Viterra Inc. provided guidance on the projected financial benefits to the company as a result of the new regulatory environment for the marketing of grain in Canada.
With the ability to purchase all grades of wheat, barley and durum directly from growers, the company expects to increase its earnings by attracting additional volumes and optimizing its operational efficiencies.
Viterra anticipates the additional volumes at primary grain elevators and port terminals will generate higher revenue from the fixed cost facilities and earn additional merchandising margins. Viterra expects to capture supply chain efficiencies as it executes with a higher degree of precision given direct relationships with the railroads and an unmatched asset network.
Viterra expects to begin realizing modest benefits in the fourth quarter of 2012, with more significant impacts in 2013. In fiscal 2014 and beyond, the company anticipates its annual earnings before interest, taxes, depreciation and amortization (1) ("EBITDA") to increase by $40 million to $50 million per annum. This guidance is based on the assumption of an increase in consolidated global pipeline margin of $2.00 to $2.50, which includes a 1.0% to 2.5% market share increase.
Viterra is a market leader in Canada with assets, people and a global marketing network in place to efficiently source and market grains and oilseeds around the globe. As a result, the company does not expect to incur any additional growth capital expenditures to achieve this earnings benefit. Additional grain purchases will require $150 million to $200 million of incremental working capital, which will be provided by operating cash flows and existing credit facilities.