September 8, 2010 / 4:35 PM / 8 years ago

UPDATE 3-Viterra profit falls 47 pct but doesn't surprise

* Q3 EPS C$0.17 vs C$0.51 a year earlier

* Excluding one-time costs EPS C$0.24 vs expected C$0.26

* Revenue rises 12 pct at $2.5 bln

* Canada crops need frost-free September, CEO says (Adds details from conference call, updates share price)

By Rod Nickel

WINNIPEG, Manitoba, Sept 8 (Reuters) - Viterra Inc VT.TO VTA.AX, Canada’s biggest grain handler and farm retailer, said on Wednesday quarterly profit fell 47 percent as a wet spring slashed Western Canada’s crop acreage and the company accounted for one-time costs.

Reduced Canadian plantings hurt sales of fertilizer and chemicals, cutting agri-products revenue by 13 percent and limiting North American grain shipments.

Analysts were braced for the impact of smaller plantings after Viterra issued a warning in early July, and the company’s earnings per share excluding one-time items were only slightly below analyst expectations.

“Going forward, it still looks pretty strong,” said Jason Zandberg, analyst at PI Financial Corp. “The quarter didn’t blow the doors off but I don’t know that there’s anything to be too concerned about here.”

Viterra shares rose 0.2 percent to C$8.52 in Toronto.

Viterra, which also owns South Australia’s main grain storage and handling facilities, reported net income including one-time costs of C$63.5 million ($61 million), or 17 Canadian cents a share, for its third quarter ended July 31. That’s down from C$120.7 million, or 51 Canadian cents, a year earlier.

Net income included one-time costs of C$17.7 million for after-tax refinancing and C$9.1 million for additional after-tax amortization — the latter associated with the purchase of Australian assets.

The weaker results were in line with the company’s warning on July 8 that smaller Canadian plantings would weigh on third-quarter performance, said Chief Executive Mayo Schmidt.

Excluding one-time costs, earnings per share were 24 Canadian cents, slightly lower than analyst expectations of 26 Canadian cents, according to Thomson Reuters I/B/E/S. Net income excluding costs is C$90.3 million.

Revenue at the Regina, Saskatchewan-based company rose 14 percent to C$2.5 billion, slightly below expectations of C$2.6 billion.

Schmidt said he expects Western Canadian production of 44 million to 45 million tonnes, which would be well below the 10-year average of 49 to 50 million tonnes.

Achieving even that size of harvest depends on frost-free days in September — when frost typically arrives — and good harvest conditions in October, he said.

Severe drought in the Black Sea, which has driven up wheat prices by about two-thirds since early June, bodes well for Viterra in 2011, given its expansion into other major crop producing countries such as Australia, Schmidt said.

Grain prices are unlikely, however, to reach 2008’s record levels because the same small stocks to use ratio doesn’t exist, said Chief Operating Officer Fran Malecha.

Higher prices have spurred Australian farmers into selling their crops, something Viterra expects to continue for the next several quarters.

Farmers in South Australia are expected to harvest 7.3 million tonnes of grains and oilseeds, 30 percent higher than the five-year average.

Canadian fertilizer maker Agrium Inc AGU.TO AGU.N is on the verge of following Viterra’s move to Australia by acquiring grain handler and farm retailer AWB Ltd AWB.AX, but Schmidt sees no significant overlap with Viterra’s operations.

The company’s focus is on integrating its recent acquisitions, including oat and durum processors in the United States, not seeking new ones, Schmidt said.

“I don’t see anything that’s immediate, but the market’s very active and you won’t find Viterra taking a passive position on things that are important to us.”

$1=$1.04 Canadian Reporting by Rod Nickel; editing by Peter Galloway

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