Agrium Q3 Profit Declines 34%, But Tops View; Boosts Dividend

(RTTNews) - Canadian fertilizer and agricultural products distributor Agrium, Inc. (AGU, AGU.TO) reported Monday a profit for the third quarter that declined 34 percent from last year, despite improved gross margins, mainly reflecting higher expenses. However, adjusted earnings per share topped analysts' expectations, while quarterly revenues missed their estimates. The company also provided earnings guidance for the fourth quarter, in line with Street view, and raised dividend.

"Agrium's business once again proved resilient delivering solid results this quarter despite challenging agricultural market conditions. Near perfect growing conditions across the U.S., combined with low crop prices, reduced demand for some crop protection products," President and CEO Chuck Magro said in a statement.

The Calgary, Canada-based company reported net earnings of $50 million or $0.35 per share for the third quarter, lower than $76 million or $0.52 per share in the prior-year quarter.

However, net earnings from continuing operations for the quarter grew to $91 million or $0.63 per share from $80 million or $0.54 per share in the year-ago quarter.

Excluding items, adjusted earnings from continuing operations for the latest quarter was $87 million or $0.60 per share. On average, 24 analysts polled by Thomson Reuters expected the company to report earnings of $0.50 per share for the quarter. Analysts' estimates typically exclude special items.

Net sales for the quarter grew 4 percent to $2.92 billion from $2.80 billion in the same quarter last year. Twenty Wall Street analysts had consensus revenue estimate of $2.97 billion for the quarter.

On a segmental basis, retail net sales for the quarter increased 9 percent to $2.30 billion from the prior-year quarter, primarily due to the contribution from the acquired Viterra agri-retail operations, which closed in the fourth quarter of 2013. Wholesale segment net sales also grew to $803 million from last year's $786 million.

Total gross profit increased 6 percent to $665 million from $629 million a year ago, and gross margin improved 100 basis points to 23 percent from last year. Expenses for the quarter grew 15 percent to $560 million from $485 million last year.

Further, Agrium's board of directors announced plans to increase Agrium's dividend by four percent to a quarterly dividend of $0.78 U.S. per common share, payable on January 21, 2015 to shareholders of record on December 31, 2014.

Looking ahead to the fourth quarter, Agrium expects adjusted earnings from continuing operations in a broad range of $0.45 to $0.75 per share, while analysts are looking for earnings of $0.75 per share.

"Wholesale achieved strong performance this quarter from our phosphate and nitrogen businesses; however results in the second half of this year have been impacted by major planned turnarounds at our Vanscoy potash and Redwater nitrogen facilities," Wilson added.

AGU closed Monday's regular trading session at $96.44, down $1.38 or 1.41% on a volume of 0.84 million shares. AGU.TO closed on the Toronto Stock Exchange at C$109.55, down C$0.72 or 0.65% on a volume of 0.34 million shares.