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Friday 27 July 2018

Huronia XVIII- New crops and New industries

      This is a continuation of the Huronia series (Huronia XVIII) and this one covers the area of Kincardine and Saugeen Shores and Owen Sound.This is another example of an area that used to rely heavily on tourism and now has seen it's tourist dollars dry up.It needs a new focus in order to grow.Once again this blog turns to agriculture just as it did when originally settled.Owen  Sound  now does have a couple of feed mills but could use more and newer equipment.The point of this blog is that growth in population and income can be achieved through the use of new crops and new industries.This exact topic is coverd in an earlier blog on Blogdaleupsome dated 06/06/2018.        
                     Some of the New Crops  
       Above is a picture of an apple tree growing with an abundance of apples.This is one of the new crops suggested.Ontario is the  province with the largest  production of apple cider; production was valued at $200 million in 2016.Apples are grown commercially on the other side of Owen Sound in Meaford and Thornbury.Farms in this area cannot all grow hay,corn and graze cattle or start lumber planing operations with lumber from local sawmills.Experimenting  should be done with new  crops like wheat,  barley,rye and hops (for beer) and looking for new uses of corn.There is also room for chicken slaughterhouses  and small meat processing operations like Beefway in Kincardine. The agricultural processing that arises can increase considerably gross county income.For example, a small pet feed mill in Owen Sound creates income of $500,000 a year and a small craft beer mill can make $5 to $10 million a year and employ 15 to 20 people.While a small hardwood mill can make $2 to $5 million a year.And a small apple cider plant(like in Thornbury) can make $10 to $20 million after 3 to 5 years of operation.
                           Soil and Growing Conditions 
   The soil in this area is not like in the Holland Marsh around Newmarket which has that deep black soil and can grow all kinds of vegetables and fruits.However it can grow corn and hay and some kinds of wheat and barley and maybe hops.Also lots of places can grow softwood in great quantities to have softwood mills.But hardwoods grow in smaller quantities and can grow in sufficient quantity around Lake Huron.Hardwoods can be grown for more of a finished product and a small hardwood mill can produce $2 to $5 million a year.But reforestation is required to ensure the future of the mill.
    Lots of corn is grown in this area but primarily for cattle feed;it is not grown for corn meal and corn byproducts needed for pet feed.Apples are grown around Owen Sound enough to run a small cider plant in Thornbury.And they can be grown here also.Maybe also some seasonal strawberries and raspberries.It is also possible to grow small quantities of soyabeans for soyabean oil and meal.
                        Forget the old Crops        
Above is  a field of corn.You cannot drive anywhere on Bruce county,Grey county nor Huron county  roads and not see field after field of corn and hay.In fact the land is used too much for these crops and not for cash crops that can increase income and the population..Mostly corn and hay is being used to feed livestock and not as a cash crop.But corn can be sold for human consumption as well as for cornmeal which can be used for pet feed and other uses.But in order to do this a corn processing plant must be built.Apples are a natural as they make cider just on the other side of Owen Sound.There is no reason not to grow apples commercially in Port Elgin.Also oats and some kinds of soyabeans and hops can be grown to produce cereal, soyabean meal and beer.

Tuesday 10 July 2018

Emera consolidates it's Teco acquisition

In 2016 Emera acquired a quite large American utility called Teco;it had divisions in Florida, New Mexico.Maine and the Carribbean.It had total assets of about $8 to $10 billion.And now Emera which is headquartered in Nova Scotia has total assets of about $29 billion.And late in 2017 it invested about $1 billion in it's Maritime Link connecting Newfoundland and Maine to it's grid.But these large projects take a bit of time to properly digest .Consequently 2017 showed inconsistent results but 2018 is off to a better start.
The first quarter 2018
As the various divisions of Teco become integrated  within the Emera system the earnings are starting to improve.Although the net income was only $271 million compared to $312 million in Q1 2016.More importantly adjusted net income improved to $202 million from $152 million in 2017.That is because accounting adjustments are being minimized.Consequently adjusted earnings per common share were $.87 compared to $.72 per share in 2017 for a 22% increase.With the improved system and earnings this blog sees adjusted earnings per common share on track to hit $3.50 to $3.90 per common share for all of 2018.Which end of the earnings'range will depend on the profitability of their new Maritime Link mentioned above.For example, the Maritime Link earned $15 million in Q1. and this number is expected to increase in Q2.
Divisional Results
Emera now has 5 main divisions;(1)Florida and New Mexico,(2)Nova Scotia Power,(3) Maine,(4)New England and (5) Caribbean.The largest increase was recorded by the Florida-New Mexico division and New England but there was a substantial contribution from Nova Scotia Power.And as mentioned previously a small contribution from the Maritime Link.Future gains are expected from Florida-New Mexico,Maine and the Maritime Link.This should bring earnings per common share to the range of $4.75 to $5.00 and adjusted earnings per share to the $3.50 to $3.90 range.
Annual Results
Annual results have been inconsistent since 2015.The general trend is that net income has risen over this period but 2016 and 2017 have not moved with trend.In addition, some quarters have shown negative results while others have been above trend.Part of the reason is that Teco was so big;it was close to 50% of the value of Nova Scotia Power.Secondly it was so spread out;part in New England and part in New Mexico and another part in Florida.It takes time to manage such a well spread out giant but this blog suspects that the amount of investment required to make Teco run smoothly was more than originally counted on.On the other hand,adjusted EBITDA has moved up considerably since 2015.And now e.p.s. has started to move towards the upward trend.The earnings projection of $3.50 to $3.90 per share is based on no extraordinary items and Emera has minimized these items gradually.At $3.50 per share this would put their P/E ratio at a reasonable 12 times earnings.
The 2018 Price
With the Teco acquisition completed the CEO stated that there would be a dividend increase every year until 2019(see Blogdaleupsome-Blogger.com dated 24/08/2017)Emera states that "operating cash flow increased $96 million,or 28% to $444 million in Q1 2018."This leaves lots of room for a 7% increase.There is little doubt that Emera has improved their operations so a corresponding price increase to the $48 range should not be much of a surprise.But it will be a slow rise.       https://www.credit-suisse.com/ca/en.html  ;https://www.brookfield.com/