Ceres Global Ag sees 70% drop in Q1 FY2025 net income despite volume gains

USA – Ceres Global Ag Corp has reported a sharp decline in net income for its fiscal first quarter ending September 30, 2024, posting US$1.8 million compared to US$6.2 million during the same period last year, a whopping 70.9%.  

The company attributed the drop to reduced gross profit and trading margins amid subdued market volatility caused by favorable weather conditions in key North American grain-producing regions​.

Despite the decline in profitability, the company achieved near-record volumes, handling 31.1 million bushels of grain and oilseeds during the quarter, up from 29.5 million a year earlier.

“Despite the limited opportunities for directional trading due to the benign weather in the US Northern Plains and Canadian Prairies, we achieved solid financial results and near record in volumes handled this quarter,” said Carlos Paz, president and chief executive officer of Ceres.

Paz added that the team of industry experts, backed by their effective trading and risk management practices, successfully navigated market conditions to drive a strong start to the year.

This performance was driven by strong results in its Supply Chain Services and Seed Retail segments, which achieved record quarterly volumes​.

Additionally, Ceres’ continued focus on strategic partnerships bolstered its operations. The company expanded its collaboration with Miller Milling, a leading U.S. wheat miller, to promote regenerative agriculture practices among wheat growers in North Dakota.

This initiative aims to improve environmental and agronomic outcomes by implementing advanced nutrient practices.​

Total revenue for the quarter stood at US$202.1 million, down from US$216 million a year ago. Gross profit nearly halved, falling to US$7 million from US$14.2 million.

Adjusted EBITDA dropped significantly to US$4.3 million, compared to US$10.6 million in Q1 FY2024. However, Ceres managed to reduce its general and administrative expenses by 21%, partly offsetting the decline in margins​.

Strategic Outlook

Looking ahead, Ceres plans to shift its focus to South America as harvests in the U.S. Northern Plains and Canadian Prairies conclude.

CEO Carlos Paz highlighted the importance of monitoring geopolitical and market developments, such as the ongoing Middle East tensions and the Russia-Ukraine conflict, which could influence global agricultural trade and pricing dynamics​

Given the potential impact of geopolitical events on market volatility, we will also be keeping a close eye on the incoming Trump administration’s potential policies impacting the agriculture and energy sectors, the escalating tensions in the Middle East, and the ongoing conflict between Russia and Ukraine,” Paz said.

The company, with an aggregate grain and oilseed storage capacity of 45 million bushels across its owned and joint venture facilities, continues to optimize its asset base and partnerships to enhance shareholder value​.

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