OPERATING EARNINGS AND PATRONAGE REFUNDS UP SIGNIFICANTLY
Consolidated revenues of $6.3 billion
Earnings before patronage refunds and income taxes of $351 million
Operating earnings of $319 million
Patronage refunds of $88 million, up by 60%
Dividend of $15.8 million paid to the Cooperative Pork Chain
Montréal, February 22nd, 2018 – On the occasion of its 96th Annual General Meeting, La Coop fédérée reports that for its fiscal year ending October 28, 2017, its consolidated revenues once again exceeded the six billion dollar mark reaching $6.3 billion, coupled with unequaled earnings before patronage refunds and income taxes of $351 million and operating earnings of $319 million. On a comparative basis, for the fiscal year ended October 29, 2016, consolidated revenues also reached the $6.3 billion mark, while earnings before patronage refunds and income taxes reached $275 million and operating earnings reached $256 million.
Given these excellent results, La Coop fédérée declares patronage refunds of $88 million in 2017, representing $33 million or 60% more than the level declared in 2016. Additionnally, the Board of Directors of La Coop fédérée declares a $15.8 million dividend to the cooperative members of its pork operations in which compares to a dividend of $10.8 million declared a year earlier.
Strong results supported by all divisions
"This year again, our agriculural cooperative demonstrates without any doubt its role of pillar of the Quebec and Canadian economies. For the sixth consecutive year, we are reporting very solid results which actually rank amongst the best of our 95 years of existence with respect to many key indicators " declared Mr. Ghislain Gervais, President of La Coop fédérée.
"We are very pleased of our financial performance for the 2017 fiscal year as the agility of each of our three divisions strongly contributed to our organization’s success. Despite the fact that many individual factors explain our strong overall results, I wish pointing out the excellent performance of Olymel, the Canadian leader in pork and poultry processing which figured out how to get the most out of the investments and partnerships made over the course of the last few years." , indicated Mr. Gaétan Desroches, Chief Executive Officer of La Coop fédérée.
The other divisions of La Coop fédérée did not however stand idle as the Agri-business division brilliantly continued implementing its strategic plan and that the BMR division kept on improving its financial and operational results. "Once again, La Coop fédérée played its cards extremely well as it fulfilled its role of a Canadian leader whose strengths lie within every component of the food chain.", he added.
The cooperative model, a prosperous business model
The cooperative model remains a credible option which is more relevant than ever and La Coop fédérée's successes demonstrate that it is perfectly adapted to adress the realities of an agricultural world that is constantly evolving while simultaneously creating wealth. "For nearly 100 years, La Coop fédérée and its network of affiliated cooperatives have known how to adjust and remain relevant. It is this capacity to adapt, along with a willingness to pick-up new challenges jointly and collectively which are characteristic of the Quebec agricultural scene and its underlying cooperative movement." , concluded Mr. Desroches.
An organization decisively looking at the future and proactive for its members
La Coop fédérée intends to fully take advantage of its diversified portfolio of activities in the best interest of its members. As a backdrop, the wave of consolidation hitting the agricultural industry for the last few years, La Coop fédérée intends to continue implementing its five-year plan. La Coop fédérée will pursue the development of its agricultural and agri-food businesses in Canada with an increased level of integration in the fields of agri-business and meat processing while stepping up the development of retail sales in Eastern Canada.
La Coop fédérée continues to be involved in a consolidation process so it can, over the long term, preserve its role of leader in Quebec and Canada while gaining more business agility and generate recurring savings. La Coop fédérée will continue having important discussions surrounding the renegotiation of the North-American (NAFTA), so it can amongst others; insure the safeguard of the supply management system given La Coop fédérée's main message is that agriculture must not be used as a bargaining chip in these negotiations.
About La Coop fédérée
Founded in 1922, La Coop fédérée is the largest agri-food enterprise in Quebec and it is the 24th largest agri-food cooperative in the world. It represents more than 120,000 members, agricultural producers and consumers grouped into nearly 70 cooperatives with operations spread out in many Canadian provinces. More than 13,000 people are employed at La Coop which has annual revenues of $6.3 billion. Including its affiliated network, La Coop fédérée has nearly 18,000 employees and consolidated revenue of $9.2 billion. Its activities are separated into three Divisions: Olymel S.E.C (under the Olymel, Flamingo and Lafleur banners), the Agri-business division (under the La Coop, Elite, Agrocentre, Agrico and Agromart banners), and Groupe BMR under the BMR, Unimat, Agrizone and Potvin & Bouchard banners). For further information, visit www.lacoop.coop. Twitter account : twitter.com/LaCoop_federee.
Sector review in appendix
Availibility of additional information
Financial information along with a complete operational review of the fiscal year ended October 28, 2017 is available on La Coop fédérée’s website at ar.lacoop.coop.
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A stronger than ever agri-business division reaping the benefits of past initiatives.
La Coop fédérée’s agri-business division takes advantage of the synergies between three core sectors; livestock, crops and grains. It also benefits from partnerships in various joint-ventures in Quebec and Canada, allowing to consolidate its presence from coast-to-coast.
For the fiscal year ended October 28, 2017, the Agri-business Division’s earnings declined $2.5 million compared with the previous fiscal year. However, the division’s operating contribution did not change significantly over the course of his period. Also, earnings were reduced by the recognition of a $3.4 million write-down on an investment which slashed the operating conribution by an equivalent amount.
With respect to external sales, those of the Agri-business Division’s external sales were up by $14.2 million reaching $1.934 billion which is explained for the most part by higher sales of the Animal Production Sector. More specifically, this division was able to take advantage of the integration of a new feed plant and higher market shares in the hog and dairy sectors. However, these positive factors were partly offset by the Crop Production Sector’s lower sales resulting from declining prices for fertilizer and certain seeds. In the Grains Sector, the lower soybean volume in Québec was offset by strong activity in the oilseed market in Ontario.
It is noteworthy that the 2016-2017 fiscal year was once again heightened by political pressures on supply management systems and free trade agreements creating a sense of uncertainty. However, despite the rather unstable climate,the Canadian production of poultry and hogs evolved favourably.
The best results ever since the inception of Olymel s.e.c.
Through its affiliate, Olymel, La Coop fédérée is present from one end of the value chain to the other. More than 11,500 employees work every day so that consumers can enjoy high quality pork and poultry meat products. To this effect, all Olymel plants are HACCP certified.
the meat division (Olymel s.e.c.) experienced for the third consecutive year significant growth in earnings before income taxes attributable to members, reaching a record $290.4 million, which compares to $251.4 million in 2016 or a $39 million increase. This record performance was driven primarily by the current highly favourable conditions in the Eastern and Western fresh pork market which continued to be bolstered by sustained and strong demand from China. In 2017, China became Meat’s top export market in terms of volume. Strong growth in the sales volume of chilled products and business acquisitions also contributed to the higher earnings. Lastly, note that the Canadian dollar’s strengthening had a downward impact on the industry’s meat margins.
Meat Division sales were thus up by $194.1 million and reached $3.433 billion in the 2016-2017 fiscal year owing mainly to the increases in volumes and prices in the fresh pork sector. The bacon sector and the secondary poultry processing sector also recorded higher sales volumes. Finally, the recognition of the sales of an acquired pork processing business for a full year in 2017 also contributed to this increase.
Groupe BMR : a nice progression and well-deserved honors
With the acquisition of Groupe BMR in 2015, La Coop fédérée is today the largest Québec-owned hardware and renovation organization. Groupe BMR regroups 300 hardware and renovation centres in Quebec, Ontario, the Maritimes and the Saint-Pierre and Miquelon islands.
For the 2016-2017 fiscal year, the BMR division generated earnings before income taxes, including corporate expenses, of $1.1 million, compared with a loss of $28.9 million in fiscal 2016, which represents a $30 million difference
Groupe BMR’s external sales, including the Farm Machinery Sector, were up $29.3 million from fiscal 2016 reaching $905 million, driven by significant growth in material sales. The forest fires in Western Canada caused plywood prices to soar, which reflected in sales. In addition, it is noteworhy that higher sales were also bolstered by the launch of material distribution operations in Ontario as well as the measures taken to increase wood purchases from retailers. As for the retail stores, they recorded higher sales, driven by renovations and expansion of corporate stores, and the hiring of sales representatives.
On a final note, the exceptional work of Groupe BMR teams to serve twice as many retailers since La Coop fédérée acquired the business in 2015 earned it the highest honours at the 2017 edition of Les Mercuriades business competition. The unique strategy developed by the logistics and transportation teams to address the integration of 180 Unimat dealers over a record four-month period convinced the competition jury to name Groupe BMR as the winner of both the Productivity Improvement Award and the highly sought after Business of the Year Award.