By Rod Nickel
May 9 (Reuters) - Agrium Inc , the Canadian fertilizer company, reported lower quarterly profit on Thursday, as cold, wet spring weather delayed plantings in the United States, and forecast weaker-than-expected earnings for the current quarter.
U.S. plantings of corn, a fertilizer-intensive crop, were just 12 percent complete as May 5, the slowest pace since 1984, the U.S. Department of Agriculture said on Monday. However more favorable weather was expected.
Agrium Chief Executive Mike Wilson said farmers have a shortened spring season for applying fertilizer, but still expects strong demand for crop inputs in the first half.
“It seems (they‘re) trying to be a bit cautious given the late planting in the U.S.,” said John Chu, analyst at AltaCorp Capital. “The risk can be if farmers switch from planting corn to soybeans, which is a pretty big switch in the amount of nitrogen that’s going to be used.”
Along with selling products to farmers, Calgary, Alberta-based Agrium is a major producer of nitrogen and potash fertilizers.
Agrium, which recently fended off its largest shareholder, Jana Partners, in a proxy battle over its retail division, said it expects a second-quarter profit of $4.60 to $5.40 per share. The midpoint of that range is $5, lower than the average analyst expectation for $5.29.
The company also said it would buy back up to 5 percent of its stock.
Agrium’s shares edged higher in light New York trading before normal hours to $94.41. For the year, the stock is down nearly 6 percent in New York and over 4 percent in Toronto, as of Wednesday’s close. It touched a record high in late January.
First-quarter net earnings fell to $141 million, or 94 cents per share, from $155 million, or 97 cents per share a year earlier, while revenue dropped 10 percent to $3.224 billion.
Adjusted earnings, not counting a $16 million share-based expense, were $153 million, or $1.03 per share. Analysts, on average, expected $1.07 on sales of $3.465 billion, according to Thomson Reuters I/B/E/S.
Retail sales to farmers fell 13 percent to $2.1 billion. Wholesale sales of nitrogen, potash and phosphate fertilizer slipped to $1.1 billion from $1.2 billion. Realized prices for ammonia, nitrates and nitrogen solutions were stronger year over year, while urea prices were in line, and potash and phosphate prices declined.
Rival U.S. fertilizer producer CF Industries Holdings Inc on Wednesday reported higher quarterly profit due to one-time items, but sales of nitrogen and phosphate fell. .
Potash Corp of Saskatchewan, which, like Agrium, mines potash in Western Canada, reported higher quarterly profit last month
Agrium expects regulatory approval for its purchase of most of Viterra Inc’s farm retail stores in Canada and Australia late in the second quarter or early in the third period. Viterra is owned by Glencore Xstrata PLC.