Agrium Inc. reported a 9 percent drop in net income for the first quarter ending March 31, 2012, from the year-ago quarter. Net earnings were $155 million ($0.97 per diluted share) on sales of $3.63 billion, down from the year-ago $171 million ($1.09 per share) on sales of $2.95 billion.
First-quarter 2012 results included a pre-tax loss of $13 million ($0.06 per share) on natural gas and other hedge positions, and a pre-tax share-based payment expense of $64 million ($0.29 per share). Excluding these items, net earnings would have been $210 million ($1.32 per share) for the quarter.
“The benefits of Agrium’s strong global position across the agricultural value chain were evident once again this quarter, as our Retail business capitalized on one of the earliest starts to the North American spring season in history, achieving its highest ever sales and EBITDA for a first quarter,” said Agrium President and CEO Mike Wilson. “Agrium’s Wholesale results were the second highest on record for a first quarter, despite slow global demand for potash and phosphate this quarter.
“Crop prices remain well above historical levels, providing a strong economic incentive for growers to optimize use of all crop inputs in order to maximize their yields and profitability,” continued Wilson. “Favorable weather has enabled growers to get a very early start on spring planting and applications and we have seen strong movement of nutrients and other crop inputs, as some of Retail’s business was brought forward into the first quarter. The Wholesale operations are expected to benefit in the second quarter from rising nitrogen and falling North American natural gas prices.”
Retail gross profit was $427 million on sales of $2.45 billion, up from the year-ago $340 million on sales of $1.82 billion. EBITDA and EBIT were $101 million and $57 million, respectively, up from the year-ago $25 million and negative $15 million.
Retail crop nutrient sales were up 46 percent to $1.03 billion from the year-ago $707 million, while gross profit was up 35 percent, to $155 million from $115 million. Crop protection gross profit was $123 million on sales of $834 million, up from the year-ago $102 million on sales of $638 million. Seeds gross profit was also up, at $44 million on sales of $316 million from the year-ago $35 million on sales of $230 million.
Wholesale gross profit was down, at $359 million on sales of $1.075 billion from the year-ago $409 million on sales of $1.072 billion. EBITDA and EBIT were $362 million and $326 million, respectively, down from the year-ago $412 million and $377 million.
Nitrogen was the big money maker in the Wholesale group, with gross profit up 11 percent, to $167 million on sales of $384 million from the year-ago $151 million on sales of $334 million. The average margin per ton was up slightly, to $208/mt from $202/mt. Total nitrogen sales volumes were up 7.5 percent, to 805,000 mt from the year-ago 749,000 mt. Ammonia saw the biggest increase at 226,000 mt at an average price of $519/mt, compared to the year-ago 158,000 mt ($484/mt). Urea sales volumes were off 10 percent, to 271,000 mt ($542/mt) versus the year-ago 300,000 mt ($495/mt). Other nitrogens were up, at 231,000 mt ($359/mt) versus 208,000 mt ($343/mt).
Agrium noted that the Carseland, Alberta, urea plant was down for six weeks during the quarter so a heat exchanger could be replaced. This resulted in some 100,000 mt of lost production of urea and ESN, and represented an impact of $0.12 per share. The facility came back up March 23 and is running well.
Agrium expects to run its nitrogen units full out in the second quarter except for the Joffre, Alberta, ammonia plant, which is slated for a three-week turnaround starting the week of May 14.
The increase in nitrogen volumes came in North America,