Agrium Inc. (AGU),a leading Canadian farm dealer and fertilizer producer, now expects its second-quarter 2011 diluted EPS from continuing operations (earnings per share) to be in the range of $4.10 to $4.40, up from its prior expectation of $3.38 to $3.88 diluted earnings per share. The increase in the forecast was attributable to very strong Retail performance and increasing nutrient pricing supported by continued strong crop fundamentals.
Currently, Agrium expects its first half of 2011 diluted EPS from continuing operations to be in the range of $5.12 to $5.42. The guidance does not include any additional impact from second quarter share-based payment expense or mark-to-market gains or losses on natural gas or other commodity hedge positions.
Agrium is a major retailer of agricultural products and services in North and South America and Australia. The company is also a leading global wholesale producer and marketer of all three major agricultural macronutrients − nitrogen, potash, and phosphate − besides being a premier supplier of micronutrients and specialty fertilizers in the U.S. and Canada.
Agrium follows a focused strategy to grow along the value chain through a combination of acquisitions and organic development efforts.
Last month, the company reported record net earnings of $160 million or $1.02 per share in the first quarter of 2011, surpassing the Zacks Consensus Estimates of 90 cents per share. It also exceeded the prior-year loss of $1.0 million or 1 cent per share.
Including one-time charges, Agrium recorded net earnings of $171 million or $1.09 per share in the first quarter of 2011. Results benefited from record high crop prices and overall strong fundamentals for agriculture and crop input market. Crop nutrient demand was strong in North America and globally, providing underlying support to crop nutrient prices.
Revenues in the quarter rose 59.8% year over year to $3.0 billion, which was above the Zacks Consensus Estimates of $2.1 billion. The company’s gross profit increased by $363 million to $725 million, primarily due to higher gross profit across all major products.
With strength in markets across most products and services, Agrium expects a great second quarter and anticipates industry fundamentals to remain strong in 2011.
The company faces stiff competition from Potash Corp. of Saskatchewan Inc. (POT) and CF Industries Holdings, Inc. (CF).
We currently maintain a Zacks #3 Rank (short-term Hold recommendation) on Agrium and a long-term Neutral recommendation.
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