) profit tumbled in first-quarter 2014 as unusually cold weather
in North America hit its businesses in the quarter. Reduced
railway availability and lower prices for nutrients in the
wholesale business also weighed on the bottom line.
The Canada-based fertilizer maker posted profit from continuing
operations of $12 million or 8 cents per share in the reported
quarter, a roughly 92% fall from $146 million or 98 cents per
share logged a year ago.
Agrium recorded a gain of $32 million (or 16 cents per share) on
natural gas hedge positions in the quarter. Barring that impact
(and treating stock-based compensation as a normal expense), loss
from continuing operations came in at 8 cents per share. Analysts
polled by Zacks were expecting earnings of 4 cents per share on
Revenues edged down 2% year over year to $3,079 million in the
reported quarter. The decline was due to a double-digit drop in
wholesale sales as a result of lower realized prices. Sales,
however, squeaked past the Zacks Consensus Estimate of $3,072
Revenues from the Retail segment rose 4% year over year to $2.2
billion in the reported quarter. Gross profit moved up 3% year
over year to $387 million. The improvement came on the heels of
contributions from the acquisition of Viterra Inc.'s
agri-products assets and better results in Australia. These
factors also led to a roughly 12% rise in crop nutrient sales in
Retail segment's EBITDA slid 32% year over year to $17 million,
hurt by late start of the spring season due to bad weather and
costs related to Viterra assets buyout. Inclement weather in
North America hurt crop protection sales which fell 7% in the
The Wholesale segment's sales dropped 11% to roughly $1.1
billion. Gross profit slid 50% year over year to $171 million
while EBITDA tumbled roughly 40% to $237 million. The results
were impacted by lower sales prices across all major crop
Within wholesale, Nitrogen sales volume rose 6% year over year to
876,000 tons in the quarter. Domestic potash sales volume jumped
47% to 292,000 tons while overseas volumes fell 24% to 136,000
tons. Phosphate sales volumes surged 33% to 308,000 tons in the
Agrium ended the quarter with cash and cash equivalent of $592
million, up 1% year over year. Long-term debt increased 47% year
over year to $3,058 million. Cash flows from operations jumped
more than two-fold year over year to a record $788 million in the
Agrium, which is among the prominent fertilizer companies along
), sees adjusted earnings from continuing operations of $3.85 to
$4.35 per share for the second quarter. Earnings for the quarter
are expected to be affected by outage at the Carseland nitrogen
facilitiy (an estimated 35 cents per share impact). The forecast
falls below the current Zacks Consensus Estimate of $4.88.
Agrium noted that prices for major crops have strengthened from
levels at the start of 2014, supported by strong demand and
increased uncertainty over supply. Improved crop prices have
triggered a rebound in farmer sentiment this spring season,
supporting demand for crop nutrients. North American crop area is
expected to be near record highs this year, which is expected to
support crop input and seed demand.
However, harsh winter weather have challenged rail and port
transportation logistics so far this year and the constrained
logistic capacity is expected to contribute to tight supply and
demand balances within regional markets this spring season.
Agrium currently carries a Zacks Rank #3 (Hold).
A better-ranked stock in the fertilizer space is
CVR Partners, LP
), holding a Zacks Rank #1 (Strong Buy).
AGRIUM INC (AGU): Free Stock Analysis Report
MOSAIC CO/THE (MOS): Free Stock Analysis
POTASH SASK (POT): Free Stock Analysis Report
CVR PARTNERS LP (UAN): Free Stock Analysis
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