August 22, 2011


Higher prices stabilise Alliance Grain Traders' profit



Despite lower sales volumes, Alliance Grain Traders Inc. reported almost identical sales revenues in Q2 2011 as in Q1.


The Regina pulse processor and exporter reported US$169.9 million in sales compared to US$168.1 million the previous quarter.


Higher commodity prices compensated for a 10% reduction in sales volumes.


The second quarter is typically slow as buyers wait to see on India's and Turkey's pulse harvests.


AGT president Murad Al-Katib said May 25 is usually the tipping point for demand because that's when buyers typically have a good read on India and Turkey.


But the Turkish harvest was delayed until mid-June this year, which pushed sales back later than normal.


Heavy spring rains in Canada that affected farm deliveries and rail service didn't help the supply side of the sales equation.


"These events resulted in some revenues shifting off into the Q3 2011 period," said Al-Katib.


He forecasts strong demand for lentils and other pulses in the second half of the year that will be met by an ample and excellent quality Canadian pulse harvest.


Earnings before interest, taxes, depreciation and amortisation for the second quarter were US$9.2 million, down from US$14.2 million the previous quarter but up from the US$4.4 million posted in Q2 2010.


Adjusted net earnings were US$4.5 million in the quarter, up from US$2.3 million last year in the same period.


During a conference call announcing the company's financial results Al-Katib was asked by an investment analyst what the future holds for the company in a post-Canadian Wheat Board environment.


Al-Katib said AGT is a major miller of durum and pasta maker through its Arbel Group of facilities in Turkey.


AGT is starting to introduce its pasta line to North and South America and will be looking to lock up Canadian durum production and possibly a milling facility to service those markets.


"We're certainly evaluating opportunities as we build out the Arbella platform in the Canadian market," said Al-Katib.

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