February 9, 2011 / 12:13 PM / 7 years ago

UPDATE 5-Agrium profit lifted by retail unit; shares rise

* Q4 adj EPS from continuing operations $1.38

* Q4 net earnings $1/shr vs $0.19 a yr-ago

* Q4 revenue up more than 60 pct to $2.35 bln

* Shares up more than 3 pct in New York, Toronto (Adds graphic, details; in U.S. dollars unless noted)

By Euan Rocha

TORONTO, Feb 9 (Reuters) - Agrium Inc AGU.TO reported a 90 percent rise in quarterly gross profit on Wednesday, as high grain prices fueled demand for fertilizers, seeds and other farm products, sending its shares up more than 3 percent.

Agrium, the largest North American farm products retailer and one of the region’s largest fertilizer producers, also expects strong results in 2011 as North American fertilizer inventories are tight and will likely remain so through the spring planting season.

“Agrium’s results were better than expected,” said Gleacher & Co analyst Edlain Rodriguez, adding that while results from the company’s wholesale fertilizer segment were largely in line with expectations, the results from the retail business well exceeded market expectations.

Rodriguez, who raised his price target on shares of Agrium by $15 to $110, contends that the company’s valuation is more attractive than that of its North American peers.

Shares of Agrium, and other in the farm sector, were also boosted by bullish data from the U.S. Agriculture Department on Wednesday. The agency slashed its forecast of U.S. corn stocks by 9 percent to 675 million bushels -- the smallest carry-over since 1995-96.

The latest USDA data pushed corn, wheat and soybean futures higher, underscoring the heightened level of concern around food security issues. [ID:nLDE7181WN]

Surging food grain demand from emerging economies, coupled with the increased use of corn to produce ethanol, has driven the price of corn and other grains to near record highs. This in turn has led to a sharp increase in fertilizer demand both within North America and overseas.

"Global crop prices and margins are expected to remain well above historic levels in 2011 as a result of very low global grain stocks, providing continued support for the entire crop input market," Agrium Chief Executive Mike Wilson said in a statement. <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ Fertilizer/corn price graphic: r.reuters.com/wyt87r Fertilizer sector comparison: link.reuters.com/dav87r For Take A Look on USDA crop data: [ID:nUSACROPS] ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>

STRONG PROFITS

Calgary, Alberta-based Agrium’s fourth-quarter net income rose to $158 million, or $1 a share, from $30 million, or 19 cents a share, a year earlier.

Excluding discontinued operations, stock-based compensation expenses and other one-time items, the company reported earnings of $1.38 a share.

Quarterly revenue rose more than 60 percent to $2.35 billion, driven by higher sales in both its retail and wholesale businesses.

Analysts on average had forecast earnings of $1.14, on revenue of $1.88 billion, according to Thomson Reuters I/B/E/S.

Agrium’s results mirror those of its Canadian rival Potash Corp POT.TO, which two weeks more than doubled its quarterly profit and increased its dividend. [ID:nN27232194]

While Agrium did not provide detailed earnings forecasts for the first quarter, the company did indicate that increases in crop nutrient prices and tight North American inventory levels for nitrogen, phosphate and potash are likely to boost profits in 2011.

However, the company did caution that strong phosphate and potash application over the fall season, could result in farmers reducing their use of those nutrients in the spring.

Shares of Agrium were up $2.80 at $96.23 on Wednesday afternoon in New York, while shares in Toronto were up C$2.80 at C$95.70.

$1=$0.99 Canadian Reporting by Euan Rocha; editing by Rob Wilson

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