WINNIPEG – United Grain Growers has reported losses of close to $7 million for the first six months of its fiscal year, more than twice the losses of $2.9 million in the first half of the last fiscal year.
But Brian Hayward, chief executive officer for UGG, said shareholders shouldn’t be alarmed. Like all things dealing with farms, business is seasonal and the company usually experiences losses during the first three quarters of the fiscal year.
“Our normal pattern of earnings is that we don’t make money until the final quarter of the year.”
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Hayward said weaker performance in the first two quarters “is related to timing.” Revenue for non-Canadian Wheat Board grains and oilseeds is recognized by the company’s accountants at the time sales are made.
Last summer, a lot of business was booked for these grains and the revenue was accounted for at that time, said Hayward. In the first half of the fiscal year, the grain was handled and shipped, incurring expenses. And this year, these grains have so far accounted for 46 percent of receipts.
Hayward said UGG has also invested $20 million in capital projects during the first six months of the year, mostly in three new high-throughput elevators at Souris, Man., Kindersley, Sask., and Grassy Lake, Alta.
The company has $71 million in corporate working capital, compared to $34.5 million at this time last year. Hayward said working capital comes from profits, and is “a measure of how much flexibility you have to invest.”
Other arms of UGG enjoyed a good first half:
- Crop Production Services division had twice the sales of seeds, chemicals and fertilizers in the second quarter that it had in the same quarter last year.
- Livestock Services are at a 10-year high of $1.9 million.
