Canadian agribusiness Saskatchewan Wheat Pool has announced second-quarter losses that its says reflect the impact of last season’s drought on the agricultural industry.
SWP recorded consolidated sales and operating revenues of C$501m in the second quarter of fiscal 2003 bringing the year-to-date total to $970m. Six-month sales were down 17% from the comparable period last year after excluding results from companies sold in fiscal 2002. SWP said the reduction reflected the impact of the drought and the unusually wet, cold harvest, which, together, caused a significant reduction in grain volumes and a severe shortage of quality commodities available for processing.
Can-Oat Milling, the company’s oat processing affiliate, and SWP’s retail agri-product operations posted sales increases of 17% and 7% respectively, partially offsetting the decline.
The net loss for the quarter was $18.8m, compared to a loss of $26m in the second quarter last year, which included after-tax provisions of $13.2m. For the first six months of fiscal 2003, the net loss was $34.4m, compared to $38.4m. Last year’s result included $9.9m of after tax provisions.
SWP’s primary shipments in the quarter were 1.2 million tonnes for a total to-date of 2.8 million tonnes, or 32.7% behind the previous year. The Pool performed relatively well in spite of a 45% drop in wheat and barley shipments prairie-wide and a 56% drop from Saskatchewan. As expected, volumes through the Pool’s port terminal operations also reflected drought-related volume declines along with the corresponding lack of higher-valued export commodities available to the industry.
“Operating results for the quarter are in line with expectations and reflect the severe production declines coming off last year’s harvest,” said CEO Mayo Schmidt. “We remained focused on maintaining our costs at minimum levels and, as a result, saw core operating, selling and administration costs decline by $16.2m during the period.
“The business environment will remain challenging for the remainder of the year, particularly in our grain operation,” added Schmidt. “However, with the completion of our capital restructuring initiative on 14 March and the significant moisture recovery throughout much of the Prairies, we look forward to improved growing conditions and a significant earnings recovery in fiscal 2004.”
Meanwhile, the company’s board of directors has elected Marvin Wiens as president and chairman of the board, Douglas Kitchen as lead director and Thad Trefiak as vice president.
Wiens, a director since 1984, will serve his fourth consecutive term as president. Kitchen, formerly an outside advisor to the board, will serve as the board’s first lead director. This will be Trefiak’s third term as vice president.
