WINNIPEG Manitoba (Reuters) - Canadian fertilizer producer Agrium Inc will cut 500 jobs and look to sell several noncore businesses as it aims to find $475 million in savings by 2017, Chief Executive Chuck Magro said on Wednesday.
Agrium will also target savings from reducing working capital at its farm retail business and trimming operating and administrative expenses.
Fellow fertilizer producers Potash Corp of Saskatchewan and Mosaic Co have already started deep cost-cutting programs as profits decline after the price of potash fell to a six-year low earlier this year. Weak grain prices have also dampened spending by U.S. farmers on fertilizer.
Among the businesses Agrium will try to sell are its micronutrients and European UAN (urea-ammonium nitrate) lines.
"These are not core to our strategy," Magro said at the company’s annual investor day in Toronto. “We have better uses for our capital.”
Agrium shares were up 0.7 percent and 0.9 percent respectively in Toronto and New York at midday. Shares of Potash Corp and Mosaic also rose.
The stock has climbed about 15 percent in Toronto since activist investor ValueAct Capital disclosed on Oct. 24 that it had bought a 5.7 percent stake in Agrium.
While the Calgary, Alberta, company cuts costs, other expenses are climbing.
Agrium said the cost of expanding its lone potash mine, at Vanscoy, Saskatchewan, had climbed to $2.3 billion from an estimate of more than $1.9 billion in August. A brutal winter and tight labor conditions in Western Canada pushed up costs.
The expansion is expected to wrap up by the end of the year. Production is expected to be 2.1 million tonnes in 2015, climbing to 2.8 million by 2017, said Ron Wilkinson, president of Agrium's wholesale division.
Agrium is in the market to buy more small U.S. farm retail companies and add them to its group, which is the largest such chain in North America, said Stephen Dyer, president of Agrium's retail operation. It is also interested in building a network of retail stores in Brazil, the world's fourth-largest fertilizer consumer, Dyer said.
The company reported higher net profit for the third quarter on Monday, beating expectations, but offered a lackluster outlook for the fourth quarter.
Reporting by Rod Nickel in Winnipeg, Manitoba, Editing by Franklin Paul and Peter Galloway