* Q1 loss 4 cents/share vs year-earlier loss 38 cents
* Adjusted earnings 41 cents/share
* Sees Q2 EPS $2.50-$3.00; Street view $2.66
* Shares bounce back after early declines (Adds details, analyst comment; In U.S. dollars, unless noted)
By Euan Rocha
TORONTO, May 5 (Reuters) - Agrium Inc (AGU.TO) reported a quarterly loss on Wednesday, hurt by hedges that forced it to pay too much for natural gas, but a bullish forecast buoyed shares of the fertilizer maker and farm products retailer.
Revenue rose in the quarter as the Calgary-based company rode a resurgence of demand for crop nutrients this year. It also posted an quarterly profit, after stripping out one-time items.
Agrium also said fundamentals for agriculture and the nutrient markets remained robust, a trend that should carry though in the medium term.
"All indications from our extensive retail system across the U.S. are that growers have returned to normal application rates for crop nutrients, as well as other crop inputs," said Chief Executive Mike Wilson, on a conference call.
The global recession and a collapse in grain prices hurt fertilizer demand in 2009, but farmers have begun to restore their soil nutrient levels this year, benefiting Agrium and other suppliers.
Last week, Potash Corp of Saskatchewan (POT.N), the world's largest fertilizer producer, raised its 2010 earnings forecast, citing stronger demand both in North America and overseas. [ID:nN29200817]
Agrium expects second-quarter earnings of $2.50 to $3.00 a share. Analysts, on average, have forecast $2.66, according to Thomson Reuters I/B/E/S.
Agrium's first-quarter net loss narrowed to $7 million, or 4 cents a share, from a loss of $60 million, or 38 cents, a year earlier, when inventory writedowns and a slump in fertilizer demand pulled down its results.
Excluding a pretax expense for stock-based compensation and pretax losses on natural gas and other hedge positions, the company said its earnings amounted to $64 million, or 41 cents a share, in the latest quarter. Agrium uses natural gas in the manufacture of nitrogen-based fertilizers such as ammonia, urea and ammonium nitrate.
Still, some analysts noted that Agrium's adjusted earnings of 41 cents a share were boosted by the recognition of a prior-year tax benefit of about 17 cents a share.
Analysts, on average, had expected earnings of 33 cents a share, according to Thomson Reuters I/B/E/S.
Revenue rose 3 percent to $1.85 billion, mainly due to increased demand for nitrogen, phosphate and potash fertilizers.
While profits from fertilizer sales at both the wholesale and retail level were in line with expectations, profits from the seed and crop-protection sales were weak, analysts said.
"The wholesale business looks fine," said Atlantic Equities analyst Colin Isaac. "The retail side is a bit disappointing, because the seeds business in particular has seen quite a big margin decline."
Agrium's wholesale segment sells fertilizer to retailers and other distributors; its retail business sells fertilizer, seeds and crop protection chemicals to farmers. The company also operates an advanced technologies unit that sells specialty fertilizers in niche markets such as golf courses.
Shares of Agrium, which fell as much as 4 percent in early trade, were up 12 cents at 60.57 in afternoon trade on the New York Stock Exchange. Its shares on the Toronto Stock Exchange were up 43 Canadian cents at C$62.23. ($1=$1.03 Canadian) (Reporting by Euan Rocha, editing by Maureen Bavdek, John Wallace and Peter Galloway)