UAP sees higher sales, lower profits for 2Q

Greeley, Colo.-Citing higher fertilizer prices and acquisition activity, UAP Holding Corp. reported sales of $767.8 million for the second quarter ended Aug. 27, up 1.4 percent from last year’s $757.5 million for the same period. Gross profit for the second quarter decreased to $108.3 million from last year’s $109.9 million, however, due to lower sales of chemicals and seed and lower margins on fertilizer. Second-quarter gross profit also included $6.4 million of additional rebate income due to changes in vendor rebate programs and enhanced rebate tracking ability. The company reported a net loss for the quarter of $4.3 million, or $0.08 per diluted share. When adjusted for charges related to refinancing and other items, ongoing net income for the second quarter was $25 million ($0.48 per diluted share), compared with $23.4 million ($0.45 per diluted share) for the same period last year. For the first six months of fiscal 2007, UAP reported net sales (including the acquisition of UAP Timberland) of $2,165.8 million, up 2.4 percent from last year’s $2,114.4 million. Six-month net income was $54.0 million, or $1.03 per diluted share. When adjusted for charges related to refinancing and other items, ongoing net income was $83.7 million ($1.60 per diluted share), compared with $73.0 million ($1.39 per diluted share) for the same period last year. First-half fertilizer sales increased 1.6 percent to $490.8 million, compared with $483.3 million during the year-ago period. The company attributed the increase to higher per ton selling prices, which offset lower sales volumes compared to last year. “We believe higher prices caused some of our growers to reduce the volume of fertilizer purchases compared to the same period last year,” UAP said. Six-month seed sales were $342.2 million, up 14.8 percent from last year’s $299 million. Citing lower demand for Asian Soybean Rust fungicides and fewer herbicide sales due to the continued adoption of seed varieties with RoundUp Ready technology traits, UAP reported six-month chemical sales of $1,280.8 million, down 1 percent from last year’s 1,294 million. This was partially offset by a corresponding sales volume increase in sales of glyphosate herbicides, UAP said. “Currently, we are operating well in a difficult external environment,” said CEO and President L. Kenny Cordell. “We are very optimistic about the health and future for farmers in the U.S. and are excited about the opportunities we have for this fall and the future. We believe we are well positioned to continue to increase our market share and to maximize the opportunities we have.” As reported earlier, the company also completed its acquisition of the Terral AgriService Inc. retail distribution business on Sept. 1, 2006.