In the wake of PotashCorp’s 80 per cent drop in third-quarter profits, fellow fertilizer firm Agrium warns its shareholders to expect a 90-95 per cent drop in its own Q3 earnings.
Agrium said its expectations are in line with Q3 results “previously reported from industry peers” and are “due to significantly lower prices and margins for all three crop nutrients, and particularly for phosphate and potash.”
The Calgary company plans to release its Q3 results Nov. 4.
Agrium, which owns a major presence in the ag retail market through its UAP subsidiary, also noted its Q3 retail results have been “negatively impacted by a slower than expected recovery in retail crop nutrient margins” and a 40 per cent drop in fungicide sales and applications this summer.
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Agrium’s warning follows PotashCorp’s release Thursday of its own Q3 ledger, in which the Saskatoon fertilizer firm posted net income of $248.8 million on $1.099 billion in sales (PotashCorp figures in US$) for the quarter ending Sept. 30. That’s down 79.9 per cent from $1.27 billion profit on $3.06 billion in sales in the year-earlier period.
“The quarter-over-quarter decline reflects the continuing caution among fertilizer buyers around the world, which has negatively affected sales volumes and prices for all three nutrients,” PotashCorp said.
“Cannot continue”
However, PotashCorp, which bills itself as the world’s largest fertilizer business by capacity, continues to predict customers will soon have no choice but to get over their uncertainty about fertilizer prices.
“This quarter was a reminder of the contrast between long-term fundamentals and short-term uncertainties,” PotashCorp CEO Bill Doyle. “Even though the science of food production and fundamentals of global development dictate that more fertilizer, especially potash, is needed around the world, the impact of the global financial crisis remained a difficult hurdle in the third quarter.
“The uncertainty among fertilizer buyers has lasted far longer than we anticipated, but cannot continue indefinitely,” he said. “Our focus is on preparing for the demand rebound that we believe will inevitably follow.”
Agrium concurred Friday, saying in its release that it’s “well positioned for the anticipated strong recovery in crop input demand in 2010.
“Our U.S. grower customers have indicated their intention to return to normal crop nutrient application this fertilizer year, particularly now that corn prices have increased again to well above historic levels,” the company said.
“If the wet weather in the U.S. continues and shortens the fall application season it is expected to push fall nutrient demand into the spring of 2010.”
