ViterraTROY FLEECE
Quarterly earnings at Canadian grain handler Viterra Inc. surpassed expectations Wednesday, pushing its shares up 5 per cent.
The acquisition of Australia's ABB Grain in 2009, which was fully reflected in the fiscal fourth-quarter results, drove up earnings, along with strong fertilizer sales and contributions from newly acquired pasta and oat processors, the company said.
"Most people were expecting them to have a good quarter, but this is definitely better," said Jason Zandberg, an analyst who follows the company for PI Financial Corp. "Definitely a great quarter."
Fertilizer sales likely benefited from Canadian farmers adding crop nutrients in the autumn to land that they couldn't use due to wetness, Mr. Zandberg said.
Grain and oilseed prices soared in the second half of 2010 as drought in Russia and flooding in Canada and Australia raised supply concerns, especially about high-quality milling wheat.
Viterra's stronger quarter mirrors that of its privately held U.S.-based competitor, Cargill Inc., which also reported better earnings this month on strong demand and rising food prices.
Too much rain shrank crop production and lowered quality in Western Canada. But South Australia, where Viterra's Australian grain-handling operations are based, is harvesting what are likely to be record-sized crops despite severe flooding in other regions of Australia, said Viterra chief executive officer Mayo Schmidt.
For the three months ended Oct. 31, Viterra earned $52.7-million, or 14 cents per share, compared with a net loss of $920,000, or nil per share, a year earlier.
The company said revenue rose 38 per cent to $2-billion.
Analysts, on average, had expected Viterra to report earnings per share of 8 cents on revenue of $1.97-billion, according to Thomson Reuters I/B/E/S.
For the year, Viterra said net earnings were up 28 per cent at $145-million.
Viterra shares jumped 53 cents, or 5 per cent, to $11.06 in Toronto at midday Wednesday, touching a 14-month high. They have now jumped 19 per cent in 2011, helped by renewed fears of food inflation.