The recession has many in the business world wringing their hands and cutting their operations, but Viterra’s chief executive officer is not among them.
The grain company is in good financial shape and plans an ambitious growth strategy, Mayo Schmidt told shareholders attending the annual meeting last week.
He said the company is “hungry for other opportunities” and intends to expand geographically and by adding value-added processing.
The company has less than 25 percent debt, $700 million in cash available and access to equity markets.
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“We’re in a unique position (in) that assets that we would have acquired six months ago are now potentially available at almost half the cost,” he told reporters. “So it’s a case for Viterra of executing and capturing the opportunities as industry moves through its down cycle so that when we come out the other end of this, which we all believe we will at some point, that Viterra will have come out with its hands full of opportunities at the right price.”
Schmidt said the company would be patient and treat its capital as “precious.” When the time is right, it will act.
He said Viterra is interested in acquiring companies similar to what it already has – milling, processing, livestock feed, malting and agriproducts.
“Secondly, you would see foundation businesses like all of Viterra that exist in a different jurisdiction would be of interest to us,” he said.
The company’s international grain division, formed in 2008, has offices in Calgary, Vancouver, Singapore and Tokyo and will add an office in Geneva.
Schmidt said that expanding presence gives Viterra access to critical market information.
And he said while the world is in an economic downturn, food is not a discretionary item.
He pointed to world population growth expected to reach 10 billion by 2050, while world grain stocks in 2009 are forecast to be the third lowest in history. That would provide only 18 percent of annual consumption needs.
“Today, people may not buy a new car,” he said to shareholders. “But they will buy food. As an important food ingredient supplier and with our unique relationships with destination customers, I believe that Viterra has a critical role to play in feeding the world.”
The past year marked the company’s first full year of operations after the merger of Saskatchewan Wheat Pool and Agricore United, a move that produced $121 million in synergies.
At the annual meeting, at least one shareholder said the company could share some of its prosperity with investors by issuing dividends.
Schmidt said that is an option but the growth strategy holds greater appeal.
“We believe we’ve identified opportunities that generate greater returns for investors than dividends at this point in time,” he said.
