Agrium Inc. is raising its dividend by $1.00 (U.S.) to $3.00 on an annualized basis even as the fertilizer company warns of a tough third quarter in its wholesale division.
Soft prices for nutrients, as well as lower sales volumes, are expected to have a negative impact on third-quarter wholesale results across Agrium's three nutrient categories, the company said Monday.
Wholesale earnings before interest and taxes (EBIT) should be about $200-million lower than for the year-earlier period, said the company.
But EBIT on the retail side for the third quarter should be better than last year and "in-line with the strong results achieved in the third quarter of 2011."
Agrium says customer demand has been delayed across all three nutrients this quarter, with wholesale nitrogen and phosphate sales volumes expected to be about 30 per cent lower than normal for a third quarter.
Benchmark nutrient prices in the third quarter of 2013 are 20 to 30 per cent below the same period last year, the company added.
"The dividend increase demonstrates our confidence in the ability of the business to generate significant cash flow and is an indication of the strength of our position across the crop-input value chain," Agrium president and chief executive officer Mike Wilson said in a statement.
"Despite short-term headwinds for our wholesale business unit this quarter, the long term fundamentals of our business remain strong and we expect significant crop input demand as we move into the fall season."
Plans are for the increased dividend to be paid in quarterly instalment of 75 cents and the next per-common-share dividend will go out on Oct. 17, the company said.