As they prepare for meetings which could open the way to a merger, two prairie grain handling co-operatives are closing the books on strong financial years.
Manitoba Pool Elevators could match last year’s record financial performance, while Alberta Wheat Pool is turning in what a senior official describes as another “strong year” of earnings.
Both companies’ boards of directors will meet this week to review a proposal to merge the two provincial co-ops into one company. The final decision will be made at special delegates’ meetings at the end of July.
Read Also
Interest in biological crop inputs continues to grow
It was only a few years ago that interest in alternative methods such as biologicals to boost a crop’s nutrient…
Officials say their 1997-98 results should send a message to others in the grain industry that the two pools are in a good position to survive and prosper in coming years.
“I think it would send a strong signal,” said MPE chief executive officer Greg Arason, adding his company will “come close” to matching last year’s record $28.1 million profit. “Overall, we’re looking at another good year.”
Some industry analysts have suggested the two pools could be elbowed aside by much larger interprovincial and multinational grain companies, as deregulation opens the industry to more intense competition.
But Alberta Pool chief executive officer Gordon Cummings said the numbers belie that analysis.
“We’ve now had two strong years of earnings in a row, but underneath that we’ve had four years of real growth in our core earnings, in the basic grain and agro business,” he said.
The pool earned $34.2 million in 1996-97, up from $28.2 million the previous year and $6.9 million the year before that.
Cummings declined to estimate 1997-98 earnings, saying the pool doesn’t release such information until it can give final numbers to delegates and members.
He said the crop input business, including fertilizer, seed and chemicals, will be up from last year, although the dry spring put a lid on chemical sales. The grain business went as expected, with a busy fall and winter followed by a slow spring and summer, but better than last year.
At Manitoba Pool, grain volumes will be down a few hundred thousand tonnes from last year, but that has been balanced by a dramatic increase in seed sales and strong sales of farm inputs.
Arason said the company’s share of the province’s grain market increased slightly, helped in part by successful unit train shipments to the United States.
“Some of the changes we’ve made in terms of restructuring our facilities network, separating out our grain and ag business in a number of locations, and introducing our hub and spoke concept, have all helped increase our overall efficiency,” he said.
The pools’ bottom line will also benefit from two unusual items: Saskatchewan Wheat Pool bought out MPE’s ownership stake in Can-Oat Milling, and Humboldt Flour Mills had to pay MPE and AWP $550,000 after rejecting their take-over bid in favor of SWP.
The grain industry’s two publicly traded companies recently released their results for the third quarter of 1997-98, with Sask Pool reporting a loss of $800,000 and United Grain Growers a profit of $1.4 million. Sask Pool says its 12-month results may be down from last year’s figures, while UGG says it could earn record profits in 1997-98.
A spokesperson for Pioneer Grain says lack of grain movement through West Coast ports this spring and summer is going to affect balance sheets throughout the industry.
“The terminals really haven’t been used to their normal capacity for the spring months, and that is going to hurt all the grain companies who have terminals out there,” said Kent Magarrell, vice-president of James Richardson International/Pioneer Grain.
Pioneer, whose fiscal year ends Dec. 31, releases no financial results. Magarrell said the company had budgeted for similar results in 1998 as in 1997, but the slow spring will make that difficult to achieve.
“When you have a couple of slow months, it’s hard to make them back,” he said. “This business still lives and dies with how many tonnes go through the system.”
