August 8, 2012
Agrium''s stock rises on earnings'' report
Agrium (AGU) stock increased on its earnings report Friday (Aug 3), with rivals'' shares gaining as well.
But Agrium and other fertiliser producers and farm suppliers could see curtailed demand if the drought continues and farmers plant fewer crops.
The drought has already burned corn and soy crops in the Midwest, driving prices up. There could be a slight reduction in fertiliser purchases in the fall, Agrium CEO Mike Wilson said.
Agrium is North America''s biggest retail supplier of farm products and services. It reported record second-quarter profit Friday, and said it won''t buy a stake in a nitrogen plant as it earlier planned.
That paved the way for archrival CF Industries (CF) to acquire the plant. CF Industries Friday announced it struck a deal with holding company Glencore International to buy an interest in Canadian Fertilizers Limited for US$916.2 million.
The accord gives CF Industries full control of the plant in Medicine Hat, Alberta, Canada, that Agrium earlier sought to buy.
Agrium''s Q2 earnings per share climbed about 19% to US$5.47, trouncing Wall Street estimates by 67 cents. Revenue rose 10% to US$6.83 billion, above views of US$6.49 billion, as farmers bought more of the company''s products.
Agrium stock rose about 1% to 95.22 Friday afternoon.
CF Industries said the purchase of the Medicine Hat plant will add about 425,000 gross tonnes of ammonia and 275,000 tonnes of urea per year to its nitrogen production capacity.
Shares of CF Industries, slated to announce Q2 results Monday after the market closes, jumped 4.2% to 202.52 Friday afternoon.
Elsewhere in the Chemicals-Agricultural group, ranked No. 50 of the 197 industry groups tracked by IBD, Rentech Nitrogen (RNF) climbed 3.5% to 30.16, Potash (POT) edged up a bit to 42.88 and Syngenta (SYT) advanced 2.3% to 69.17.
National Bank Financial lowered Agrium''s rating to underperform from sector perform Friday, after Dahlman Rose and Co. Thursday downgraded the company.