(Adds details from conference call, analyst's comment, updates stock price. In U.S. dollars unless noted)
WINNIPEG, Manitoba, Feb 13 (Reuters) - Agrium Inc (AGU.TO), the top U.S. crop-supply retailer, said on Wednesday it rebounded to a profit in the fourth quarter as it sold more fertilizer at higher prices.
In a conference call with investors, Chief Executive Mike Wilson said the company also sees a strong 2008 as demand for agricultural products continues to rise. It will provide forecasts for the first half of 2008 in the next quarter.
"Grain fundamentals have continued to improve over the past few months as a result of unprecedented demand for use in food, feed, fuel and fiber, with virtually all major crop prices at record or near-record levels," Wilson said.
"Agrium is in a unique position to benefit from these strong fundamentals as our diverse asset and earnings base crosses the agricultural value chain."
Agrium, the world's third-largest nitrogen producer, earned $172 million, or $1.24 a share, in the fourth quarter, compared with a loss of $62 million, or 47 cents per share, a year earlier, when problems at a phosphate mine affected results.
Analysts surveyed by Reuters Estimates had expected, on average, earnings of 87 cents a share.
Calgary, Alberta-based Agrium also beat its own forecast of 80 cents to 95 cents a share for the fourth quarter and $2.80 to $2.95 per share for 2007.
Its 2007 profit was a record $3.25 per share.
Wilson said that the outlook for demand remains strong, especially in Brazil, while India could surpass the United States as the world's biggest importer of urea nitrogen.
Strong demand and limited capacity are expected to continue to drive potash prices higher, while North American inventories, specifically in-country inventories, remain extremely tight, he said.
The results sent Agrium's shares up 4.1 percent, or C$2.61, at C$65.74 on the Toronto Stock Exchange. They rose 4.9 percent, or $3.09, to $65.91 in New York.
In a research note this morning, Brian MacArthur, analyst at UBS, wrote: "We continue to like Agrium over the long term as the company provides good exposure to various fertilizer markets with nine nitrogen plants, two phosphate plants, one potash mine and a growing retail business."
"While margins in the retail business can be lower, we believe this segment complements the portfolio well as it tends to generate more consistent profits throughout the cycle."
Reduced income taxes boosted Agrium's results by 20 cents per share, but strong nitrogen prices helped the company beat expectations, said David Silver, analyst at J.P. Morgan, in a research note.
Revenue was $1.43 billion, up 58.6 percent from $899 million a year earlier.
Agrium said it is still waiting for U.S. regulators to approve its friendly takeover of UAP Holding Corp UAPH.O, which would boost Agrium's share of the U.S. retail fertilizer, chemical and seed market.
During the conference call, Wilson said Agrium is working closely with regulators to proved information and was "highly confident" that it would close the transaction.
The deal is worth $39 a share in cash, making the equity portion of the deal worth $2.16 billion.
$1=$1.00 Canadian Reporting by Roberta Rampton, Jonathan Spicer, Scott Anderson, and Leah Schnurr; Editing by Peter Galloway