Agrium 3Q has fifty-fold increase in earnings

Agrium Inc. net income rose fifty-fold in the third quarter ending Sept. 30, 2007, to $51 million ($.38 per diluted share) from the year-ago $1 million ($.01 per share). Earnings would have been even higher except for some $20 million in unrealized gas hedging losses. Total sales were $1.04 billion, up from the year-ago $869 million.

Nine-month net earnings were $269 million ($2.01 per share) on total sales of $3.99 billion, versus the year-ago $95 million ($.72 per share) and $3.43 billion.

“The fundamentals of our business remain excellent, with continued strong crop prices and a tight supply and demand balance for all three nutrients benefiting our Retail, Wholesale, and Advanced Technologies business,” said Mike Wilson, Agrium president and CEO. “All our Wholesale operations are running well, we expect a solid fall application season in our core markets, and the outlook for the remainder of 2007 and 2008 is excellent.”

Agrium noted positive factors for all three major nutrients. Nitrogen has seen strong international demand over the past few months, with robust demand from India expected to keep supplies tight.

Wilson told analysts he is expecting corn acreage to fall back to 87-89 million acres; he believes that total acreage seeded in all crops will be up 2-3 million acres, as more acres come out of the Conservation Reserve Program. He suggested that soybeans might come in next year at just under 70 million acres. He also expects additional wheat acreage. He noted that acreage mix is hard to predict right now, but he does not expect much change in nitrogen use.

Wilson said potash supply continues to struggle to meet growing demand. He said the current negotiations with the Chinese and associated demand remains an important factor, creating some uncertainty for potash. He noted concerns over the Silvinit sinkhole, a factor that adds to potash bullishness.

Phosphates have been positive, with strong demand from Brazil and Europe and tight supplies in the U.S. September inventories of DAP and MAP combined are 30 percent lower than the five-year average. One uncertainty going forward is the amount China will have for export.

Agrium gave second half guidance of $1.18-$1.33 earnings per share, or $.80-$.95 for the fourth quarter. Annual 2007 earnings are expected to be a record $2.80-$2.95 despite the gas hedging losses and a surge in the Canadian dollar.