May 10, 2007

Animal feed firm Ridley reports thinner profits in Q3

Animal feed producer Ridley Inc has reported weaker January-March net income, to US$3.1 million to US$3.9 million, despite a 4.4 per cent rise in revenue, over feeble Canadian business.

Ridley, who has main headquarters in Mankato, Minnesota and Winnipeg, Canada said revenues were US$136.9 million in its third quarter ended March 31, up from US$131.1 million a year earlier.

Net income was $3.1 million, 22 cents per share, down from $3.9 million, 29 cents per share.

Ridley CEO Steve VanRoekel said strong results in US feed business were offset by sharply lower earnings in the Canadian business and weak demand for blocks.

VanRoekel said a combination of external factors, including "continued strength in the Canadian dollar, high feed prices, and uncertainty in the meat industry continue to depress demand and as a result, earnings in Canada."

Additionally, the company's results were negatively impacted by the departure of several sales personnel from a Canadian business unit who have formed a competing firm, he said.

Ridley said feed supplement demand "has been depressed for the second consecutive year by weather patterns that have extended good grazing conditions throughout the western US and western Canada." But the US feed business "produced excellent results" thanks to "generally favourable meat, milk, and egg production economics."

VanRoekel said the American branch is expected to remain solid for the rest of the year, but results in Canada "are likely to remain weaker for some time."

Ridley, along with the federal government, remains involved in litigation brought by cattle producers hurt by international prohibitions on Canadian cattle and beef following the May 2003 discovery of mad cow disease an Alberta cow. Plaintiff attempts to win class-action status "are still at an early stage," and Ridley said it "cannot determine what impact, if any, these lawsuits may have."