BSE settlement reason for Q2 loss Ridley
Ridley reported a net earnings loss of US$2.8 million after income taxes for the second quarter ending Dec 31, 2007 due to a CAN$ 6 million settlement in a class action lawsuit.
For the three months ended December 31, 2007, earnings before interest,
taxes, amortization and asset impairment loss (EBITA(i)) for continuing
operations, were $8.5 million compared to $10.1 million last year.
Ridley
previously announced that, on February 5, 2008, it had reached a settlement
agreement with the plaintiffs in the BSE class action lawsuits filed against
Ridley and the Government of Canada in four provinces of Canada.
Under the
settlement agreement, Ridley will pay CAD$6 million into a plaintiffs’
settlement trust fund and will effectively cap its exposure to the claims made
by the plaintiffs to the CAD$6 million. The net earnings loss in the second
quarter of fiscal 2008 reflects the $6.0 million claim settlement
expense.
Restructuring costs
EBITA in the second quarter
includes a one-time charge of $1.4 million taken for the restructuring of
Canadian operations, implemented in November. These expenses should pay back in
the next quarter through lower operating expenses.
Excluding those
one-time costs for restructuring Ridley’s EBITA in the second quarter would have
been equivalent to the same period as last year.
Drought problems
impact US results
“After allowing for the class action claim settlement,
Ridley performed well in the second quarter despite an increasingly difficult
livestock production economy, thanks largely to good results from the US side of
Ridley Feed Operations and a strong earnings increase from Ridley Feed
Ingredients”, reported Steve VanRoekel, President and CEO of Ridley
Inc.
“Gross profit results from our US-based Ridley Nutritional Solutions
were close to last year, but continue to be below expectations, due primarily to
the exceptional drought and poor pasture conditions in the south-eastern US that
continue to depress block supplement volumes.
High prices hurt
Canadian profits
“Earnings results in the second quarter of fiscal 2008
on the Canadian side of Ridley Feed Operations were impacted by the severe
strains that beef and hog producers on the Prairies are feeling from
historically high feed prices and the strong Canadian dollar,” added VanRoekel.
“Looking ahead, we are obviously concerned about the effect that
historically high feed prices are having on our customer base. The potential for
sustained high prices and continuing volatility creates an uncertain environment
for the entire food industry.”
Related news:
Animal feed maker settles in BSE case
Judge allows class action over BSE
