Australian expansion leads to record Q4 for Agrium

Expansion into Australia's ag retail market during 2010 has helped lead to a record fourth quarter for fertilizer and ag retail giant Agrium.

The Calgary company on Wednesday posted net earnings of $158 million on $2.398 billion in sales (all figures US$) for its fourth quarter ending Dec. 31, up from $30 million profit on a $1.501 billion gross in the year-earlier period.

Increased sales also wore well on the company's full-year results, where it booked $714 million profit on $10.743 billion in sales, up from $366 million on $9.328 billion in fiscal 2009.

The company closed its 2010 books by completing its takeover of AWB Ltd., the former Australian Wheat Board, in December and making a $175 million deal to sell AWB's grain handling assets to U.S. agrifood giant Cargill.

Company CEO Mike Wilson said in a release that the results "are an illustration of Agrium's earnings power across the value chain as we continue to take advantage of the strength in global agricultural fundamentals."

Specifically, the company said, its retail segment's Q4 sales alone rose to $1.3 billion, up $587 million from the year-earlier period -- although earnings before interest and taxes (EBIT) included a $7 million loss for Landmark, Agrium's new Australian ag retail business unit, whose results are included only in the final month of Agrium's 2010 ledger.

The retail sales in Q4 included $827 million from crop nutrients (up from $431 million in 2009's Q4), $291 million from crop protection (up from $234 million), $54 million from seed (up from $16 million) and $153 million from application services (up from $57 million).

Agrium's wholesale fertilizer sales rose 54 per cent in Q4 from the year-earlier period, to $1.1 billion. The company posted Q4 gross profit of $160 million on nitrogen (up by $65 million), $96 million on potash (up $22 million) and $54 million on phosphate (up from just $1 million).

The company's "Advanced Technologies" segment, which markets turf and ornamental products as well as Agrium's ESN nitrogen product, saw Q4 net sales of $97 million, up $2 million, partly accounted for by a 21 per cent increase in ESN sales volumes due to higher demand and "additional available production" from a new facility in Missouri.

"Well above historic"

Global crop prices and margins, Wilson said, are "expected to remain well above historic levels in 2011 as a result of very low global grain stocks, providing continued support for the entire crop input market."

And crop nutrient inventories in North American "are tight and are expected to remain so as we move into the spring season," he said.

Recent political unrest in Egypt and other countries in the same region have contributed to uncertainty in global markets, including crop nutrient products, the company noted. Agrium still holds a 26 per cent stake in a MOPCO nitrogen facility at Damietta, an Egyptian port city.

That plant, however, is now in expansion mode to triple its capacity and meanwhile "has continued to operate and export at normal levels during the recent period of unrest, although this is not true for all Egyptian nitrogen facilities."