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Mike Wilson, Agrium CEO


Agrium Inc. foresees strong demand for fertilizer this fall as flooding in China and Canada to drought in Europe and Russia deplete crop inventories, sending prices higher and pushing farmers to improve their yields.

"The recent firming in crop prices, as well as nitrogen and phosphate markets, is setting the stage for a robust second half of 2010," Agrium president and CEO Mike Wilson said Wednesday after the Calgary-based fertilizer giant posted fat profits and rising revenues.

Mr. Wilson told a conference call with analysts the outlook for the rest of this year is "very promising," as crop prices strengthen due to a combination of lower production and increased demand.

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"We believe crop nutrient inventories for North American retailers and distributors is currently very low for all products and that major restocking will be required as we enter the fall season," he said.

"This factor combined with a tightening world market and higher crop prices should set the stage for a strong 2010 fall season."

While North American demand for fertilizer is still important, much of the growth comes from emerging markets like Brazil, India and China - where demand for fertilizers is steadily growing as farmers seek to boost crop qualities and yields to meet the demands of their growing middle classes.

Earlier Wednesday, Agrium reported its second highest quarterly net earnings of $506-million (U.S.) in the second quarter as the company benefited from higher sales and some one-time gains on its books.

It earned $3.20 a diluted share for the second quarter ended June 30, compared with earnings of $370-million or $2.35 for the same quarter of 2009.

Net sales in the quarter rose to nearly $4.4-billion from $4.1-billion, said the company, which reports in U.S. dollars. The earnings were well above analyst expectations and helped push up the company's stock price.

"These earnings really look terrific, well above expectations," Toronto money manager Robert Floyd told BNN.

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The 2010 second quarter results included a pre-tax recovery of $57-million on stock-based compensation and pre-tax gains of $8 million on natural gas and other hedge positions.

"Agrium delivered excellent second quarter results, the second highest in our history," said in a release before stock markets opened.

Mr. Wilson said fertilizer demand returned to normal in the second quarter, but earnings results could have been even better if it weren't for a dampening of demand due to late spring wet weather across North America.

Earlier this year, Agrium scrapped a planned acquisition of CF Industries Holdings Inc., a big U.S. fertilizer company, and booked $45-million of acquisition-related costs on its books. The company also sold its 1.2 million CF shares it owned, booking a pre-tax gain of $52-million.

Agrium, with more than 11,000 employees, is a major fertilizer company with operations in Canada, the United States and Argentina. It produces potash, nitrogen and phosphates, the three key fertilizers widely used around the world, and has a big farm store retail presence.

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