Grainnet

Winnipeg, MB – Agricore United announced March 2 earnings before interest, taxes, depreciation, and amortization (“EBITDA”) of $8.3 million for the quarter ending Jan. 31, 2007.

The $11.2 million increase over the same period last year is largely the result of improved operating results in all business segments.

The company reported a seasonal net loss of $14.9 million (30 cents per share) for the quarter, a $5.7 million improvement over the $20.6 million loss (46 cents per share) for the same period in 2006.

“These improved first quarter results are a true testament to the focus and commitment of the entire Agricore United team,” says CEO Brian Hayward.

“The challenges of the past five years only made us more determined to build this company into the strong entity it is today.”

Grain shipments for the quarter increased by 120,000 metric tons (tonnes), and for the trailing 12 months ended Jan. 31, 2007, Agricore United held a market share of 33.1%, down marginally from the 33.6% market share reported for its fiscal year ended Oct. 31, 2006.

Average grain margin per tonne increased to $20.81 for the quarter compared to $20.12 in 2006.

At the same time, grain handling expenses decreased by over $3 million or 8.2%, due mainly to improvements in operating efficiencies.

The company’s grain inventory turn factor for the first quarter of 2007 was 9.0 times, 33% higher than the industry average of 6.7 times.

With the higher volumes, margins, and reduced expenses, EBITDA in the grain segment was a record $22.9 million for the quarter, an improvement of over 49% from the same quarter last year.

Crop Production Services (“CPS”) sales also increased slightly for the three month period, from $51.1 million last year to $52.6 million at Jan. 31, 2007, due mainly to higher crop nutrition sales.

Crop input sales for this quarter typically represent less than 10% of the company’s overall annual sales, with the third quarter representing about 75% of sales.

However, deferred sales revenue, which represents prepaid sales not yet delivered to customers, increased to $131.5 million at Jan. 31, 2007, up $36 million from the same time in 2006.

“Last year we saw an industry phenomenon in crop nutrition, with high product costs and lower commodity prices, which significantly reduced the application of fertilizer,” says Hayward.

“However, higher yields in 2006 resulted in a definite need to replenish soil nutrients, and with the strong outlook for commodity prices in 2007, we’re beginning to see producers respond through higher sales and purchase commitments booked this quarter.”

Gross profit in the CPS segment was up 7% in the first quarter and, together with reduced operating expenses, contributed to a $2.1 million improvement in EBITDA for three months ended Jan. 31, 2007, a 13.5% improvement from the same quarter in 2006.

Agricore United’s Livestock Services Division also delivered a record first quarter, with feed volumes increasing by 154,000 tonnes during the quarter to 428,000 tonnes.

Consequently, gross profit and net revenue in this segment increased by more than 43% to $20.8 million.

The acquisition of Hi-Pro Feeds (Hi-Pro) contributed $7.3 million to the gross profit of the livestock segment in the most recent quarter.

With additional operating expenses associated with the Hi-Pro acquisition, overall segment EBITDA was $7.5 million for the segment, an improvement of over 40% from the same period last year.

Gross profit and net revenue also increased by $74,000 in Agricore United’s Financial Markets segment during the quarter.

The company’s PRISM program, introduced in 2006, which offers producers a bundled product offering with a risk management component, contributed $110,000 to the segment in the most recent quarter and is being offered again to producers for the 2007 growing season.

Improved operating performance in all segments, combined with an ongoing commitment to cost control, contributed to an $11.2 million improvement in EBITDA for the quarter.

After expensing $2.8 million of costs for the company’s legal, financial, and shareholder communication costs associated with the company’s response to the takeover proposal initiated by Saskatchewan Wheat Pool on Nov. 7, 2006, the net loss of $14.9 million reflects an improvement of almost 28% over the prior year.

“Our concentrated efforts in cost control and market development are truly contributing to the bottom line of this company,” says Hayward.

“Controlled administrative costs, improved debt servicing costs, and improved service and product offerings to farmer customers are just a few of the measures that we are proud to have implemented and are eager to build on.”

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