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Agrium Inc.'s (AGU - Analyst Report) second-quarter 2013 earnings (excluding one-time items other than stock-based compensation expenses) of $5.09 per share beat the Zacks Consensus Estimate of $4.95. After including one-time items, the company reported earnings of $5.02 per share compared with $5.44 in the year-ago quarter. Profit fell 13.1% year over year to $747 million as cold weather in North America caused farmers to make fewer applications in the quarter.

Revenues increased roughly 3.6% year over year to $7,016 million in the reported quarter and exceeded the Zacks Consensus Estimate of $7,000 million. Increased Retail and Advanced Technologies sales led to the higher revenues in the quarter.

Segment Highlights

Revenues from the Retail segment rose 7% year over year to $5.6 billion in the reported quarter due to a more regular seasonal crop input demand for the first half of 2013 in North America and the a very early planting season in 2012. Gross profit remained flat at $1.1 billion and earnings before interest, taxes, depreciation and amortization (EBITDA) was $619 million, up 2.3% year over year.

The Wholesale segment's sales fell 9% to $1.5 billion. The segment’s EBITDA of $517 million represented a decline of $160 million from the year-ago quarter. Results of the segment were affected by lower realized sales prices for urea, potash and phosphate as a result of global market pressures accompanied by an unplanned outage at the company’s Redwater nitrogen facility.

Revenues from the Advanced Technologies segment rose 16% to $207 million and EBITDA from the division shot up 20% year over year to $24 million due to strong Environmentally Smart Nitrogen (ESN) volumes as a result of gains in market acceptance in North America for the product and higher production at its New Madrid facility.

Financial Position

Agrium’s cash and cash equivalents were $494 million as of Jun 30, 2013, compared with $1,946 million as of Jun 30, 2012. Cash provided by operating activities was $298 million as of Jun 30, 2013, compared with $1,120 million as of Jun 30, 2012.


Agrium entered into an agreement to acquire certain agri-product assets of Viterra from Glencore (Glencore acquired Viterra in Dec 2012) including Viterra's 34% interest in a nitrogen facility located in the city of Medicine Hat. During the second quarter, CF Industries Holdings Inc. (CF - Analyst Report) acquired Viterra’s 34% interest from Glencore, and Agrium thus received $932 million which is subject to adjustment according to Agrium’s agreement with Glencore.


Looking ahead, Agrium expects strong demand for crop inputs in the second half of 2013 as farmers seek to increase crop yields. The optimism is also based on strong nutrient removal in 2013 and the affordability of crop nutrients.

Agrium is one of the prominent Canadian fertilizer companies and currently carries a Zacks Rank #5 (Strong Sell). Notably, its competitors include   Mosaic (MOS - Snapshot Report) and Potash Corp. of Saskatchewan Inc. (POT - Analyst Report).

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