Mike Wilson, Agrium CEO
Agrium Inc.'s fourth-quarter profit and revenue were down substantially compared with the year-earlier results but the Calgary-based fertilizer producer said Tuesday it also saw signs of improved market conditions.
"The fourth quarter of 2009 saw the initial stages of recovery in the crop input sector," Agrium president and chief executive officer Mike Wilson said of the company's latest financial report.
"We have seen increasing demand for domestic potash and a tight supply situation for nitrogen and phosphate products."
The company's net earnings for the three months ended Dec. 31, reported in U.S. currency, fell to $30-million (U.S.), or 19 cents per share.
The profit is down from $124-million or 79 cents per share in the fourth quarter of 2008, when Agrium and other fertilizer producers were still reaping the rewards of strong demand and high prices.
Agrium produces fertilizer ingredients for sale around the world. It also sells agricultural products through retail locations in Canada and the United States.
Prices and demand for fertilizer dropped sharply in the early parts of last year because of the global recession, affecting not only Agrium but other Canadian fertilizer producers.
Agrium's net sales fell to $1.44-billion in the fourth quarter of 2009, down from $1.94-billion in the comparable period of 2008.
Mr. Wilson, however, remained optimistic for sales in the coming quarters.
"We are seeing increasing signs that demand for crop nutrients and other crop inputs will be strong in the coming spring, despite some recent weakening in crop prices following the revised yield estimates from the USDA," he said.
"Agrium is looking forward to a significant recovery in the crop input markets in 2010."
His company was one of three major Canadian potash producers to reach a recent agreement, through their Canpotex marketing arm, to sell a total of 350,000 tonnes of the fertilizer ingredient to a Chinese buyer at what it described only as "competitive" spot prices.
Canpotex and Agrium didn't disclose what the buyer paid per tonne, but Mr. Wilson said on Monday after the sale was announced that it was "a good deal for us."
In December, a consortium of European potash producers inked a year-long agreement with the Chinese to sell the fertilizer for $350 per tonne.
But Canpotex has indicated the price locked up between Belarusian Potash Co. and the Chinese buyers wouldn't be acceptable and Mr. Wilson said Monday that reaching sales on a quarter-to-quarter basis was the way to go for now.
The fertilizer giant also reiterated Tuesday that it's still interested in acquiring CF Industries Holdings Inc. through a $5.2-billion bid hostile bid. The offer for the Deerfield, Ill.-based competitor stands until Feb. 22.
"Agrium... intends to continue to press the board of directors of CF to engage in negotiations," the company said.