Coop federee cracks $6 billion mark in revenues

Coop federee president Ghislain Gervais speaks to the co-operative’s AGM Feb. 23 in Quebec City. (CNW Group/La Coop federee)

Revenues for expansion-minded Quebec agrifood and retail co-operative La Coop federee crossed the $6 billion mark in fiscal 2016, leading to a substantial jump in patronage dividends to producers.

The co-operative at its annual meeting reported earnings, before patronage dividends and income taxes, of $275.44 million on $6.335 billion in revenues for fiscal 2016, up from $95.7 million on $5.992 billion in 2015.

The co-operative, “considering these excellent results,” declared patronage refunds of $55 million for the year, up from $35 million in 2015, not counting a $10.77 million dividend announced last month for members working with the co-op’s Olymel pork business.

With its financial results in mind, “we must continue playing our cards right while we continue to grow in the best interest of our members, the agricultural producers,” co-op president Ghislain Gervais said in a release Thursday.

The co-op noted it’s in the midst of an “ambitious” five-year plan for “development of their agricultural and agri-food activities across Canada with an increased level of integration in the agricultural supplies and meat processing sectors” while expanding its retail sales operations in Eastern Canada.

The co-operative also noted it has “international ambitions, an unavoidable path,” but its co-op structure, “with private and co-operative players, may it be in Canada or abroad, will remain at the heart of La Coop federee’s business model.”

CEO Gaetan Desroches described Coop federee as being “in an ideal position to engage into its next leg of growth despite the everyday challenges which are part of the commodity-related markets, including the impact of international trade agreements.”

The co-op model, he said, “remains a credible and relevant option. Accordingly, we must remain proactive and vigilant, as we are confronted to the reality of an agricultural world in the midst of major technological changes and where large-size business combinations are becoming widespread.”

The co-op’s meat packing division, Olymel, booked a “best ever” $3.16 billion in sales in 2016, up from $2.805 billion in 2015, mainly on expanded production through acquisitions, including deals for processors La Fernandiere and Atrahan Transformation.

On top of growth in sales of value-added products, the co-op noted a “major turnaround” in meat margins due to the re-opening of the Chinese export market to all of Olymel’s Quebec plants, plus a spike in margins in the U.S.

However, Olymel’s poultry, processed pork and bacon businesses’ numbers came in below 2015 levels, and its hog production businesses in both Eastern and Western Canada “recorded negative results.”

Coop federee’s agribusiness arm, which includes the Coop, Agromart, Agrico and Elite Grain businesses, booked $1.945 billion in sales for 2016, up from $1.764 billion in 2015, also mainly on acquisitions including Co-op Atlantic’s agricultural assets and Agrico’s new majority stake in Sharpe’s Soil Services, an eastern Saskatchewan ag retail business.

The co-operative’s hardware retail division, Groupe BMR, reported $873.6 million in sales for 2016, up from $808.6 million the previous year, mainly on a change in the reporting of sales.

BMR, the co-op said, is still pressured by a decrease in residential housing starts, which are a “traditionally strong market” for the division’s BMR and Unimat retailers. The farm machinery department also saw a 23.6 per cent decline in sales on a “significant slowdown” in the market for most equipment lines.

During fiscal 2015-16, the co-operative also amalgamated its Sonic energy business with a major Quebec distributor, Groupe Filgo, to create joint venture Songo Energies.

“This new entity will be in a more favourable position to face the major challenges the sector is confronting,” the co-op said Thursday. — Network

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