Despite signs of increasing demand, lower prices for crop nutrients and inputs took a chunk from this year’s profits for fertilizer and ag retail giant Agrium.
The Calgary company on Tuesday reported year-end net earnings of $366 million (all figures US$) on $9.13 billion in net sales, down from $1.32 billion on net sales of $10.03 billion in fiscal 2008.
Agrium’s net income for its fourth quarter (Q4) ending Dec. 31 also slipped from the year-earlier level, totalling $30 million on $1.44 billion in net sales, down from $124 million on $1.94 billion in net sales in its 2008 Q4.
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Agrium’s Q4 ledger showed losses of $35 million on gas and other hedge positions and a $34 million expense in “stock-based compensation.”
The company’s Q4 fertilizer net sales dropped to $431 million from $631 million in the year-earlier period, as “lower crop nutrient prices for the primary nutrients more than offset an increase in sales volumes this quarter compared to the same period last year.”
Q4 gross profit in Agrium’s wholesale business was $180 million, down from $283 million, due mainly to lower average sales prices across all three nutrients, offsetting a 44 per cent increase in sales by volume in Q4.
All that said, Q4 “saw the initial stages of recovery in the crop input sector,” Agrium CEO Mike Wilson said in Tuesday’s release, adding that the company is anticipating a “significant” recovery in those ag input markets.
“We have seen increasing demand for domestic potash and a tight supply situation for nitrogen and phosphate products Wholesale sales volumes were substantially higher this quarter across all products than the fourth quarter of last year, despite the shortened fall application season.”
The company, he said, sees “increasing signs” that demand for fertilizers and inputs will be strong this spring, despite some recent weakening seen in crop prices in the wake of recent revised yield estimates from the U.S. Department of Agriculture.
