Agrium Profit Hit By Cold North American Spring
Canadian fertilizer company Agrium reported a fall in quarterly profit due to an unusually cold spring in North America, but said it expected strong demand for crop inputs for the rest of the year.
Unseasonably cool weather in the U.S. Midwest this spring compressed the usual time period for farmers to apply fertilizer to their fields.
"We expect solid demand for crop inputs in the second half of 2013 given positive grower sentiment, strong nutrient removal this year and the affordability of crop nutrients," chief executive Mike Wilson said in a statement.
Net earnings for the second quarter fell 13% to $747 million, or $5.02 per share, from $5.44 per share a year ago, in line with the range given in a previous company forecast.
Agrium, which is also North America's biggest farm retail supplier, said its adjusted earnings per share were $736 million or $4.94 per share, matching the average expectation by analysts according to Thomson Reuters I/B/E/S.
Revenue rose 4% to $7.02 billion, slightly ahead of analysts' expectations for $6.952 billion.
Agrium's retail sales to farmers, which include fertilizer, seed and chemicals, rose by 7% to $5.6 billion. Wholesale sales of nitrogen, potash and phosphate fertilizer fell 9% to $1.5 billion.
Wholesale sales of potash account for about 4% of Agrium's total sales revenue and 8% of gross profit.
Every price change of $10 per ton of potash raises or lowers Agrium's net earnings by $9 million, according to the company's 2012 annual report.
Rival U.S. nitrogen producer CF Industries on Tuesday reported a lower quarterly profit. Last month, Potash Corporation of Saskatchewan, which, like Agrium, mines potash in western Canada, reported a lower than expected quarterly profit.
In June, Agrium suspended two projects to increase nitrogen production, partly because numerous competitors are pursuing similar plans.
Agrium's U.S.-listed shares ended the session up 1.7% at $83.05 before the release of its results. The stock is down 9% in New York since the breakup last week of the Belarusian Potash Company (BPC), which led to predictions of lower potash prices.
