May 4, 2011 / 2:33 PM / 7 years ago

UPDATE 5-Agrium shares fall 5 pct on weaker forecast

* High crop prices boost fertilizer demand

* Wet U.S. farms weigh down outlook

* Shares fall on weaker forecast (Adds CEO comments from conference call, updates share activity. In U.S. dollars unless noted)

By Rod Nickel

WINNIPEG, Manitoba, May 4 (Reuters) - Farm-products retailer and potash miner Agrium Inc AGU.TO offered a weaker than expected financial forecast on Wednesday, and its shares fell 5 percent despite strong first-quarter profit.

The Calgary, Alberta-based company, which produces potash, nitrogen and phosphate, returned to profit on strong fertilizer demand, beating expectations.

But Agrium’s shares fell after it forecast earnings of $4.40 to $4.90 per share for the first half of 2011. The average consensus estimate was at the upper end of that range.

Chief Executive Mike Wilson said that guidance is cautious, but reflects wet corn planting conditions in the United States. Corn is one of the most fertilizer-intensive crops, but too much moisture has stalled planting.

“You fly over the fields and a lot of the areas, they’re still quite wet,” Wilson said in a conference call with analysts. “We could be pushed back another week, maybe in Canada a little bit more.”

Delayed planting could affect second-quarter fertilizer volumes and lower seed sales, but could also lift corn prices, Wilson said.

Agrium shares fell 5.4 percent to $83.07 in New York and by 4.5 percent to C$79.76 in Toronto. Shares of rival fertilizer makers Potash Corp POT.TO, Mosaic (MOS.N) and CF Industries (CF.N) were also lower, although they did not fall as far.

The general weakness in fertilizer stocks likely reflects Wednesday’s lower commodity prices, especially copper, often seen as a bellwether for the economy, said analyst Raymond Goldie of Salman Partners Inc, who described the Agrium selloff as overdone.

“They actually came through in the first quarter better than expected,” he said.

Agrium, the largest North American farm products retailer, reported consolidated net income of $171 million, or $1.09 per share, for the first quarter, compared with a net loss of $1 million, or 1 cent a share, a year earlier.

Excluding a pretax share-based payment expense and a pretax gain, its first-quarter profit was $1.03 a share.

Sales rose 60 percent to $2.95 billion.

High prices for crops such as corn spurred demand for fertilizer and supported prices of crop nutrients, said analyst Edlain Rodriguez of Gleacher & Co.

“It’s a continuation of what we’ve seen the past few quarters where the ag market is extremely strong,” he said.

Analysts on average had forecast earnings of 92 cents a share on revenue of $2.35 billion, according to Thomson Reuters I/B/E/S. It was not clear whether the estimates factored in the pretax expense and gain.

Agrium reported a 91 percent rise in crop nutrient sales in the quarter.

Last week, rival Potash Corp reported a higher quarterly profit that also topped expectations. [ID: nN2820337]

In December, Agrium agreed to sell the commodity management business it acquired as part of its A$1.24 billion purchase of Australia’s AWB Ltd to U.S. agribusiness and trading giant Cargill Inc [CARG.UL].

Cargill has received clearance from Australia’s Foreign Investment Review Board for the acquisition, the companies said on Wednesday.

Agrium kept the Landmark farm dealer operation, which includes 200 company-owned retail locations in Australia.

$1=$0.96 Canadian Additional reporting by Arnika Thakur in Bangalore, editing by Janet Guttsman

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