Canadian fertilizer and ag retail firm Agrium reported lower quarterly profit on Thursday, as cold, wet spring weather delayed plantings in the U.S., and forecast weaker-than-expected earnings for its current quarter.
U.S. plantings of corn, a fertilizer-intensive crop, were just 12 per cent complete as of Sunday, the slowest pace since 1984, the U.S. Department of Agriculture said on Monday. However, more favourable weather was expected.
Agrium CEO Mike Wilson said farmers have a shortened spring season for applying fertilizer, but still expects strong demand for crop inputs in the first half.
“It seems (they’re) trying to be a bit cautious given the late planting in the U.S.,” said John Chu, analyst at AltaCorp Capital. “The risk can be if farmers switch from planting corn to soybeans, which is a pretty big switch in the amount of nitrogen that’s going to be used.”
Along with selling products to farmers, Calgary-based Agrium is a major producer of nitrogen and potash fertilizers.
Agrium, which recently fended off its largest shareholder, Jana Partners, in a proxy battle over its retail division, said it expects a second-quarter profit of $4.60 to $5.40 per share. The midpoint of that range is $5, lower than the average analyst expectation for $5.29.
The company also said it would buy back up to five per cent of its stock.
First-quarter net earnings fell to $141 million, or 94 cents per share, from $155 million, or 97 cents per share a year earlier, while revenue dropped 10 per cent to $3.224 billion.
Adjusted earnings, not counting a $16 million share-based expense, were $153 million, or $1.03 per share. Analysts, on average, expected $1.07 on sales of $3.465 billion, according to Thomson Reuters I/B/E/S.
Retail sales to farmers fell 13 per cent to $2.1 billion. Wholesale sales of nitrogen, potash and phosphate fertilizer slipped to $1.1 billion from $1.2 billion. Realized prices for ammonia, nitrates and nitrogen solutions were stronger year over year, while urea prices were in line, and potash and phosphate prices declined.
Rival U.S. fertilizer producer CF Industries on Wednesday reported higher quarterly profit due to one-time items, but sales of nitrogen and phosphate fell. .
Saskatoon-based fertilizer firm PotashCorp, which, like Agrium, mines potash in Western Canada, reported higher quarterly profit last month.
Agrium also expects regulatory approval for its purchase of most of Viterra’s farm retail stores in Canada and Australia late in the second quarter or early in the third period.
— Rod Nickel is a Reuters correspondent based in Winnipeg.