- `Strong' demand seen during current fall application season
- Trims estimate for potash output, narrows earnings forecast
Agrium Inc., the largest agricultural retailer to U.S. farmers, posted better-than-expected third-quarter earnings as higher sales volumes of crop nutrients for the fall offset the effect of lower prices.
Earnings excluding one-time items were 71 cents a share, the Calgary-based company said Thursday in a statement, beating the 67-cent average of 20 estimates compiled by Bloomberg.
Profit also benefited from lower production costs for the nitrogen and potash fertilizers that Agrium manufactures. Demand for crop nutrients will improve this fall as harvest progress is significantly ahead of last year, resulting in a wider application window than the short 2014 season, the company said. Yield prospects in Western Canada and the U.S. corn belt are better than expected, it said.
“We see strong crop input demand during the fall application season, which is now in full swing,” Chief Executive Officer Chuck Magro said in the statement.
The stock climbed 1.2 percent to C$126.83 ($96.32) in Toronto.
Higher fertilizer volumes, bolstered by plants and mines that were shut for maintenance and expansions last year, will offset lower prices and support margins, Bloomberg Intelligence said Wednesday in a report.
Third-quarter net income rose to 72 cents a share from 63 cents a year earlier. Sales declined to $2.52 billion from $2.92 billion, less than than the $2.87 billion average estimate.
Agrium’s retail business performed well in the quarter even amid challenges with Western Canadian production and a decline in North American farm income, according to Peter Prattas, an analyst with Altacorp Capital Inc.
“We were happily surprised the retail segment was resilient,” Prattas said in a telephone interview from Toronto. “They’ve outperformed expectations.”
Agrium narrowed its forecast range for full-year earnings to $7.10 to $7.40, compared with an August prediction of $7 to $7.50. It also trimmed its projection for potash production this year to 1.95 million metric tons to 2.05 million, down from its forecast last quarter for 1.9 million to 2.2 million tons.