Viterra Inc. reported net earnings of C$99.6 million ($.27 per share) on sales of $2.47 billion for the first quarter ending Jan. 31, 2011, up from the year-ago $10.6 million ($.03 per share) on sales of $1.78 billion.
Fertilizer sales were up 45 percent during the quarter, to $175 million from the year-ago $120.6 million. Volumes moved up to 373,000 mt from 310,000 mt, while the average margin per mt sold was $98.71, up from $57.05. Viterra said volumes were up due to higher commodity prices and higher expected usage rates, which has motivated farmers to take early delivery of product.
As of Jan. 31, 2011, North American retail customer prepayments were at record levels of $338.9 million, a 24 percent increase over the year-ago date’s $272 million. Viterra cited strong seed and fertilizer demand, as well as higher fertilizer prices.
First-quarter crop protection sales were $5.2 million, up from $4.1 million, while seeds were $1.1 million, up from $578,000.
Overall, gross profits for the Agri-products sector, which include the above inputs, were $53.5 million on sales of $292.6 million, up from the year-ago $32.6 million on sales of $215.4 million. Only about 10 to 12 percent of Agri-products sales occur in the first quarter.
For fiscal 2011, Viterra expects strong demand in Western Canada due to improved commodity prices and increased nutrient requirements caused by excess moisture in 2010 and 2011. It expects blended fertilizer margins will be in the $100-$120/mt range.
Viterra also expects increased demand for canola seeded acreage as a result of higher oilseed prices. It is currently estimating seeded acres of canola will increase to about 18-19 million acres in 2011, versus 16.8 million acres in 2010.
Viterra expects fertilizer volumes to Western Canada will need to be up 5 to 10 percent to replenish soils that were impacted by 2010 flooding. “There is no question that the nutrients have been depleted as a result of excess moisture, and that, coupled with the significant incentive from commodity prices, will result in higher application rates than what we’ve seen in the past,” said Doug Wonnacott, Viterra Agri-products senior vice president. “Our best guess right now is that the Western Canadian market is probably going to be close to 4.5 million mt.” He said this is about where it was in 2008. He added that the fertilizer mix is expected to stay about the same, except for an increased need for sulfur.
Despite these strong fundamentals, Viterra cautioned that it expects an overall reduction in Western Canada seeded acreage in 2011, expecting acreage to decrease 3-4 million acres, below the 10-year average of 60 million acres. It said excess moisture last year, coupled with above-average snowfall in some areas, poses some additional risk should flooding occur entering the spring planting season.
Viterra’s input business continues to be dominated by its Canadian sales, as it has 261 retail locations in Western Canada versus only 12 in South Australia, with the latter units acquired in 2010.