ALBERTA

Agrium first-quarter earnings down as spring arrives late in North America

05/09/2013 08:50 EDT | Updated 07/09/2013 05:12 EDT
CALGARY - Agrium Inc. says spring's late arrival to North America could be a major challenge, as farmers who buy fertilizers, seeds and other agricultural products from the company have less time to get their crops in the ground.

"The weather has clearly not been conducive to farmers preparing and feeding their fields across North America so far this spring," said chief operating officer Chuck Magro on a conference call with analysts Thursday.

As of May 5, only 12 per cent of the U.S. corn crop was seeded — the slowest rate since 1984, he said.

"However, there is still time to get the crop and the associated crop inputs in the ground. Crop economics remain excellent and growers will strive to optimize their use of top genetics, crop protection products and crop nutrients," Magro said.

"A late wet spring has a tendency to reduce root development of the crop and increase the risk of reduced yields later in the season. But the extent to which this may be a significant issue still depends on how the summer develops."

On the other hand, sales of crop protection products could benefit, since persistent wet conditions can lead to disease and pests.

A late planting also means a late harvest, said Richard Gearheard, Agrium's president of retail.

"The later the harvest, the smaller your window is in the fall. The smaller the window, you have a greater chance that you could get shut out in the fall," he said. "That doesn't mean that would happen."

North America isn't the only region where weather has been a challenge. In Australia, where Agrium owns retail outlets, it has been extremely dry in the south and southeast.

Earlier Thursday, Agrium reported a profit of US$141 million, or 94 cents per diluted share, in the quarter, down from US$155 million, or 97 cents per share, in the same year-earlier period.

Revenue dropped 10 per cent to US$3.22 billion from $3.57 billion.

Excluding a $16-million share-based payments expense, Agrium's earnings would have been $153 million, or $1.03 per share.

That missed the average analyst estimate of $1.13 per share, according to Thomson Reuters.

Agrium said retail sales fell 13 per cent to US$2.1 billion.

Wholesale sales declined $100 million to $1.1 billion as a result of weaker international phosphate prices coupled with lower product purchased for resale, sales prices and volumes.

Advanced Technologies sales were relatively steady at $133 million compared with $135 million in the same period last year.

Agrium also said it plans to buy back up to five per cent of its stock. Last fall, it announced a $900-million share buyback.

"This is another example of Agrium's continued commitment to providing strong total shareholder returns as well as our confidence in our outlook for Agrium's business," said CEO Mike Wilson.

Last month, Agrium fended off a boardroom challenge from its largest shareholder, New York activist hedge fund Jana Partners LLC.

Jana had aimed to get five of its directors elected to Agrium's board as a means to pressure the company into splitting up its retail and wholesale businesses, among other things.

The bitter proxy fight ended with Jana's slate losing the vote by a wide margin.

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