Agrium CEO Michael WilsonJeff McIntosh
Agrium Inc. is warning investors that it expects to report a 90 to 95 per cent drop in third-quarter earnings due to lower prices and margins for all three categories of its fertilizer products.
That would bring the Calgary-based company's third-quarter results to between $18.35-million (U.S.) to $36.7-million, the lowest for Agrium's summer quarter in at least two years.
Agrium didn't provide estimates for its earnings per share or for anticipated revenue. However, based on last year's results - and excluding the impact of any change in the number of shares outstanding - its maximum anticipated profit would be about 23 cents per share.
Thomson Reuters analysts' estimates pegged earnings per share for the quarter at 96 cents a share, although such tallies usually exclude special and one-time items that can affect net income.
Agrium expects to report its full results on Nov. 4.
Last year Agrium reported third-quarter profit of $367-million or $2.31 cents per share, which was more than seven times higher than the $51-million reported in the comparable period of 2007.
Agrium said Friday its predicted drop in earnings is due to significantly lower prices and margins for crop nutrients, particularly phosphate and potash.
The Calgary-based company said its retail results had felt the brunt of a slower than expected recovery in retail crop nutrient margins. Agrium said it also had a 40-per-cent drop in fungicide sales and applications over the summer.
Agrium isn't alone in its woes. Potash Corporation of Saskatchewan Inc. , another fertilizer heavyweight, saw its profit drop by 80 per cent this quarter.
Despite the substantially reduced earnings this year, Agrium said it still stood by its business fundamentals and believed it was well positioned for an anticipated strong recovery in crop input demand next year.
Agrium didn't mention how the reduced profitability in the third quarter will affect its attempts to acquire Illinois-based CF Industries , something CF has been resisting since the offer was first made last February.
CF management contends the $4-billion cash-and-stock offer is inadequate.
Agrium has set a new, Nov. 13 deadline for the CF takeover, the latest in a string of extensions as it tries to get CF management to the bargaining table.
Agrium is a retailer of agricultural products and services in the U.S., Argentina and Chile, and a global producer and wholesale marketer of nutrients for agricultural and industrial markets.
Its shares closed at $59.7 Thursday on the Toronto Stock Exchange.