Agrium posts best-ever quarter
Agrium Inc. posted its highest-ever quarterly earnings on Wednesday, one day after the Egyptian government cancelled plans for the company's controversial new fertilizer plant.
The Calgary-based phosphate and potash heavyweight earned $636 million US, or $4 a share, for the April to June period this year. Those results represented a huge jump compared to the $229 million, or $1.70 a share, Agrium made for the second quarter of 2007.
Strong global prices for fertilizer and additional profits from a recent acquisition were big factors underlying Agrium's stellar financial performance in the quarter.
Sales in the April to June period were $3.9 billion, nearly double the $2 billion in revenue Agrium posted this time last year.
The company noted that the prices for all of its products had increased over the past 12 months.
For instance, Agrium's phosphate products were selling at prices 80 per cent higher than in 2007.
The potash market was even stronger as selling prices more than doubled. Thus, the profit margin in Agrium's potash business reached $184 million in the quarter, a jump of $133 million compared to he same time last year.
While downside risks exist in all of these markets, demand is likely to stay strong throughout the coming months, said Agrium's president and chief executive officer Mike Wilson.
"We anticipate continued strong demand for our products. Specifically, the outlook for the second half of the year remains solid," he noted.
As well, the strong quarterly results benefited from the profit posted by recently-acquired UAP Holding Corp, a company that distributes crop products throughout North America. UAP added 70 cents to Agrium's second quarter results.
Three month chart for AgriumAll of these good results come just after the Egyptian government turned down an Agrium proposal to build a $1.2-billion fertilizer manufacturing facility in that country. The proposal drew loud protests from local residents concerned about the potential environmental impact on the region.
Agrium said it is holding discussions with the government in Cairo in an effort to get compensation for the money already invested in the plant.
So far, the talks have not resulted in an agreement, Agrium said. The company estimated its total exposure at $280 million, plus gains in financial hedges on natural gas prices worth $45 million.
Shares in Agrium closed the day at $87.16, an increase of $4.38 or more than five per cent.
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