United Grain Growers’ third quarter results show a loss of $5.4 million, about double the loss in the same quarter in 1996.
Part of the reason was related to this winter’s grain transportation problems, the company said June 26.
But it also noted that if not for extraordinary expenses of $4.3 million related to a civil court case and the costs of fighting the take-over bid by the Alberta and Manitoba pools, its results would have been better than third quarter 1996, but still a loss.
UGG officials said for most grain companies the fourth quarter makes or breaks the year. They predict the company will deliver a year-end profit that is higher than last year’s $5.85 million.
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“That quarter is when the tale is told whether you’ve had a good year or bad year,” said Brian Hayward, UGG’s chief executive officer, of the final three months.
To emphasize the effect of the fourth quarter, the company took the unusual step of releasing partial results for May, the 10th month in the fiscal year.
Ten-month results show operating income before depreciation of $29.7 million, an increase of 41 percent from the period last year, and pre-tax income up $10.1 million over the same period in 1996.
“We are endeavoring to make sure that everyone has as much information as possible to make a decision,” Hayward said.
“Some shareholders have a particular point of view, and we didn’t want to be faced with a situation where someone is making statements about how the year is unfolding when we know that the situation is different.”
The company faces a critical meeting July 17 when shareholders will be asked to deal with two major issues.
New York-based Oppenheimer and Co., which owns 13.2 percent of UGG shares, will ask for a vote on the shareholders rights plan that included the poison pill that killed the two pools’ takeover bid. Another Oppenheimer resolution would stop UGG from issuing new shares.
UGG directors will ask shareholders to approve the proposed deal that would see Archer Daniels Midland buy 45 percent of UGG’s common shares for $113 million. That deal requires new shares to be issued.
For the three quarters ending April 30, UGG reported a loss of $7.14 million, an improvement over last year’s loss of $7.3 million over the same period.
Grain handling revenue was $78.8 million, down from $88.93 million last year. Income from the sector was $16.19 million, down from $18.94 million.
Country elevator shipments were 3.75 million tonnes, down from four million.
A market analyst who wished not to be identified drew attention to the number of tonnes handled. She said winter transportation problems affected third quarter handlings. But expectations for year to date, given the large 1996 crop, were for increased country handlings.
She said Saskatchewan Wheat Pool has increased handlings in the first nine months to 7.5 million tonnes from 6.6 million.
UGG’s crop production services sector in the first nine months reported a 23 percent increase in revenue, but the sector had a loss of $7.6 million, an improvement over the $10 million loss last year at the same time.
Livestock services showed a 23 percent increase in revenue. The sector had income of $3.95 million, up from $3.85 million last year.
Farm business communications revenue was down one percent, but income was $1.43 million, about double the same period last year.
Corporate and other revenue doubled, but the sector showed a loss of $10.26 million, an improvement over the $12 million loss last year.
