Agrium reports $441 M net income in 2007; Redwater I to restart in late March

Agrium Inc. reported record net income for the year and quarter ending Dec. 31, 2007. Income for the year was $441 million ($3.25 per diluted share) on sales of $5.5 billion, versus 2006’s $33 million ($.25 per share) and $4.4 billion. Fourth-quarter net income was $172 million ($1.24 per share) on sales of $1.5 billion, versus the year-ago loss of $62 million ($-.47 per share) and sales of $944 million.

“Our performance this quarter was a result of our three business units all delivering record fourth quarter results, due to a combination of excellent business fundamentals and strong operating performance,” said Mike Wilson, Agrium president and CEO. “Furthermore, the outlook for 2008 is outstanding. Prices for virtually all major row crops are at record high levels, providing growers with a strong incentive to optimize use of crop inputs. Strong demand for crop inputs, combined with limited capacity additions for all three nutrients, is expected to result in the continuation of tight supply and demand conditions for global nutrient markets.”

For the year, Agrium’s Wholesale business reported an EBITDA of $786 million, more than double the year-ago level. Wholesale gross profit and EBITDA were all-time highs for any quarter, even though the second quarter is normally the strongest of the year.

Agrium’s Retail section posted annual EBITDA of $210 million, up from the year-ago $125 million. Agrium’s goal for the year had been $200 million.

The Advanced Technology section reported 2007 EBITDA of $29 million, up from 2006’s $7 million. The company said ESN sales volumes in 2007 were 120,000 mt. Wilson told analysts that the ESN market has the potential to grow to 1-3 million mt/y.

While touting the year 2007, Wilson told analysts that the best is yet to come. He cited tight supply/demand scenarios for all three major nutrients. While inventories at the retail level are higher than a year ago, the company anticipates a good spring, what with high grain prices across the board. As for fertilizer prices, the company expects no price corrections before spring planting, but maybe afterwards.

As for the average selling prices for potash, the company expects those for the first quarter to average in the low $300s/st for the Cornbelt warehouses, with them being above $400/st for the second quarter and above $500/st for newer sales.

When pressed by analysts, Agrium’s Retail President Richard Gearheard said he expects corn acreage to come in around 90 million acres in 2008. He said any downturn may come from the Southeast. He added Cornbelt acres may actually be up.

With a huge run-up in wheat prices, Agrium expects fallow land and pasture to be converted to more wheat production, noting Western Canada in particular. The company is bringing back more capacity in that region.

Agrium is restarting its Redwater 1 ammonia plant by the end of March. The plant, located in Redwater, Alberta, has been idled for some time and is only expected to come up to meet seasonal demand. Redwater I has the capacity to produce 280,000 mt/y. Redwater II operates at 680,000 mt/y.

In other news, on Feb. 11 the company re-filed its notification with the Federal Trade Commission in order to allow the FTC to continue to review the proposed acquisition of UAP Holding Corp. by Agrium under the Hart-Scott-Rodino Antitrust Improvements Act. The current re-filing will provide the FTC with additional time to review the information. The new waiting period under the HSR Act will expire Feb. 26, 2008.