Fertilizer maker Agrium Inc. (AGU - Free Report) has inked a deal with Koch Agronomic Services, LLC, an affiliate of Koch Fertilizer, LLC, to divest its turf and ornamental business. The deal is valued at around $85 million including working capital.
The turf and ornamental business, which is a part of Agrium’s former Agrium Advanced Technologies (AAT) group, offers controlled release fertilizers for horticulture, professional turf grass and consumer lawn and garden markets. As per Agrium, the divestment is part of a strategic review of the business completed last year with regards to the discontinued operations of the AAT unit. The transaction is expected to close in the second quarter of 2014 subject to customary closing conditions.
Agrium will remain focussed on optimising its portfolio and product lines to generate additional value for our shareholders.
Agrium released its first-quarter 2014 results a few days ago. The company’s profit tumbled in the quarter as unusually cold weather in North America hit its businesses. Reduced railway availability and lower prices for nutrients in the wholesale business also weighed on the bottom line.
Agrium posted profit from continuing operations of $12 million or 8 cents per share in the reported quarter, a roughly 92% fall from $146 million or 98 cents per share logged a year ago.
Agrium registered a gain of $32 million (or 16 cents per share) on natural gas hedge positions in the quarter. Excluding that impact (and treating stock-based compensation as a normal expense), loss from continuing operations came in at 8 cents per share. Analysts polled by Zacks were expecting earnings of 4 cents per share on an average.
Revenues slipped 2% year over year to $3,079 million in the reported quarter. The decline was due to a double-digit drop in wholesale sales as a result of lower realized prices. Sales, however, edged past the Zacks Consensus Estimate of $3,072 million.
Agrium, which is among the prominent fertilizer companies along with Mosaic (MOS - Free Report) and Potash Corp. (POT - Free Report) , sees adjusted earnings from continuing operations of $3.85 to $4.35 per share for the second quarter.
Agrium currently carries a Zacks Rank #3 (Hold).
A better-ranked stock in the fertilizer space is CVR Partners, LP (UAN - Free Report) , holding a Zacks Rank #1 (Strong Buy).