Agrium traded lower after reporting relatively in-line Q4/12 results, EPS of US$2.16 versusprevious guidance of “slightly above US$2.00”.
The company did not offer Q1 or full-year guidance (historically, AGU only provides Q2 and Q4 guidance at the end of Q1 and
Q3 earnings, respectively).
Retail gross profit of US$509 million was lower than US$524-million estimate. Crop protection was better than expected at US$203 million (versus our US$168 million) due to better volumes and pricing as well as supplier rebate programs. Seed, merchandise services and other was US$151 million versus Carpenter’s US$186 million due primarily to the pricing pressure associated with the livestock and wool segments within the Australian retail division.
Overall, the realized retail gross margin was 25.8%, in line with estimates. AGU’s nitrogen segment performed better than expected with a reported gross margin of US$326 million versus Carpenter’s estimated US$293 million. Volumes sold were in line with estimates at 1.1mt but the average margin per tonne of US$290 In potash, gross margin of US$79 million was in line with US$78-million estimates as realized sales volumes of 341kt were in line with estimates of 334kt and the average margin per tonne was in line at US$233 versus our US$235/t.
In phosphate, gross profit of US$47 million was lower than US$57 million estimates as a result of a lower margin per tonne (US$166 versus estimates of US$199) resulting from higher operating costs.
We prefer the non-potash equities over the potash equities given expectation of a supportive agriculture macro environment and an expected near record U.S. planting this spring.
- A Brief History of JANA Partners: Agrium Inc. (USA) (AGU), Marathon Oil Corporation (MRO), The McGraw-Hill Companies, Inc. (MHP) (insidermonkey.com)
- Agrium says it’s on track to beat previous guidance for Q4 earnings (business.financialpost.com)