December 3, 2008 / 2:44 PM / 9 years ago

UPDATE 2-Agrium says ahead of schedule on UAP cost savings

* Agrium says ahead of schedule on UAP cost savings

* It has forecast $115 mln in savings by 2010

* Shares drop 2.8 percent (Adds details. In U.S. dollars)

TORONTO, Dec 3 (Reuters) - Agrium Inc (AGU.TO) will be ahead of schedule in achieving cost savings from its acquisition of U.S. agricultural supplies retailer UAP Holding, but is not yet ready to formally change its forecasts, Agrium’s chief executive said on Wednesday.

Agrium, which closed the $2.65 billion purchase of UAP earlier this year, had said it would achieve $115 million in annual savings from the UAP purchase by 2010.

Mike Wilson, Agrium’s president and CEO, told an industry conference in New York that the company should hit that target ahead of time. Wilson did not provide any more details on the target or the timing.

“We will deliver that and we will deliver that ahead of schedule,” Wilson said.

Agrium, the world’s third-largest nitrogen producer and the top U.S. retailer of crop supplies, announced the offer one year ago. Its takeover of UAP creates North America’s largest agricultural retailer with a market share of almost 15 percent.

Fertilizer prices surged in the first half of this year as demand boomed on tight inventories and record grain prices. But the credit crisis and sputtering world economies have led to big drops in prices for crop nutrients.

Share prices of the Canadian fertilizer producers have been pulled down in the meltdown. Agrium shares, which have lost about half of their value so far this year, were down 2.8 percent at C$31.74 on the Toronto Stock Exchange on Wednesday morning. ($1=$1.26 Canadian) (Reporting by Scott Anderson; editing by Peter Galloway)

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