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Challenging year in 2012 for Village Farms


April 1, 2013
By Village Farms

April 1, 2013, Vancouver — Village Farms experienced a number of
challenges in 2012, including devastating storm damage at one of its
Texas facilities and a continuing slump in tomato prices.

April 1, 2013, Vancouver — Village Farms experienced a number of challenges in 2012, including devastating storm damage at one of its Texas facilities and a continuing slump in tomato prices.

As a result, the company reported that net sales decreased 19 per cent to $133.9 million for the year ended Dec. 31, 2012, compared to $164.4 million for the year ended Dec. 31, 2011.

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Also in the year-end report:

• Earnings per share of $0.20 for the year ended Dec. 31, 2012 versus $0.15 for the year ended Dec. 31, 2011.

• Net income increased 36 per cent to $7.9 million for the year ended Dec. 31, 2012 versus $5.8 million for the year ended Dec. 31, 2011.

• EBITDA (earnings before interest, taxes, depreciation and amortization) increased 52 per cent to $23.8 million for the year ended Dec. 31, 2012 compared to $15.7 million for the year ended Dec. 31, 2011.

'DIFFICULT AND DEMANDING YEAR'

“Calendar year 2012 was a difficult and demanding year for Village Farms,” said Michael CEO DeGiglio.

“The company faced many challenges, the primary one being low market pricing continuing from the fourth quarter of 2011 through most of the first three quarters of 2012, principally caused from the continuing and increasing capacity of Mexican tomatoes.

Many in the industry feel the excess supply was dumped into the U.S. and Canadian markets. "This had a negative impact on pricing in the entire fresh tomato industry in the U.S. and Canada, aiding in the demise of some long standing growers.

Startup complications were experienced with the new facility in Monahans, Texas, which included labour challenges and housing availability.

“These events, coupled with the devastating hail storm in Marfa, Texas on May 31 completely destroying 82 acres, the impact of this event on our financial institutions and the unresolved insurance claim, overshadowed favourable prior years of operating results.

IMPROVED TOMATO PRICING

“We have been and continue to experience improved tomato pricing, especially as compared to the same period in 2012.”

About half of the Marfa facilities were repaired in the fourth quarter of the year, “and we are pleased to report it is operational.”

Recently the U.S. Department of Commerce acknowledged the dumping actions by the Mexican tomato industry by supporting the U.S. tomato industry and materially revised the 16-year-old Suspension Agreement with Mexico with a new agreement enacted on March 4, 2013.

The new agreement includes enhanced minimum pricing, significant penalties for violations, full participation from Mexican growers, clear definitions of controlled environmental growing and field production, together with annual pricing reviews.

The Canadian operations experienced “terrific production in 2012 with great growing weather and execution by our team ending the year with strong results.”

Village Farms’ exclusive Mini San Marzano tomatoes are selling well, and the company “remains energized with the pipeline of new products we continue developing.”

ABOUT VILLAGE FARMS

Village Farms is one of the largest producers, marketers and distributors of premium-quality, greenhouse-grown tomatoes, bell peppers and cucumbers in North America. It has greenhouse facilities in British Columbia and Texas.


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