SASKATOON – United Grain Growers Ltd. lost $8.6 million, or 93 cents per share, in the first nine months of the 1994-95 fiscal year.
That compares with a loss of $3.4 million (52 cents per share) during the same period last year.
In its quarterly report to shareholders, the company said the poor results reflect lower income from grain handling and marketing, the impact of the national rail strike and increased interest payments.
But chief executive officer officer Brain Hayward tried to reassure shareholders by noting the critical period for the company has always been from May through July, when 75 percent of the company’s crop input sales take place and grain handling volumes reach a peak.
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He expects the bottom line will improve during the final quarter of 1994-95, although the magnitude of the improvement is hard to predict.
Market dependent
“One key item that is difficult is the level of contracted sales, which depends on conditions in the grain market,” said Hayward. “Grain market conditions at this time of the year are, in turn, highly dependent on the weather.”
The report also said the company is positioning itself to take advantage of longer-term changes in the grain handling and transportation environment, including things like the deregulation of freight rates, the privatization of CN Rail and new rules making it easier to abandon branch lines.
“Just as a football quarterback throws the ball to where the receiver will be, not where he actually is, so will we build a grain infrastructure to meet the commercial realities to come – not those of this, or even next year,” Hayward told shareholders.
Sales and revenue up
For the nine months ended April 30, UGG reported the following results (with the previous year’s comparable figures in brackets):
- Sales and revenue from services were up 46 percent to $1.11 million ($763,000). Gross profit was $119 million ($105 million) and operating losses totalled $4.4 million ($169,000).
- Interest expenses nearly doubled to $9.9 million ($4.9 million).
- The company’s debt rose as a result of increased investment in capital projects. Capital expenditures for properties was $33 million ($20 million), mainly new elevators and warehouses. The report noted that revenues from such projects are not immediately apparent in the company’s financial reports.
- Working capital was drawn down during the nine months by $32 million and stood at $60 million on April 30. A year earlier, working capital was $46 million.
- 796,604 shares were traded on the Toronto Stock Exchange, at a range of $7 to $8.87 a share. During the same period last year 1,049,559 shares changed hands, trading in a range of $8.62 to $11 a share.
