Fertilizer company Agrium Inc. (AGU) (AGU.TO) which has been pursuing a hostile takeover bid of smaller rival CF Industries Holdings Inc. (CF), Friday said that it expects third-quarter earnings to be 90% to 95% below last year's third-quarter results. Agrium posted net earnings of $367 million or $2.31 per share on sales of $3.13 billion in the third-quarter of 2008.
The company is scheduled to release its third-quarter results on November 4. Wall Street analysts have earnings estimate pegged at $0.79 per share, on revenue of $2.22 billion.
Agrium, based in Calgary, Alberta produces all three major agricultural nutrients, namely, nitrogen, phosphate and potash, as well as controlled-release fertilizers and micronutrients.
The company blamed the year-over-year expected decline in third-quarter earnings on significantly lower prices and margins for all three crop nutrients, and particularly for phosphate and potash. Retail results have been negatively impacted by a slower than expected recovery in Retail crop nutrient margins in the third quarter and approximately a 40% decline in fungicide sales and applications this summer, said Agrium.
Looking ahead, Agrium is optimistic about its business fundamentals and believes it is well positioned for the anticipated strong recovery in crop input demand in 2010.
The U.S. grower customers are expected to return to normal crop nutrient application this fertilizer year, particularly now that corn prices have increased again to well above historic levels, according to the company. If the wet weather in the U.S. continues and shortens the fall application season, the company said that the fall nutrient demand will be pushed into the spring of 2010.
Agrium's takeover target CF Industries is slated to report its third-quarter results on October 26, after the market closes. Analysts polled by Thomson Reuters expect CF Industries to earn $1.02 per share on revenue of $438.03 million.
Terra Industries Inc. (TRA), which is in the crosshairs of CF Industries, on Thursday posted a 72% drop in third-quarter earnings, hurt by lower prices and demand.
Meanwhile, Agrium's extended exchange offer to acquire all the outstanding shares of CF Industries for $40.00 in cash plus one Agrium share per CF share expired on October 22.
On the New York Stock Exchange, AGU, which has thus far hit a low of $22.08 and high of $57.63 over the last twelve months, closed Thursday's trade at $56.91. On the TSX, Agrium shares closed at C$59.73.
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