CALGARY — Viterra Inc.’s third-quarter net income fell to $63.5 million, down 47 per cent from the same time last year, as a number of accounting provisions and higher expenses offset increased revenue from its new Australian division.
The Canadian grain handler and farm supplier (TSX:VT) announced Wednesday that net income for the three months ended July 31 amounted to 17 cents per share, down from 51 cents a year earlier when fewer shares were outstanding.
Analysts had expected a year-to-year decline but the drop was bigger than anticipated, according to figures compiled by Thomson Reuters.
Revenue for the quarter was $2.5 billion, $273 million higher than a year earlier, but also below analyst estimates.
The higher year-over-year revenue in the third quarter — which spans the important North American planting months of May, June and July — was attributed to contributions from ABB Grain, the Australian company that Viterra acquired last fall for $1.4 billion.
The company says the growth in Australia and from other acquisitions was partially offset by lower agriproduct sales in North America, where Viterra sells seed, fertilizer and other products used by farmers.
Viterra is also one of Canada’s largest grain handlers. The company said Wednesday that it’s expecting this year’s production from Western Canada to be between 44 million and 45 million tonnes, which is well below the 10-year average of 49 million to 50 million tonnes.
“As you all know, weather in Canada has been very unusual with significant rainfall that hampered this year’s crop cycle, as illustrated in our third quarter,” Viterra chief executive Mayo Schmidt told analysts on a conference call.
“It was a difficult quarter for agriproducts in North America.”
In contrast, Australian grain shipments picked up considerably. “We shipped 1.7 million tonnes during the quarter, equal to the volume we shipped in the entire first half of the year,” Schmidt said.
A number of factors, some of them related to Viterra’s acquisition activity, combined to drag down the company’s net income.
Operating, general and administrative expenses, for instance, were up more than $50 million to $196 million from $143.5 million. The charge for amortization increased to $63.7 million from $26.8 million. Financing expenses nearly tripled to $44.8 million from $15.6 million.
On the other hand, provisions for corporate taxes fell substantially.
Net income per share was also more diluted this year as a result of additional shares outstanding.
“Please note that our earnings include one-time, after-tax refinancing costs of $17.7 million,” Schmidt told analysts.
“As well, as part of the purchase price allocation process for Australia, amortization is expected to increase by about $18 million per year (and) about three-quarters of the increase was booked in the quarter.”
“These two items impacted earnings per share by seven cents.”
Analysts had estimated Viterra would earn 26 to 30 cents per share, depending on the measure used. Revenue had been estimated at $2.64 billion.
Viterra shares were up six cents at $8.56 in afternoon trading Wednesday on the Toronto Stock Exchange.