Agrium cuts 2016 profit forecast

Agricultural retailer Agrium Inc. fell after the Calgary-based company cut its full-year profit forecast for a second time this year amid an agriculture slump that has dragged down prices for crop nutrients.

Earnings in 2016 will be $5 to $5.30 a share, it said Wednesday. That compared with a May forecast of $5.25 to $6.25 a share. The stock fell 0.9 per cent Thursday to close at $116.52 in Toronto, after slumping as much as 2.7 per cent, the biggest intraday loss since late June.

Over the past year, prices have fallen for the potash, phosphate and nitrogen fertilizer Agrium produces as cheaper commodities have reduced the appetite for agricultural chemicals.

Three straight annual declines for corn, soybean and wheat futures have cut farmer spending. The company also lowered its fullyear guidance when it reported first-quarter profit in May.

Depressed crop and fertilizer prices are “going to be a weight that sticks with them for a while here,” Steve Hansen, a Vancouver-based analyst with Raymond James, said in an interview.

Still, the company posted betterthan-expected earnings in the second quarter amid strong margins and lower costs. Profit excluding one-time items was $4.18 a share.

Even as fertilizer prices have been under pressure, there are signs a rebound could be coming amid expectations for high U.S. crop yields, chief executive Chuck Magro said Thursday on an earnings call.

Higher yields strip significant nutrients from the soil.

“This will mean significant nutrient depletion will drive solid nutrient demand through the fall season,” Magro said.

Agrium likes North American retail assets and would like to add other wholesale assets into its integrated network, he said. The company sees a lot of acquisition opportunity and the average size of deals are rising, executives said on the same call.

Wet conditions in most North American growing regions have created an ideal environment for disease development and delayed herbicide applications, the company said in the statement. There will probably be strong fungicide and herbicide demand this summer as growers try to protect strong yield potential, Agrium said.