Wet Weather Dampens Agrium Forecast

High prices for corn and other crops in the past three months increased demand for fertilizer, pushing Canadian farm products maker Agrium (NYSE: AGU) back to profitability from a loss during the same period a year ago. But the strong first quarter was not enough to offset a weaker than expected financial forecast, triggering stock prices to slide today.

Shares of Agrium, an IU25 company, fell nearly 6%. It regained some of that loss in the late afternoon, trading to end at $84.02, down 4.27%.

The Calgary, Alberta-based company, which produces potash, nitrogen, and phosphate, posted consolidated net income of $171 million, or $1.09 per share, on revenue of $2.95 billion this morning, besting a net loss of $1 million, or 1 cent a share, a year earlier. The performance exceeded expectations, which averaged 92 cents on revenue of $2.35 billion.

But CEO Mike Wilson issued cautious financial guidance because of wet weather in both the US and Canada. The wet weather has slowed planting of corn, one of the most fertilizer-intensive crops. "You fly over the fields and a lot of the areas, they're still quite wet," Wilson said in a conference call today. "We could be pushed back another week, maybe in Canada a little bit more."

Wilson estimates earnings of $4.40 to $4.90 per share for the first half of 2011, slightly lower than what analysts expected.

Analyst Raymond Goldie of Salman Partners attributed the weakness in fertilizer stocks to lower commodity prices overall. However, he described the selloff of Agrium stock as overdone, noting that the firm posted a strong first quarter.

Last December, Agrium agreed to sell the commodity management business it had acquired as part of its purchase of Australia's AWB Ltd. to privately held Cargill Inc. Early yesterday, Agrium announced that Australia's Foreign Investment Review Board had approved the acquisition.

Wilson also announced several management changes: Stephen Dyer will move to CFO from his previous position as vice president, retail west region; and CFO Bruce Waterman will become chief officer for strategy, corporate development, and investment.