Agrium Inc.’s board of directors announced today its intention to increase Agrium’s dividend by $1.00 U.S. per common share to a total dividend of $3.00 U.S. per common share on an annualized basis. Agrium also provided an outlook for results in the third quarter of 2013.
The intention to increase the dividend to $3.00 U.S. per common share comes as part of Agrium’s annual strategic review process and recognizes the strength in the long-term agriculture fundamentals and the benefits of our integrated model. Based on the closing price of Agrium’s shares on the NYSE on Friday, Sept. 20, 2013, this represents a dividend yield of 3.3 percent. The increased dividend is expected to be paid in quarterly installments of $0.75 U.S. and the next $0.75 U.S. per common share dividend will be paid Oct. 17, 2013 to shareholders of record on September 30, 2013.
Soft nutrient prices, combined with lower sales volumes, are expected to negatively affect third quarter Wholesale results across all three nutrients. Wholesale EBIT in the third quarter of 2013 is expected to be approximately $200-million lower than the same period last year. However, Agrium’s Retail EBIT this quarter is expected to surpass the third quarter of 2012 and is anticipated to be in-line with the strong results achieved in the third quarter of 2011.
Customer demand has been delayed across all three nutrients this quarter. Wholesale nitrogen and phosphate sales volumes are expected to be down 20 and 30 percent respectively from the third quarter of 2012 and potash volumes are anticipated to be about 30 percent lower than normal for a third quarter.
Agrium said plant outages at its nitrogen facilities impacted volumes by approximately 100,000 mt this quarter, which also impacted costs. Benchmark nutrient prices in the third quarter of 2013 are 20-30 percent below the same period last year. Retail nutrient inventories were low at the end of the spring season and Agrium said Retail is in a good cost position from an inventory perspective for its nutrient products overall.
“The dividend increase demonstrates our confidence in the ability of the business to generate significant cash flow and is an indication of the strength of our position across the crop-input value chain. Agrium is committed to returning capital to shareholders while continuing to deliver on value-added growth,” said Mike Wilson, Agrium president and CEO. “Despite short-term headwinds for our wholesale business unit this quarter, the long term fundamentals of our business remain strong and we expect significant crop input demand as we move into the fall season."