Low prices hurt Agrium’s net; Argentina currency adds to overall woes

Allen Baker, PNA contributing writer

Agrium Inc. lost $36 million in the first quarter of the year as problems in Argentina hurt a company already pummeled by low prices for nitrogen fertilizers.

Agrium has a nitrogen fertilizer plant in Nikiski.

The losses from currency translation in Argentina contributed $9 million of the loss for Agrium, which had a $7 million profit in the same quarter a year ago. Agrium is based in Calgary, but uses U.S. dollars in its financial reporting.

Fertilizer inventories rose last year as bad weather in the spring planting season cut demand about 3 percent, and the fall brought a global economic decline. Fertilizer prices plunged.

In the North American market for nitrogen fertilizers produced at the Nikiski plant and elsewhere, Agrium had a gross profit of $7 million in the first quarter of this year, compared with $62 million a year ago. Sales dropped a bit to 921,000 tons from 985,000 tons, but the margin on each ton tumbled to $8 from $63.

While Agrium has a long-term contract for the natural gas that feeds the Nikiski plant, the company hedged prices on its natural gas feedstocks elsewhere when the cost was higher, and showed hedging losses of $17 million for the first quarter.

The company sold 11.2 million common shares to underwriters in March for $9.85 a share. That raised $106 million, which was used to pay down debt. Sales in the quarter were $338 million, a decline of 18 percent from $410 million a year ago.