Cold North American spring hits Agrium’s profits

Fertilizer and ag retail firm Agrium reported a fall in quarterly profit due to an unusually cold spring in North America, but said it expected strong demand for crop inputs for the rest of the year.

Unseasonably cool weather in the U.S. Midwest this spring compressed the usual time period for farmers to apply fertilizer to their fields.

“We expect solid demand for crop inputs in the second half of 2013 given positive grower sentiment, strong nutrient removal this year and the affordability of crop nutrients,” CEO Mike Wilson said in a statement.

The Calgary-based company added Thursday it plans to complete the expansion of its potash mine at Vanscoy, Sask., southwest of Saskatoon — despite the breakup last week of the Belarusian Potash Co. (BPC), which raised fears of a drop in prices.

Agrium also said it sees no changes at the export marketing consortium to which it belongs, Canpotex Ltd.

On a call with analysts and investors to discuss Agrium’s quarterly results, Wilson praised Canpotex’s cost structure and relationships with customers.

Net earnings for Agrium’s second quarter fell 13 per cent to $747 million, or $5.02 per share, from $5.44 per share a year ago, in line with the range given in a previous company forecast (all figures US$).

Agrium, also North America’s biggest farm retail supplier, said its adjusted earnings per share were $736 million or $4.94 per share, matching the average expectation by analysts according to Thomson Reuters I/B/E/S.

Revenue rose four per cent to $7.02 billion, slightly ahead of analysts’ expectations for $6.952 billion.

Calgary-based Agrium’s retail sales to farmers, which include fertilizer, seed and chemicals, rose by seven per cent to $5.6 billion. Wholesale sales of nitrogen, potash and phosphate fertilizer fell nine per cent to $1.5 billion.

Wholesale sales of potash account for about four per cent of Agrium’s total sales revenue and eight per cent of gross profit.

Every price change of $10 per tonne of potash raises or lowers Agrium’s net earnings by $9 million, according to the company’s 2012 annual report.

Rival U.S. nitrogen producer CF Industries on Tuesday reported a lower quarterly profit. Last month, Saskatoon-based PotashCorp also reported a lower than expected quarterly profit.

In June, Agrium suspended two projects to increase nitrogen production, partly because numerous competitors are pursuing similar plans. — Reuters

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