SASKATOON – As Saskatchewan Wheat Pool enters a year which is likely to bring scrutiny from outside financial analysts, the company reports a slight increase in net earnings.
Saskatchewan Wheat Pool turned a profit of $32.6 million in the year ended July 31, on total revenues of $2.8 billion. That’s about five percent higher than the previous year, when profits were $31.1 million on revenues of $2.1 billion.
The pool originally reported earnings of $40.4 million in 1993-94, but that has been restated as $31.1 million to reflect changes in accounting practices.
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Potential investors are likely watching the pool’s financial performance carefully this year, as the company prepares to convert member shares to equity and sell shares on the public stock exchange perhaps as soon as next March.
Chief executive officer Don Loewen described last year’s earnings as an “excellent” result, but declined to speculate how it might be received by outside investors.
“We’re certainly comfortable in taking that bottom line earning to our members,” he said. “How the investment community views it is up to them.”
He said the five percent increase in earnings is noteworthy in light of the fact that the company faced several unusual expenses during the year, including the costs associated with closing down a number of country elevators and a terminal at Thunder Bay and a one-time “environmental reclamation” charge involving Western Co-operative Fertilizer Ltd. facilities in Alberta. The pool is a one-third owner of the fertilizer company.
The pool’s associated companies, CanAmera Foods, AgPro Grain, Dawn Foods and Prairie Malt Ltd,. contributed to the strong financial result.
Earnings from those value-added businesses were up 31 percent, accounting for more than half of the pool’s total net earnings.
Detailed financial results for each of the pool’s divisions won’t be released until the annual meeting in November.
Loewen said while some divisions didn’t perform as well as hoped, the company’s two main operating groups – the grain group and the food and industry group – were both “very profitable.”
Farm supply sales reached record levels, exceeding $300 million, up from $260 million the year before. The company handled 10.6 million tonnes of grain, up from 9.9 million tonnes a year earlier.
Working capital increased by $10 million to $111 million, while retained earnings jumped by 22 percent to a record $138 million.
Yet this year’s good financial showing won’t slow the pool’s move to become a publicly traded company.
“The ongoing needs for capital are still there for the company and the membership,” Loewen said. “If we’re going to restructure the grain-gathering system, make strategic acquisitions and joint ventures and grow the company, all those requirements are still there.”
In promoting its plans for a share conversion, pool officials have argued the company needs more revenue than can be generated under its current structure.
While the share conversion will be the pool’s top priority in the coming year, it will also continue to strengthen its core businesses and diversify into new ventures. Loewen said another acquisition was completed just last week, but declined to release any details.
