January 18, 2008 / 4:38 PM / in 10 years

UPDATE 2-Viterra scouting for acquisitions, growth-CEO

(Recasts with details from CEO interview, conference call)

By Roberta Rampton

WINNIPEG, Manitoba, Jan 18 (Reuters) - Top Canadian grain handler Viterra VT.TO is actively seeking growth through acquisitions to profit from strong demand in the agricultural sector, Chief Executive Mayo Schmidt said on Friday.

“I think the company has terrific momentum and the opportunity to do some new and exiting things that will be well thought out,” Schmidt said in an interview.

Viterra, which changed its name from Saskatchewan Wheat Pool after its C$1.8 billion takeover of Agricore United last year, posted a loss on Friday of C$1.93 million ($1.87 million) in the quarter ended Oct. 31, or 1 Canadian cent a share.

The Regina, Saskatchewan-based company, which is also Canada’s largest fertilizer and crop supply retailer, had sales of C$1.29 billion in the quarter, but did not provide pro forma results for 2006 for comparison.

Viterra shares were down 18 Canadian cents at $11.94 at the Toronto Stock Exchange on Friday, and have dropped 11 percent from highs set three weeks ago.

Viterra said it had a 44 percent share of Canada’s grain handling market in the quarter, compared to Saskpool’s 25 percent share a year earlier.

The dominant position combined with low debt and strong cash flow gives Viterra the ability to seek opportunities in Canada, the United States and overseas, Schmidt said.

“The window of opportunity is now. I think the issue really is, how long does that window stay open?” he said.

“We think there’s a prolonged cycle of strength in agriculture because it’s being driven by a demand base,” he told analysts on a conference call.

Tight world supplies and growing demand for grain have boosted export opportunities for Canadian grain, and sent prices soaring, giving farmers the resources and drive to maximize fertilizers and other supplies to produce more grain.

Viterra said farmers had already booked C$250 million in fertilizer, seed and chemicals for the spring planting season, which begins in March, which was about C$100 million more than the company’s expectations.

Schmidt said Viterra remains interested in investing in biofuels and canola crushing, and is confident it could manage those sectors’ commodity price risks.

“Our bias would be to buy existing plants,” he said, rather than building new ones. The company is also keen on helping consolidated the “fragmented” North American livestock feed manufacturing sector, he said.

Earlier this month, Schmidt hired a former investment banker with two of Canada’s major banks to his management team.

Viterra is closely watching signs of an economic downturn in the United States, which is the largest market for Canadian agricultural products.

“It may affect who we ship product to, and when it’s shipped, but we do as an industry, as an organization, have other options,” he said.

The weaker U.S. economy has also affected Viterra’s expansion plans, he said. “We’ve got a very strong Canadian dollar, we’ve got interest in U.S businesses, it’s created more of a focus on the opportunities for us in the U.S., absolutely,” he said.

$1=$1.03 Canadian Reporting by Roberta Rampton; Editing by Rob Wilson

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