March 9, 2011 / 4:34 PM / 7 years ago

UPDATE 4-Record S. Australian harvest boosts Viterra profit

* EPS C$0.27 vs C$0.03 year-ago, estimates of C$0.21

* Revenue rises 38 percent to C$2.5 billion

* Shares up 2 percent at C$11.86 in Toronto (Adds comments on planting and acquisitions from conference calls)

By Rod Nickel

WINNIPEG, Manitoba, March 9 (Reuters) - Viterra Inc VT.TO VTA.AX, Canada’s biggest grain handler and farm retailer, posted its biggest-ever first-quarter profit on Wednesday, easily beating expectations, as the company reaped the benefits of a record harvest in South Australia and high crop prices.

Viterra shares rose by more than 3 percent on the news before easing back, for an increase of 2 percent, or 24 Canadian cents, to C$11.86 on the Toronto Stock Exchange. That bucked a broader trend that saw the TSX tumble as much as 1 percent.

Prices of wheat, oats and canola have touched 2-1/2-year highs this year, driven by tight supplies of U.S. corn and high-quality milling wheat.

“This is a great time to be in the business of producing and marketing food ingredients as the world’s population increases and living standards improve,” Viterra Chief Executive Mayo Schmidt said in a conference call.

The quarter is seasonally weak for Viterra’s Canadian operations, but falls during the harvest in South Australia, where the company also owns handling and port terminals.

The South Australia harvest of grains and oilseeds is estimated at a record 9.8 million tonnes in 2011, surpassing last year’s production by more than one-third, Viterra said.

Flooding that reduced crop quality in parts of Australia largely missed the southern region where Viterra is based, giving the company a timely buffer against disappointing crops last year in Western Canada.

“To have these results in the face of that really shows how valuable that Australian asset is,” said Jason Zandberg, an analyst at PI Financial Corp.

Viterra bought Australia’s ABB Grain in late 2009 and is still in the market for acquisitions, Schmidt said, adding the company won’t necessarily be deterred by high valuations due to soaring commodity prices.

“All these boats are rising with the same tide ... We think there’s an array of growth opportunities that we’ll pursue over time,” he said.

Viterra said it expects further large shipments of stored crops in Australia.

“What this means to me is they still have some strong results that will filter into Q2, Q3,” Zandberg said.

Viterra reaffirmed its projection for larger Western Canada canola acreage this spring of 18-19 million acres, but sees reduced area overall because of high flood potential.

Spring wheat, durum and canola will likely be farmers’ priorities because of high margins, but if delays push the planting season into early June, they will likely switch to legumes, said Doug Wonnacott, Viterra’s senior vice-president of agri-products.

Fertilizer usage in Western Canada looks to climb 5 to 10 percent to 2008 levels, due to high crop prices and the need to replenish soil nutrients after an excessively wet year, he said.

Earnings for the first quarter ended Jan. 31 soared to C$99.6 million ($102.7 million), or 27 Canadian cents a share, from C$10.7 million, or 3 Canadian cents a share a year earlier.

Revenue rose 38 percent to C$2.5 billion from C$1.8 billion.

Analysts, on average, had forecast earnings of 21 Canadian cents a share on revenue of C$2.42 billion, according to Thomson Reuters I/B/E/S.

$1=$0.97 Canadian Reporting by Rod Nickel; editing by Rob Wilson

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