South Australian Harvest Boosts Viterra Profit

Viterra Inc., Canada’s biggest grain handler and farm retailer, posted its biggest-ever first-quarter profit March 9, easily beating expectations, as the company reaped the benefits of a record harvest in South Australia and high crop prices.

“This is a great time to be in the business of producing and marketing food ingredients as the world’s population increases and living standards improve,” Viterra chief executive Mayo Schmidt said in a conference call.

The quarter is seasonally weak for Viterra’s Canadian operations, but falls during the harvest in South Australia, where the company also owns handling and port terminals.

Viterra bought Australia’s ABB Grain in late 2009 and is still in the market for acquisitions, Schmidt said, adding the company won’t necessarily be deterred by high valuations due to soaring commodity prices.

“All these boats are rising with the same tide … We think there’s an array of growth opportunities that we’ll pursue over time,” he said.

Viterra said it expects further large shipments of stored crops in Australia.

“What this means to me is they still have some strong results that will filter into Q2, Q3,” Jason Zandberg, an analyst at PI Financial Corp. said.

Viterra reaffirmed its projection for larger Western Canada canola acreage this spring of 18 million to 19 million acres, but sees reduced area overall because of high flood potential.

Spring wheat, durum and canola will likely be farmers’ priorities because of high margins, but if delays push the planting season into early June, they will likely switch to legumes, said Doug Wonnacott, Viterra’s senior vice-president of agri-products.

Fertilizer usage in Western Canada looks to climb five to 10 per cent to 2008 levels, due to high crop prices and the need to replenish soil nutrients after an excessively wet year, he said.

Earnings for the first quarter ended Jan. 31 soared to $99.6 million, or 27 Canadian cents a share, from $10.7 million.

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