Agrium posts 4Q loss due to write-down

Agrium Inc. reported a net loss of $62 million ($.47 per diluted share) on sales of $944 million during the fourth quarter ending Dec. 31, 2006. Agrium was in the loss column due to a $100 million charge taken on its phosphate assets in late 2006 (GM Jan. 1, p. 1). Excluding the write-down, earnings would have been $33 million ($.25 per share). Agrium had year-ago net earnings of $54 million ($.40 per share) on sales of $817 million.

For the year ending in December, Agrium reported net earnings of $33 million ($.25 per share) on sales of $4.37 billion, versus 2005’s $283 million ($2.12 per share) and sales of $3.49 billion. Agrium said the reduction in year-over-year results was due to lower nitrogen and potash sales prices, plus lower production and sales from the Vanscoy potash, Redwater phosphate, and Kenai nitrogen facilities.

During the fourth quarter, Agrium noted that from its Wholesale operations, it sold a non-core oil and gas property in the Canadian Artic and recorded a $13 million gain on the sale.

Agrium has adjusted its reporting for its Wholesale business, now reporting North and South America as one business. It is also now referring to its Specialty Products segment as Advanced Technologies.

In the Wholesale business, Agrium said international sales volumes and gross profit were off significantly due entirely to lower sales from Kenai. It noted that Profertil increased fourth-quarter sales volumes by 10 percent, though it noted that urea sales into the Argentina market are subject to price controls of $300/mt to growers, with this possibly applying for all of 2007. Agrium said it was able to delay a turnaround of Profertil until after the Argentine spring season was over in the fourth quarter. A turnaround was started Jan. 20, and the facility is expected to restart Feb. 5.

Saying it is the best agricultural outlook in many years, Agrium President and CEO Mike Wilson said the only major risk he could foresee for this year is weather. The company noted that urea and UAN imports into the U.S. for the current fertilizer year are down 35-40 percent, and ammonia is down 10 percent compared to year-ago figures. Agrium saw increased combined North and South American seed sales during the fourth quarter (up 26 percent) and for the year (up 18 percent) as good bellwethers for the coming season.

Agrium expects to make a decision on whether to proceed with a new nitrogen plant in Egypt early in the second quarter. The company will likely decide on another expansion at its Vanscoy potash mine late in the year, while any decision on a new greenfield project for Manitoba would be further down the road. The company is weighing whether to put its next ESN expansion at its Carseland facility or actually at a location within the market area. ESN sales have now expanded beyond the Western U.S. to Western Canada and the Midwest.