Agrium’s Magro Says Pace of Farm-Retail Deals May Pick Up

Agrium Inc. (AGU), the largest seller of farm products, may step up the pace of U.S. acquisitions as it targets a 32 percent increase in retail earnings in two years.

Buying more independent U.S. farm-retail outlets complements Agrium’s plan to boost profit from its retail unit to $1.3 billion, Chief Executive Officer Chuck Magro said.

“We don’t have a capital constraint,” Magro said by phone on May 7, referring to what he called potential “tuck-in” acquisitions. “We certainly could accelerate with the right opportunities.”

Magro, who succeeded Mike Wilson as CEO in January, is affirming the Calgary-based company’s commitment to retail a year after it defeated activist shareholder Jana Partners LLC’s attempt to separate the business from Agrium’s fertilizer unit.

Lower prices for Agrium’s potash, nitrogen and phosphorus crop nutrients, and the unplanned shutdown of a fertilizer plant, have depressed earnings so far in 2014. The company said May 7 that first-quarter net profit plunged to $2 million from $141 million a year earlier.

Retail “is one of our highest priorities when we look at how we allocate our capital,” Magro said. There’s plenty of room to expand in the U.S., the CEO said. “It’s a matter of finding the right deals.”

In the first quarter, Agrium acquired five retail outlets in Louisiana, South Dakota, Iowa and Maryland that it expects will generate sales of about $40 million a year.

The company’s retail earnings before interest, taxes, depreciation and amortization were $986 million last year. As well as further acquisitions, Agrium plans to achieve $1.3 billion of retail Ebitda in 2015 by expanding its existing business and via the earnings from assets it acquired from Viterra Inc., according to a March investor presentation.

To contact the reporter on this story: Christopher Donville in Vancouver at cjdonville@bloomberg.net

To contact the editors responsible for this story: Simon Casey at scasey4@bloomberg.net Jasmina Kelemen

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