Agrium profit tops forecasts, driven by retail
By Euan Rocha
TORONTO (Reuters) - Agrium Inc (AGU.TO: Quote), a Canadian fertilizer producer and retailer, reported stronger-than-expected quarterly results on Wednesday, driven by a robust performance by its farm-supply stores and its nitrogen-based crop-nutrient business.
The company, North America's biggest farm-products retailer, said early spring weather in Canada and the United States boosted sales of fertilizers, crop-protection products and seeds, resulting in a 35 percent increase at its retail stores.
It forecast a range for earnings for the first half of the year whose midpoint exceeds the current average forecast of analysts who cover the company.
The outlook was in contrast to a lackluster forecast issued by Potash Corp (POT.TO: Quote), a larger fertilizer producer whose revenue depends more on demand for potash and phosphate-based nutrients.
"This goes to show that Agrium's retail and nitrogen segments remain more stable during uncertain market conditions," wrote Altacorp Capital analyst John Chu in a note to clients.
Even so, the shares dropped more than 2 percent as grain prices slipped ahead of a U.S. government crop report on Thursday, while operational issues in Argentina and Eygpt also weighed on the stock price. The stock ha s risen more than 20 percent this year despite a pullback in the sector this week.
While nitrogen-based fertilizers did well on the retail level, lower sales volumes for potash and phosphate-based nutrients held back Agrium's wholesale business. In addition, an unplanned outage at its Carseland nitrogen plant in Alberta thinned production.
That said, the wholesale segment benefited from higher realized prices and volumes for nitrogen-based ammonia and urea. Continued...