Wednesday, Canada-based fertilizer producer Agrium Inc. (AGU, AGU.TO) said that its third quarter earnings increased seven times from last year, boosted by strong performance across all business units and higher fertilizer prices. The company also widened its earnings guidance for the second half of fiscal 2008.
Third Quarter Results
The Calgary, Alberta-based company reported third quarter net income that increased to US$367 million or US$2.31 per share from US$51 million or US$0.38 per share in the third quarter of 2007.
On average, 12 analysts polled by First Call/Thomson Financial expected the company to earn $1.89 per share for the quarter.Results for the quarter include non-qualifying natural gas and power hedge losses of $171 million or $0.73 per share and a recovery in stock-based compensation of $99-million or $0.42 per share.Net sales for the quarter surged to US$3.11 billion from US$989 million in the same quarter last year, ahead of analysts' revenue consensus of $2.24 billion.
Segment-wise Results
Retail sales rose to US$1.59 billion from US$427 million in the third quarter of 2007, attributable to higher crop nutrient sales.
Net sales from the wholesale segment during the latest quarter were US$1.59 billion, up from US$563 million in the previous year quarter, helped by significant increase in prices across all product lines.
Sales from Advanced Technologies grew to US$90 million from US$46 million in the year-ago quarter, due to 60% higher ESN sales volumes.
Other Metrics
Consolidated gross profit soared to US$1.05 billion from US$305 million in the previous year quarter, driven by strong crop prices supported improved selling prices for fertilizer, chemical and seed.
CEO Comment
Mike Wilson, Agrium President and Chief Executive Officer said, "These impressive third quarter results demonstrate the strength of Agrium's diverse product and asset mix and our ability to make and integrate strategic acquisitions."
Nine-month results
For the year-to-date, the company' net earnings surged to US$1.19 billion or US$7.54 per share from US$269 million or US$2.01 per share in the previous year period.
Sales for the year-to-date period increased to US$8.28 billion from US$3.99 billion in the preceding year period.
Outlook
Looking ahead, Agrium said guidance for the second half of 2008 was difficult in view of the current turmoil in the global economic and commodity markets, further complicated by current fertilizer and crop pricing volatility and the later North American harvest. This is expected to result in a deferral of sales volumes, including pre-sold sales volumes, to the first half of 2009, the extent of which is difficult to anticipate. Agrium therefore said it has widened its guidance range for the second half of 2008 to US$3.30 - US$4.00 per share.
Stock movement
AGU is currently trading at US$41.61, up US$1.39 or 3.46% on a volume of 6.14 million shares, while AGU.TO is currently trading at C$48.17, up C$2.17 or 4.72% on a volume of 1.09 million shares.
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