The company increased its revenue outlook for industrial activities to between eight and 11 per cent this year, versus a previous forecast of between six and 10 per cent.

Farmers’ solid income cushioned profits even as commodity prices came down from their peaks a year ago. Growers were able to cash in on still-elevated wheat and soybean prices, which fueled purchases for new and used machinery, CNH CEO Scott Wine said.

CNH’s farm equipment brands include Case IH, New Holland, Steyr and Flexi-Coil.

“The high-horsepower and cash crop markets continue to be very strong,” Wine said in an interview, adding that the company is planning to accelerate production of large ag equipment to catch up on volume output that was reduced during an eight-month long United Auto Workers strike.

Like competitors Deere and Caterpillar, CNH’s profit margins were propped up by price increases across its machinery businesses to offset inflated input costs and a choppy supply chain.

Analysts believe the manufacturer’s double-digit price hikes that contributed to a 16 per cent increase in net sales on the year for its agriculture division will sustain the company’s margin growth in the coming quarters, said Eric Greaser, vice-president at Moody’s.

Industrial activity revenues increased 21 per cent in 2022.

CNH’s first-quarter adjusted earnings before interest and tax (EBIT) for industrial activities rose 29 per cent to US$555 million, just ahead of analysts’ consensus forecast in a Reuters poll. Revenue was in line with expectations at US$4.78 billion.

Company executives said they were confident the company would complete its delisting from the Milan bourse by the end of the year and keep its shares trading only in New York.

— Reporting for Reuters by Giulio Piovaccari in Milan and Bianca Flowers in Chicago.

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The company, an arm of ag co-operative Sollio, announced Thursday it will close its St. Jacques Street plant at St. Hyacinthe, Que. effective Feb. 10, affecting 107 employees.

The plant, which previously focused on ham deboning, still handled some processing and frozen food storage, but most of its operations since 2017 have focused on rendering fats and oils. The company had said in 2016 it was considering “various options to find a new vocation” for the St. Hyacinthe site.

Olymel, which has its head office in the same community, said in a release Thursday the decision follows a reorganizing of its workforce in the fresh pork sector “as well as a reduction in the volume of products requiring packaging.”

The company’s primary kill-and-cut facilities are now able to cover the packaging operations previously handled in part at the St. Hyacinthe plant, Olymel said, and products which until now have been stored there will be transferred to other internal or external distribution centres.

Citing “the scale of the investments required to maintain the melting operations for lard production,” Olymel has decided to stop that work and will instead sell and ship its raw materials for lard to a third-party company.

Employees still actively working at the plant have been notified and received 12 weeks’ notice of termination as per Quebec labour law, Olymel said.

All affected employees get the opportunity to be “voluntarily relocated” to one of four Olymel facilities — two of which, at St. Damase and St. Rosalie, are located in the same municipality and specialize in fresh poultry and further-processed poultry products, respectively.

The other two are the Unidindon turkey plant at St. Jean-Baptiste-de-Rouville and the company’s further-processing plant at St. Jean-sur-Richelieu. Employees who’d rather work at other Olymel facilities further afield in Quebec may also use the company’s relocation plan to do so, it said.

Olymel management said it will be “carefully weighing” available options for disposal of the St. Jacques Street plant itself, noting its buildings and land take up a “significant area in the heart of the municipality.”

Olymel CEO Yannick Gervais, in Thursday’s release, said the decision to close the plant “ties in with the restructuring of the fresh pork sector and stems from a months-long analysis that concluded today.”

The closure, he said, is meant to help ensure the company’s fresh pork sector “gets back on the road to profitability after two years of difficulties caused by the impacts of the COVID-19 pandemic, the labour shortage, market uncertainties and various other factors underlying the unfavourable economic situation.”

Olymel had already announced in July that it would cut back the packaging operations at the St. Jacques Street plant. Last month it served layoff notices for 57 people in its management ranks and said it would eliminate another 120 mainly administrative positions via attrition.

The Olymel arm of Sollio in fiscal 2021 booked a $60.2 million loss before patronage refunds and income taxes, down from earnings of $215.4 million in fiscal 2020. The drop into the red was “largely attributable” to its fresh pork operations in Quebec and Alberta, Sollio said in its annual report in February.

At that time, the company said factors dragging on the bottom line had included a loss of market access to China, a COVID-19-related shutdown at its Red Deer, Alta. hog plant, labour shortages, related outsourcing costs, a four-month strike at its Vallee-Jonction, Que. pork plant, higher hog supply costs and a stronger loonie making Canadian products less attractive internationally. — Glacier FarmMedia Network

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Global food companies have been increasing prices over the past year to shield profit margins, which have been squeezed by elevated freight and labour expenses, and spiraling costs of raw ingredients such as corn, wheat, proteins and edible oils.

However, signs of consumers becoming more price sensitive have begun to emerge and analysts have flagged concerns of Americans hunting for more affordable alternatives as persistent inflation erodes consumer spending power.

Conagra — whose retail product lines in Canada include Pam, Aylmer and Duncan Hines, among others — noted store label brands are gaining share in certain categories versus 2019 levels, echoing sentiments from peers Campbell Soup and J.M. Smucker Co.

Still, Conagra CEO Sean Connolly announced further price hikes in the third quarter although he expects volumes to remain challenged in the second quarter.

“I think the operating environment for Conagra Brands as well as the entire package food industry is becoming a little bit more challenging and I say that … because every dollar of additional price increases will be harder to come by,” CFRA analyst Arun Sundaram said.

“That’s just because the demand environment while still highly favourable is not as strong as it was over the past two years,” Sundaram added.

Shares of Conagra, known for brands like Birds Eye and Chef Boyardee, fell about two per cent as the company witnessed a 4.6 per cent decline in sales volumes in the reported quarter that was offset by average selling prices rising 14.3 per cent.

On an adjusted basis, the company earned 57 cents per share, beating estimates of 52 cents per share, according to IBES data from Refinitiv.

— Reporting for Reuters by Granth Vanaik and Mehr Bedi in Bangalore.

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Top fertilizer producers including CF, Nutrien and Mosaic Co. have benefited as sanctions on exporters Russia and ally Belarus limited global supplies that were already tight.

Illinois-based CF, which operates the world’s largest nitrogen complex in Louisiana, said net earnings reached $883 million in the three months ended on March 31, compared with $151 million a year earlier (all figures US$). Net sales were $2.9 billion, up from $1 billion a year ago.

Nitrogen fertilizer is one of the most commonly used fertilizers to boost production of corn, canola and other crops.

Global inventories are “extremely tight” while demand is strong from farmers seeking to cash in on grain prices that have jumped as the Ukraine war is disrupting crop shipments from the Black Sea, CF said.

It will take at least two to three years to replenish global grains stocks after the invasion, CEO Tony Will said. Moscow calls its action in Ukraine a “special operation.”

The company said it shipped the highest quarterly volume of nitrogen by rail in North America in 10 years to meet demand and is chartering three times its typical volume of U.S.-flagged vessels to move liquid nitrogen to the U.S. coasts.

The average price for natural gas, used to make nitrogen fertilizer, was $6.48 per MMBtu in the quarter, compared with $3.22 in 2021, CF said.

— Reporting for Reuters by Tom Polansek in Chicago.

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Prices of essential crop nutrients such as potash and phosphate skyrocketed in the quarter, touching near-record levels, as sanctions imposed on major exporter Russia for its invasion of Ukraine disrupted supplies that were already tight.

Demand for fertilizer has also been strong as an inflation-induced surge in prices of major crops is driving farmers to increase production.

“Global agriculture and crop input markets are being impacted by a number of unprecedented supply disruptions that have contributed to higher commodity prices and escalated concerns for global food security,” interim CEO Ken Seitz said in a statement.

Seitz also said Saskatoon-based Nutrien could potentially expand its low-cost fertilizer production capability.

The company, however, forecast a cut in global potash shipments for the year, citing supply uncertainties from Russia and Belarus.

Nutrien expects 2022 adjusted earnings of $16.20 to $18.70 per share, compared with its previous forecast of $10.20 to $11.80 per share (all figures US$). Analysts were expecting $15.20 per share, as per Refinitiv data.

Net earnings rose to $1.39 billion, or $2.49 per share, in the quarter ended March 31 from $133 million, or 22 cents per share, a year earlier.

Excluding items, it posted a profit of $2.70 per share, but missed estimates of $2.75.

Earlier, rival Mosaic Co., the world’s largest producer of finished phosphate products, posted a more than sevenfold surge in quarterly profit that narrowly beat estimates.

Mosaic said its potash and phosphate shipments were delayed by poor rail performance, adding that rail cycle times would not likely recover to normal levels until the second half of 2022.

The company earned $2.41 per share, excluding items, while analysts were expecting $2.40.

The bottom lines for major fertilizer makers including Nutrien, Mosaic and CF Industries have been expected to benefit from recent sanctions on Russia and Belarus.

Nutrien had said in March it would ramp up its annual potash output in response to the uncertainty of supply from Eastern Europe.

However, Joel Jackson, senior analyst at BMO Capital Markets Equity Research, cautioned Monday that Nutrien may face challenges in finding the labour to ramp up that capacity.

High fertilizer prices may also eventually be partially offset by soaring natural gas prices, particularly for nitrogen-based fertilizer makers such as CF, Morningstar equity analyst Seth Goldstein said.

“For companies like Mosaic and Nutrien that are vertically integrated and mining their own potash, they should feel the cost inflation less than perhaps a CF who still needs to buy U.S. natural gas to make nitrogen.”

Analysts said Monday they would also be on the lookout for comments from fertilizer firms on demand getting hit due to higher prices. Farmers are already reacting by skimping on fertilizer use, stockpiling for a few years, or switching to manure.

— Reporting for Reuters by Ruhi Soni in Bangalore.

CLARIFICATION, May 3: Paragraph 6 rewritten by Reuters to clarify that Nutrien’s projection for reduced output was for the potash sector globally, not for the company specifically.

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In a bid to focus on its higher-margin agriculture and construction machine businesses, where data content, autonomous technologies and alternative fuels are increasingly at core, CNH Industrial at the beginning of this year completed the spin-off of its truck, bus and engine operations, now separately listed as Iveco Group.

In slides prepared for the strategy presentation the group, which is controlled by Exor NV, the holding company of Italy’s Agnelli family, forecast net sales of between $20 billion and $22 billion in 2024, up from $17.8 billion last year (all figures US$).

CNH, which houses brands such as Case and New Holland, also guided for a margin on its adjusted operating profit (EBIT) of between 12 and 13 per cent in 2024 from 9.9 per cent in 2021, with that of its agriculture unit increasing to between 14.5 and 15.5 per cent from 12.3 per cent over the same period.

After buying Raven Industries last year for $2.1 billion to bolster its position in precision agriculture and autonomy, CNH will now focus on “disciplined” M+A activity, it added.

“We’re not buying to get bigger, our dollars are going to go towards driving organic growth,” CEO Scott Wine told analysts during the plan presentation.

“Disciplined M+A will be a key part of our strategy going forward.”

The company added it was seeing strong buyer interest for Raven’s engineered films and aerostar units, the two non-core business it plans to sell.

Chief digital officer Parag Garg said CNH was well placed to be leaders in autonomy and help customers throughout the entire farming cycle.

“Automation is a key strength for CNH Industrials tech strategy, already bringing benefits to farmers across the world across the whole cycle and helping build a backbone for it to deliver an autonomous future,” he told analysts.

— Reporting for Reuters by Giulio Piovaccari in Milan and Bianca Flowers in New York.

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Canadian National Railway (CN) on Tuesday reported 2021 net income of $4.892 billion on $14.477 billion in gross revenue, up from $3.784 billion on $13.819 billion in 2020.

Canadian Pacific Railway (CP), meanwhile, on Thursday reported 2021 net income of $2.852 billion on $7.995 billion in revenue, up from $2.444 billion on $7.541 billion in 2020.

For both railways, however, grain handling was almost the only market segment to book a decline in gross revenue in 2021 compared to 2020.

For CN, the grain and fertilizers segment marked a five per cent year-over-year decline in 2021, both in carloads at 628,000 and in segment revenue at $2.475 billion. While CN’s forest products and automotive segments also saw fewer carloads, their year-over-year revenue improved.

At CP, the grain segment saw an 11 per cent decline in carloads in 2021 over 2020, at 426,200, and 2021 revenue of $1.684 billion, down eight per cent.

CP’s only other segment to book a year-over-year decline in carloads and revenue was potash — down seven and six per cent, respectively. Its separate fertilizers and sulphur segment saw carloads and revenue both up five per cent.

Western Canada’s drought in 2021 weighed heavily on several of the major crops handled by the railways. Reduced yields are estimated to have cut the region’s 2021 production of wheat, barley, canola, oats and pulses by between 30 and 45 per cent compared to 2020 levels.

Floods and mudslides in southern British Columbia in November then washed out several tracks and destroyed rail bridges, which cut both railways’ access to port terminals at Vancouver — although both companies were able to resume service quickly.

CN said its operating performance “improved across most measures in 2021 when compared to 2020, specifically through network train speed, through dwell and car velocity.”

Those improvements, the company said, helped overcome “negative impacts from the polar vortex in February, the forest fires in Western Canada over the summer and the washouts in British Columbia caused by severe rain and flooding, resulting in a network shutdown in the region for three weeks in the fourth quarter.”

CP CEO Keith Creel, in that company’s release, said it “relied on our strong operating model and commitment to controlling what we can control to safely deliver for customers and shareholders despite the unique challenges faced in the (fourth) quarter.”

Both railways were coming off record-level grain handles in 2020, offset by significant traffic declines in other market segments that year, such as petroleum, crude oil and coal. — Glacier FarmMedia Network

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Financial statements of the meat-processing companies — which control 55 to 85 per cent of the market for beef, poultry and pork — contradict claims that rising meat prices were caused by higher labour or transportation costs, advisers led by National Economic Council director Brian Deese wrote in an analysis published on the White House website Friday.

Officials studied earnings statements from Tyson Foods, the chicken producer and biggest U.S. meat company by sales; Brazil-based JBS, the world’s biggest meatpacker; Brazilian beef producer Marfrig Global Foods, which owns most of National Beef Packing Co.; and Seaboard Corp.

Those statements showed a 120 per cent collective jump in their gross profits since the pandemic and a 500 per cent increase in net income, the analysis shows. These companies recently announced $1 billion in new dividends and stock buybacks, on top of the more than $3 billion they paid to shareholders since the pandemic began (all figures US$).

Trade group the North American Meat Institute accused the White House of “cherry-picking” data.

“It is no coincidence this blog post appears on the same day as the Consumer Price Index is released showing gas and energy prices are up nearly 60 per cent over the past 12 months which is nearly 10 times the rate of inflation for food,” president Julie Anna Potts said in a statement.

Profit margins — the spread companies are making over and above their costs — have increased significantly too, belying the argument that companies are just passing along higher labour and supply costs, the analysis said, with gross margins up 50 per cent and net margins up over 300 per cent.

“If rising input costs were driving rising meat prices, those profit margins would be roughly flat, because higher prices would be offset by the higher costs,” the analysis said.

Increases in meat prices accounted for 25 per cent of the rise in consumer prices for food consumed at home in November, a big driver in the surge in inflation seen in recent months.

Tyson increased the price of beef “so much — by more than 35 per cent — that they made record profits while actually selling less beef than before,” the advisers wrote.

The companies didn’t immediately respond to requests for comment.

The White House, hammered by Republicans over rising inflation, is scrambling to combat rising prices by clearing supply chain logjams and tackling what it views as uncompetitive practices by big companies, which are reporting big profit gains even as consumers suffer.

Friday’s blog — released after November consumer prices showed the largest annual gain since 1982 — reflects growing frustration by White House officials about continued increases in meat prices, an issue it flagged in September.

— Andrea Shalal reports on U.S. trade and economic policy for Reuters from Washington, D.C.

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U.S.-listed shares of the company, which also posted a bigger-than-expected quarterly loss, were down two per cent in extended trading.

After more than three years into Canada’s legalization of recreational cannabis, profits have been wearing thin at most pot firms, weighed down by fewer-than-expected retail stores, cheaper rates on the black market and sluggish overseas growth.

Aurora last week said it would shut down a facility in Edmonton, without disclosing the number of employees that would be impacted by the move.

The company laid off hundreds of employees last year to mitigate the impact of the pandemic, shut facilities and amended its loan agreements.

Net revenue at its consumer cannabis business, its second largest segment, slumped 45 per cent to $19.5 million in the fourth quarter.

The Edmonton-based company’s total net revenue fell 20 per cent to $54.8 million, below Refinitiv analysts’ expectations of $56.28 million.

Aurora sold 11,346 kg of cannabis in the quarter, compared with 16,748 kg a year earlier.

On an adjusted basis, the company lost 68 cents per share, compared with Wall Street expectations for a loss of 27 cents per share, according to data from Refinitiv.

— Reporting for Reuters by Rithika Krishna in Bangalore.

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Calgary-based Cervus — which operates 64 dealerships in Canada, Australia and New Zealand, including 38 devoted mainly to Deere farm equipment — expects increased demand to run up against “supply chain constraints” in its first-quarter financial report on Thursday.

“Strong industry demand, compounded by supply chain constraints related to the pandemic and severe weather events, impacted the availability and timing of equipment from our manufacturers in the quarter,” Cervus CEO Angela Lekatsas said in the company’s release.

“We expect manufacturer supply chain issues, including semiconductor shortages, may continue into the second and third quarters of the year, and are working in partnership with our manufacturers to minimize the impact to our customers and our business.”

While major automakers’ difficulties in sourcing chips to complete new vehicles are well known, major farm equipment manufacturers including Deere, CNH and Agco have also taken a hit.

While semiconductor makers have said they plan to boost production, chips are currently harder to come by as demand for consumer electronics such as smartphones and gaming systems is amped up by the COVID-19 pandemic.

An Agco official last month told Reuters the company is informing farmer customers they may have to wait as long as six months for their new machinery, putting delivery well past harvest in markets such as the U.S.

However, Lekatsas said Thursday, “despite a decrease in equipment and service revenues from continued impacts of the global pandemic, we achieved a five per cent increase in gross profit quarter over quarter, from this change in the proportion of revenue from product support.”

Lekatsas noted the company’s “successful execution on initiatives to grow parts sales, which increased 11 per cent in the quarter, driving a seven per cent increase in overall product support revenue.”

Cervus booked net income of $2.987 million on $253.93 million in revenue for the quarter ending March 31, up from a $2.703 million net loss on $256.88 million in revenues for the year-earlier period.

The dealer chain’s revenue in 2021 Q1 included $174.63 million from equipment and $79.31 million from “product support.” — Glacier FarmMedia Network

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