After a year of unprecedented change and growth, Viterra has no plans to rest on its laurels, says Mayo Schmidt, company chief executive officer and president.
“Our next step must be to grow,” said Schmidt. “The creation of Viterra was not an end goal, but a launch pad for growth.”
Viterra, which evolved from last spring’s merger of the Saskatchewan Wheat Pool and Agricore United, held its first annual and special meeting for shareholders in Winnipeg March 12. The day was a busy one for Viterra, as the company also announced a first quarter profit of $41 million for the three months ending Jan. 31.
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The meeting of shareholders, executives and board of directors was an efficient affair, lasting 45 minutes, including Schmidt’s speech.
Viterra’s chair Terry Baker, led the formal business of the meeting, which led to the appointment of two new directors and the re-election of 10 directors.
The company also officially changed its corporate name to Viterra Inc., after launching its new identity Aug 30, 2007.
Schmidt’s speech focused on opportunities to move forward, and “advance our interests in North America and abroad.”
Schmidt said Viterra will focus on value-added processing in feed, food, fuel and fibre as a path to global growth.
The logic behind that strategy comes down to dollars and cents. Margins in the Viterra’s grain business are $25 a tonne, he said. In feed, the company’s margins are $40 a tonne, and in food processing, it jumps to $75 a tonne.
He pointed to Viterra’s feed mills in Texas, Unifeed Hi-Pro, as an example of a global opportunity. The company provides feed for dairy operations and Schmidt said it is well positioned for expansion.
“We see solid growth in the dairy industry….It is expected by 2009 there will be 650,000 cows in the milk and cheese market. That’s more than four times the number of dairy cows than just 10 years ago,” he said.
Adding to the optimism is the rising demand for Viterra’s products, which comes at a perfect time for the now larger and stronger company, said Schmidt.
“The opportunities that biofuel and China and India have presented to us are just staggering,” Schmidt told reporters after the meeting. “The demand pull for our commodities is just extraordinary. Timing has been fantastic.”
He did say there’s no way the company could have predicted $25 a bushel wheat before the merger, but it intends to build a healthy business that will thrive in lean times as well as good.
Schmidt said a global strategy would insulate Viterra from future bumps in the road.
“Clearly for our organization, to get the geographic diversity and the diversification of different businesses, value-added, all tied back to our roots…(that) creates a shock absorber to weather events in any one particular area.”
Richard Gray, a University of Saskatchewan professor, said Viterra’s value-added focus has a downside – losing market share in the core business of grain handling.
With volatile grain markets and a large associated basis, because of market risk, there is an opportunity for a large and consistent cash flow.
“If you’re a grain company and you have a big basis … you’re going to make a lot of money,” he said.
Viterra’s first annual meeting ended with only one question from a shareholder who asked if the company plans to offer a dividend payout in the future.
Schmidt said, for now, the answer is no, because the company is focused on expansion and wants to reinvest profits into growth.
