Fertilizer firm Agrium has boosted its second-quarter guidance in light of “very strong results” from the company’s retail and wholesale operations.
The Calgary company, which recently took over North American agretail firm UAP, said Wednesday it now expects to earn $2.80 to $3 in diluted earnings per share in its second quarter, up from its previous guidance of $1.92 to $2.22 (all figures US$).
Agrium CEO Mike Wilson said in a release that the company’s strong retail and wholesale results are “particularly impressive given that the North American spring application season has been hampered by excessively cold and wet weather this year.
“Continued strong global crop prices have created unprecedented demand for crop inputs and we foresee an extended demand-driven cycle,” he said.
The guidance doesn’t take into account any contributions that the UAP business may now make, though that’s expected to be “significant” in the second quarter.
As rosy as the financial outlook may be, Agrium’s release Wednesday also included an update on a potentially costly venture abroad. Construction has been stopped at the planned “EAgrium” ammonia-urea joint venture project on the Mediterranean coast of Egypt since April 21, “due to permitting and other delays created by the Egyptian government.”
A committee of the Egyptian Peoples’ Assembly plans a “comprehensive review” of the project, Agrium said, including land use issues and environmental, health and safety compliance, Agrium wrote. “We expect that the review will be favourable to the project given that EAgrium is constructing the project to the highest health, safety and environmental standards consistent with its other operations.”
That said, “we have concerns these issues may not be resolved in the near term, in which event EAgrium’s shareholders would be exposed to the loss of their total equity commitment.” Agrium’s total equity commitment to the joint venture is worth about $280 million, it said.