WINNIPEG, MANITOBA–Agricore United announced today that UGG had a seasonal net loss of $6 million for the first quarter of the 2002 fiscal year. United Grain Growers Limited and Agricore Cooperative Ltd. combined on November 1, 2001 to form a company which operates as Agricore United. Because the merger was not effective until November 1, 2001, these first quarter results as at October 31, 2001 represent only the operations of United Grain Growers.
Drought conditions on much of the prairies last summer have had a negative impact on results for the quarter. Country shipments decreased 9% and receipts at the terminals were down by 16%. Some of the losses relating to the low handling volumes are eligible for a claim under UGG’s integrated risk financing program. The poor weather conditions also hindered crop input sales with a particularly significant impact on fertilizer.
Grain Handling results were lower due to decreased volume through both the country and terminal elevators – a direct result of this summer’s drought. Despite the decreased UGG shipping volumes, Grain Handling EBIT fell only $255,000 from $4.3 million in fiscal 2001 to $4.1 million, largely due to continued control of operating costs.
Increased sales in both seed and crop protection products in Crop Production Services were masked by a decline in fertilizer sales. While some of this decline is attributed to poor weather conditions, much of the decrease is due to an unusual seasonal shift in demand for fertilizer in last year’s first quarter in anticipation of price increases later in the year. The seasonal operating loss (EBIT) increased by $4.9 million to $10.7 million.
Livestock Services posted record sales for the quarter. Gross profit grew 47% to $12.2 million, and EBIT rose 50% from $2.5 million to $3.7 million. The Company’s acquisition of the assets of Pro Form Feeds, now known as Unifeed – Chilliwack, has contributed significantly to this increase.
Farm Business Communications’ EBIT saw an improvement of $78,000 to a loss of $28,000 due largely to reduced operating costs.
UGG earnings before interest, taxes and depreciation (EBITDA) for the quarter were $1.4 million-a decrease of $2.3 million from the prior year’s first quarter results. Historically the slowest season of the year, first quarter results generally represent only 5% of the fiscal EBITDA.
During the quarter, UGG realized decreased interest expenses of $2.2 million largely as a result of the implementation of UGG Financial and lower interest rates.
The seasonal loss per share for the quarter was $0.37, compared to $0.32 cents in fiscal 2001. Cash flow for the quarter was negligible compared to $0.12 per share in the prior year.
Agricore United will be reported on a consolidated basis from November 1, 2001 forward. “We look forward to releasing the first results of the combined Company as of the second quarter ending January 31, 2002”, said Brian Hayward, Agricore United’s CEO.
Agricore United is Canada’s leading farmer-directed agri-business. The prairie-based company is diversified into sales of crop inputs and services, grain merchandising, livestock production services, and farm business communications. Agricore United’s shares are publicly traded on the Toronto Stock Exchange under the symbol “UGG”.