.
The company lost $4.4 million from its country operations, compared to $5.2 in 1994-95. Timlick said most of the losses were because the company handled less grain, although it slightly improved its market share.
Arason told delegates more farmers shipped directly to processors, fed grain to livestock and grew cash crops.
The pool is optimistic about this crop year because it expects to handle more grain, he said.
Earnings from joint ventures, included for the first time in the company’s annual report because of a change in accounting systems, increased by $11.5 million over the previous year.
The joint ventures include Western Co-operative Fertilizers Ltd., Xcan Grain Pool Ltd. and CanAmera Foods.
The pool paid $4.5 million in patronage dividends to retiring members and estates of deceased members last year, and expects to pay $3.8 million this year.
However, the pool did not earn enough money to pay dividends to members.
