UPDATE 1-Agrium reports record profit, beats Street expectations

Thu Feb 21, 2013 7:08pm EST

* Q4 net profit $2.34 per share vs $1.20 year ago

* Sales up 3 pct to $3.26 bln

* U.S. listed shares up 0.5 pct in extended trading

By Rod Nickel

Feb 21 (Reuters) - Canadian fertilizer company Agrium Inc reported a record profit for the fourth quarter on Thursday, handily beating expectations due to higher demand for crop protection products and fertilizer from farmers, ahead of a proxy battle with its largest shareholder.

Agrium shares in New York edged up 0.5 percent following the news, after falling nearly 2 percent to $106.84 during regular trading.

Agrium is facing a proxy contest in April with its biggest shareholder, Jana Partners, which wants to split the company's farm retail and wholesale fertilizer production divisions, and take other steps to improve the company's performance.

The Calgary, Alberta-based company said retail sales rose 8 percent to $2 billion due to higher demand for crop protection products and fertilizer, after autumn weather left U.S. farmers with a larger than normal window for applications before winter. The improved retail sales outweighed a 7 percent drop in wholesale sales of fertilizers, mainly because of weak international demand for potash.

A lack of potash exports to key markets China and India in the second half of 2012 hurt Agrium, Potash Corp of Saskatchewan and Mosaic Co, who collectively make offshore sales through Canpotex Ltd. Both countries have since signed new supply contracts with Canpotex.

HIGHER DEMAND SEEN FOR NITROGEN, POTASH

Tight global grain and oilseed supplies are keeping crop prices high, offering farmers strong motivation to maximize crop production, Agrium said, noting that it has seen strong demand for seed purchases leading up to the spring planting season.

Global demand for nitrogen, a yield-boosting fertilizer that farmers apply every year for crops like corn, looks likely to increase 2 to 3 percent in 2013, while North American nitrogen demand should be flat to 2 percent higher, Agrium said.

Global demand for potash looks strong for the first half of 2013, with China committed to Canpotex purchases during the period, Agrium said. Total potash shipments on a global basis should reach 55 to 57 million tonnes, up from 52 million tonnes last year, the company said.

Net earnings for the fourth quarter jumped to $354 million, or $2.34 per share, from $193 million, or $1.20 per share a year ago. Adjusted for one-time items, earnings per share were $326 million or $2.16 per share.

Sales rose 3 percent to $3.26 billion.

Analysts on average expected Agrium to earn $2.00 a share on sales of $3.2 billion, according to Thomson Reuters I/B/E/S.

Agrium's earnings per share exceeded its own guidance on Jan. 24 of slightly more than $2 a share for the quarter.

The company's full-year 2012 earnings of $1.5 billion matched a record, despite a disappointing third quarter that gave Jana fodder to build its case for change.

Agrium is the world's third-largest nitrogen producer, a significant miner of potash from Western Canada, and a producer of phosphate.

Rival nitrogen producer CF Industries on Tuesday posted record-high fourth quarter profit, but its nitrogen fertilizer sales slumped in the period and its stock fell.

A couple walks along the rough surf during sunset at Oahu's North Shore, December 26, 2013. REUTERS/Kevin Lamarque

Find your dream retirement town

Florida? Hawaii? Reuters has teamed up with Zillow to give you the power to customize a list of your best places to retire.  Video | Full Article