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Agrium Lowers Q4 Guidance, Shares Down

CF AGU IPI

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Agrium Inc. (AGU - Analyst Report) has provided its updated outlook for fourth-quarter 2013. The company expects earnings from continuing operations to be at the bottom of the earlier released guidance range of 80 cents to $1.25 per share. Agrium’s shares are down roughly 1.4% since the announcement.

The guidance excludes a number of one-time adjustments including a purchase gain of about $250 million related to the acquisition of the Viterra’s Agri-business on Oct 1, 2013. The company will also receive an insurance recovery of $70 million for a long-standing litigation case on soybean shipments related to the AWB Ltd./Landmark acquisition. Agrium will also incur a goodwill impairment of roughly $220 million in Landmark due to lower-than-expected business performance and delays in synergy realization.

Agrium revised its guidance primarily due to lower-than-expected selling prices across all wholesale nutrients in the fourth quarter and lower-than-expected urea ammonium nitrate and domestic potash sales volumes, partly due to problems related to rail shipments.

Agrium expects its retail operations to achieve record results for the fourth quarter and full-year 2013.

Agrium has completed a strategic review of its Agrium Advanced Technologies (AAT) business unit and is reviewing options, including divesture of the turf and ornamental and direct solutions businesses. AAT is not expected to contribute to earnings before interest and tax (EBIT) in the fourth quarter of 2013 primarily due to delayed sales of ESN.

Agrium currently carries a Zacks Rank #3 (Hold).

Some better-ranked companies in the fertilizer industry include China Bluechip , Intrepid Potash Inc. (IPI - Snapshot Report) and CF Industries Holdings, Inc. (CF - Analyst Report). While China Bluechip holds a Zacks Rank #1 (Strong Buy), CF Industries and Intrepid Potash retain a Zacks Rank #2 (Buy).

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