Saskatchewan Wheat Pool hopes to break even this fiscal year, even though it began with a $9.8 million loss in the first quarter.
Chief executive officer Mayo Schmidt said the company is “within striking distance” of its break-even goal, if Mother Nature co-operates.
“It would be a remarkable accomplishment given 21/2 years of drought-reduced crops, the heavy debt load we were struggling under less than a year ago and the reality that fiscal 2004 will also be affected by somewhat lower production, particularly here in Saskatchewan,” Schmidt told the annual Class B shareholders meeting Dec. 11.
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It’s an ambitious goal, considering the company lost $54 million last year – even with a $14.5 million fourth quarter profit – and lost $92 million the year before.
But Schmidt said all signs are pointing toward meeting expectations.
The loss in the first quarter ending Oct. 31 compares to a $15.6 million loss for the same period last year. The latter number included $5 million in income from grain insurance, Schmidt said, so the loss this year is more like half what it was last year. The loss was expected, given the nature of the grain business.
Earnings before interest, taxes, depreciation and amortization, or EBITDA, were six times greater than last year, at $7 million.
EBITDA improved in grain handling, agriproducts and pork segments, but it was down in agrifood processing.
Agriproduct sales rose 33 percent from the year before, producer deliveries rose 18 percent, and operational costs fell.
“We still have the lingering effects of last year’s crop, some effect to this year’s crop, but we see across the piece, all major businesses in the organization have improved their earning potential,” Schmidt told reporters.
This year’s production in the biggest grain producing province, Saskatchewan, was down about 15 percent from normal. Schmidt said the company is creating plans to insulate itself from weather effects.
“But we are a volume-driven organization and it is a weather play at this time.
“We just need to execute. We don’t expect any significant changes other than things that may just come out of left field that we certainly can’t forecast or predict.”
Schmidt said the company’s market share in Western Canada is in the range of 22-24 percent, hurt somewhat by lack of rail car tendering but helped by the closure of 16 facilities by competing companies.
He said recent rate adjustments by the railways will pressure the 25 percent excess capacity in the system, especially older facilities.
A freight savings advantage of $8.50 a tonne on 100-car trains is an extraordinary advantage, he said.
“Today on the CN railroad, loading a 25-car unit is the same as loading one car,” he said.
“I think it will prevent more capital investment in (older facilities). I think they’ll simply run them until they can no longer mechanically operate and they’ll just simply not put more capital back in.”
