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Fertilizer producer and retailer Agrium Inc. (AGU-T) reported better-than-expected quarterly results on Wednesday, driven by a strong performance in its farm retail segment and strong sales of its nitrogen-based crop nutrient products.
Calgary, Alberta-based Agrium, North America's biggest farm-products retailer, said early spring weather in Canada and the United States boosted sales of fertilizers, crop-protection products and seeds in the quarter, resulting in a 35 percent increase in sales in its retail business.
Results from its wholesale arm were weighed down by lower sales volumes of potash- and phosphate-based nutrients, but the segment benefited from higher realized prices and volumes for nitrogen-based fertilizers such as ammonia and urea.
"The benefits of Agrium's strong global position across the agricultural value chain were evident once again this quarter," chief executive Mike Wilson said. "Favorable weather has enabled growers to get a very early start on spring planting ... We have seen strong movement of nutrients and other crop inputs."
Excluding one-time items, the company forecast earnings per share of between $5.50 US and $6.10 for the first half of 2012. The mid-point of that range is $5.80 a share, which is above the current Wall Street consensus of $5.67 a share for the period, according to Thomson Reuters I/B/E/S.
Excluding a pretax loss on natural gas hedging and a pretax share-based payment expense, the company reported first-quarter earnings of $210 million, or $1.32 a share.
Quarterly sales rose 23 percent to $3.63 billion.
Analysts, on average, had forecast earnings of 99 cents a share, on revenue of $2.98 billion, according to Thomson Reuters I/B/E/S.
Despite the strong results, shares of Agrium fell amid a wider sell-off of commodity stocks on Wednesday as concerns about the euro zone's debt crisis mounted and grain prices fell ahead of a key U.S. government crop report on Thursday.
On a net basis, first-quarter profit was $155 million, or 97 cents per share, compared with $171 million, or $1.09 per share, a year earlier.
Gross profit in the period rose 10 percent to $800 million, driven largely by gains in its retail segment, the company said.
Agrium, already the dominant farm products retailer in the United States, has now set its sights on winning the same status within Canada.
Earlier this year, Agrium agreed to acquire the majority of Viterra Inc.'s (VT-T) retail network in Canada as part of a side deal to Glencore International $6.1-billion bid for the grain handler.