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Viterra (VT-T), said on Wednesday it expects to see higher earnings and grain-handling volumes thanks to the end of the Canadian Wheat Board's marketing monopoly, starting with modest benefits in the fourth quarter of 2012.
Viterra, Canada's biggest grain handler, said that by fiscal 2014 it expects its annual earnings before interest, taxes, depreciation and amortization (EBITDA) to increase by $40 million to $50 million a year.
Additional grain volumes at elevators and port terminals will generate higher revenues from facilities with fixed costs, the company said in a statement.
Viterra's guidance is positive, but "decidedly conservative," wrote BMO Capital Markets analyst Kenneth Zaslow in a note to clients. The company will likely see the higher earnings it is forecasting for 2014 a year earlier, Zaslow wrote.
The Wheat Board has held a marketing monopoly on Western Canada's wheat and barley for milling or export since World War Two, but the Conservative government passed a law last month that will allow farmers to sell into an open market.
Viterra and other grain handlers, such as Cargill and Richardson International, are already signing forward contracts with farmers for delivery of grain once the CWB monopoly ends on August 1.
Viterra does not expect to incur any additional capital costs connected with higher earnings, but additional grain purchases will require $150 million to $200 million of added working capital, the company said.
It also said it does not expect court challenges to delay Western Canada's move to an open grain market.
Viterra reports its 2011 fourth-quarter earnings on January 18.