August 10, 2010 / 12:16 PM / 7 years ago

UPDATE 2-Canada's Arctic Glacier posts Q2 loss; units plunge

* Q2 loss $0.01/shr vs EPS $0.17 year ago

* Sales up 2 pct

* Units fall as much as 28 pct (Recasts, adds analyst comment, share movement)

By Isheeta Sanghi

BANGALORE, Aug 10 (Reuters) - Canadian packaged ice maker Arctic Glacier Income Fund AG_u.TO posted a quarterly loss, hurt in part by higher expenses for establishing operations in Arizona and Colorado, sending its units tumbling 28 percent.

The fund, which has operations in Canada, California, and the midwestern United States, said it plans to continue to focus on its expansion into the Arizona and Colorado markets in the third quarter.

Arctic Glacier said the recent increase in competitive activity in west coast markets in United States also had an adverse effect on margins.

Sam Yake of BGB Securities added that the ice business has a relatively small market in the United States.

“All that will happen...is you will drive down prices and no one will make any money,” Yake told Reuters.

Yake said the fund also refinanced debt, resulting in higher interest expense, which dragged quarterly results and disappointed investors.

Interest expense grew to $9.4 million in the quarter, up from $5 million last year, while costs of antitrust investigations and related litigation rose to $1.6 million from $1.1 million last year.

In October, Arctic Glacier’s subsidiary reached an agreement with the U.S. Department of Justice on a probe related to possible antitrust violations in the packaged ice industry. [ID:nBNG346913]

“They settled with the government over antitrust, but there’s still civil litigation that worries people,” Yake added.

DISAPPOINTING Q2

For the second quarter the fund reported net loss of $300,000, or 1 cent a unit, compared with a profit of $6.5 million or 17 cents a unit, a year ago.

Excluding items, the fund earned 2 cents a share.

“This is their big quarter because the weather is more favorable for ice sales in the United States, and they were barely profitable,” Yake said.

Sales increased 2 percent to $71.5 million.

“I thought revenues would do much better than a two percent gain year over year,” Yake said.

The fund said its cost of sales, selling, general and administration expenses were up 10 percent to $51.5 million.

Units of the Winnipeg, Manitoba-based fund were down 25 percent at C$1.72 Tuesday morning on the Toronto Stock Exchange. They had touched a low of C$1.65 earlier. (Reporting by Ashutosh Joshi and Isheeta Sanghi in Bangalore; Editing by Prem Udayabhanu)

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