Tuesday, May 3, 2011

Agrium Inc. (NYSE: AGU): Q1 Earnings Preview 2011

Agrium Inc. (NYSE: AGU), North America’s third- largest fertilizer maker by market value, is scheduled to release its first-quarter earnings before the opening bell on Wednesday, May 4, 2011. Analysts, on average, expect the company to report earnings of 91 cents per share on revenue of $2.33 billion. In the year ago quarter, the company reported a loss of 4 per share on revenue of $1.80 billion.

Agrium Inc., together with its subsidiaries, produces and markets agricultural nutrients, industrial products, and specialty products worldwide, as well as involves in the retail supply of agricultural products and services in North and South Americas.

In the preceding fourth-quarter, the Calgary, Canada-based company's net income was $158 million, or $1.00 per share, compared with $30 million, or 19 cents per share, in the year-earlier quarter. On an adjusted basis, the company earned $1.38 per share for the fourth quarter of 2010. Revenue rose to $2.35 billion from $1.44 billion in the prior year quarter. Analysts, on average, expected the company to report earnings of $1.14 per share on revenue of $1.87 billion.

Agrium expects earnings to be in the range of $1.00 to $1.30 per share, excluding estimated hedging gains or losses and stock-based compensation expense in the fourth quarter.

Fertilizer demand continues to strengthen and market segment sentiment has improved due to the rally in grain prices, lean producer inventories and the need to refill a de-stock pipeline.The broad-based rally in agricultural commodity prices translates into profitable farm economics and record or near-record farm income around the world. Rallies in a broad array of agricultural commodity prices during the last few months are fueling an increasingly positive outlook for phosphate and potash demand. Phosphate prices have increased sharply. Growth in China, India, Brazil and other emerging areas around the globe are creating demand. An improving agricultural picture, visibility with pricing, and the fear of inflation could all boost fertilizer stocks higher.

Agrium anticipates the strength in crop input demand and prices to continue into the spring of 2011, benefiting all three of our strategic business units. The company also expects global crop prices and margins to remain well above historic levels in 2011 as a result of very low global grain stock. 

Among other developments, the company recently announced the purchase of Italian fertilizer distribution company CerealToscana S.A. and its Romanian subsidiary, Agroport, for $27 million plus working capital. "This acquisition is complementary to Agrium Europe's existing fertilizer distribution business ..., significantly expanding our presence in Italy and providing an opportunity for entry into the growing Romanian agricultural market," said Agrium president and CEO Mike Wilson. "This also allows Agrium to further leverage the value of our marketing off-take agreement of urea from our Egyptian nitrogen facility, which is expected to commence in mid-2012."

Full Disclosure: None.
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