Agrium Reports Record Second Quarter and First Half Results
(firmenpresse) - CALGARY, ALBERTA -- (Marketwire) -- 08/02/12 -- ALL AMOUNTS ARE STATED IN U.S.$
Agrium Inc. (TSX: AGU) (NYSE: AGU) announced today record consolidated net earnings ("net earnings") of $860-million ($5.44 diluted earnings per share) for the second quarter of 2012, compared with net earnings of $718-million reported in the second quarter of 2011 ($4.54 diluted earnings per share).
The 2012 second quarter results included a pre-tax gain of $3-million ($0.01 diluted earnings per share) on natural gas and other hedge positions and a pre-tax share-based payment expense of $9-million ($0.04 diluted earnings per share). Excluding these items, net earnings would have been $864-million ($5.47 diluted earnings per share) for the second quarter of 2012.(1)
"Agrium's record second quarter results have once again demonstrated the strength of our strategic position across the agricultural value chain. All three business units capitalized on the strong fundamentals in our sector, with Retail and Wholesale achieving their highest EBITDA in history for both the second quarter and the first half of the year. Agrium also generated record cash flow from operations for the quarter and the first half this year. The demand for crop inputs remained strong through to the end of June, despite the very early start to the spring season in the U.S.," said Mike Wilson, Agrium President and CEO.
"The impact of the severe drought in the U.S. has resulted in very strong grain and oilseed prices, and we believe crop yields are likely to be revised downward again. We expect high crop prices and tight grain inventories to create significant support for international nutrient demand in the coming year, as growers globally are expected to expand acreage and optimize application rates. Inventories for most crop nutrients remain tight in North America as retailers have ended the season largely empty. The combination of these factors and an expected early start to the fall harvest and application season is expected to result in solid crop input demand in the back half of 2012 and Agrium will be there to provide the expertise and products necessary for growers to meet the unrelenting global growth in demand for food," added Mr. Wilson.
"I am also pleased that today we were able to reach an agreement for the sale of Viterra's interest in the Medicine Hat nitrogen facility. We received an excellent price for this asset and the resulting purchase price for Viterra's retail business is very attractive. This has provided us with an opportunity to return excess capital to our shareholders, and as a result we have authorized a Cdn$900-million substantial issuer bid to repurchase shares given our strong financial position and the positive outlook for our business," stated Mr. Wilson.
(1)Second quarter effective tax rate of 28 percent used for adjusted diluted earnings per share calculations.
MANAGEMENT'S DISCUSSION AND ANALYSIS
August 2, 2012
Unless otherwise noted, all financial information in this Management's Discussion and Analysis ("MD&A") is prepared using accounting policies in accordance with International Financial Reporting Standards ("IFRS") and is presented in accordance with International Accounting Standard 34 - Interim Financial Reporting. All comparisons of results for the second quarter of 2012 (three months ended June 30, 2012) are against results for the second quarter of 2011 (three months ended June 30, 2011). All dollar amounts refer to United States ("U.S.") dollars except where otherwise stated. Certain financial measures in this MD&A are not prescribed by IFRS, and are defined in the Non-IFRS Financial Measures section of this MD&A.
The following interim MD&A is as of August 2, 2012 and should be read in conjunction with the consolidated interim financial statements for the three and six months ended June 30, 2012 and 2011, and the annual MD&A included in our 2011 Annual Report to Shareholders to which our readers are referred. The Board of Directors carries out its responsibility for review of this disclosure principally through its Audit Committee, comprised exclusively of independent directors. The Audit Committee reviews, and prior to publication, approves, pursuant to the authority delegated to it by the Board of Directors this disclosure. No update is provided where an item is not material or there has been no material change from the discussion in our annual MD&A. Forward-Looking Statements are outlined after the Outlook, Key Risks and Uncertainties section of this press release.
2012 SECOND QUARTER OPERATING RESULTS
CONSOLIDATED NET EARNINGS
Agrium's 2012 second quarter consolidated net earnings ("net earnings") were $860-million, or $5.44 diluted earnings per share, compared to net earnings of $718-million, or $4.54 diluted earnings per share, for the same quarter of 2011. Net earnings for the first half of 2012 were $1,015-million, or $6.41 diluted earnings per share, compared to $889-million, or $5.62 diluted earnings per share for the first half of 2011.
Sales
Retail sales increased by 12 percent to approximately $5.2-billion and 19 percent to approximately $7.7-billion compared to the second quarter and first half of 2011, respectively, due to higher sales volumes of all of our major product lines, with the exception of international crop nutrients. Wholesale sales, were essentially unchanged from 2011 at $1.7-billion and $2.9-billion, respectively, for the second quarter and the first half. Advanced Technologies ("AAT") sales during the quarter and for the first half of 2012 increased by 13 percent to $178-million and 31 percent to $313-million, respectively, compared to the same periods last year attributed to acquisition activity in the second half of 2011.
Gross Profit
Our consolidated gross profit for the second quarter and first half of 2012 increased by $195-million and $270-million, respectively, compared to the second quarter and first half of last year. Highlights for the second quarter and first half of 2012 include the following:
Expenses
The $19-million increase in expenses for the second quarter of 2012 compared to the second quarter of 2011 is mainly comprised of:
These expense increases were partially offset by a $51-million decrease in other expenses, attributable to decreased environmental remediation and asset retirement obligation expenses along with decreased expenses of $14-million related to foreign exchange derivative financial instruments in the second quarter of 2012 versus the second quarter of 2011 (see section "Other" for further discussion).
The following table is a summary of our other expenses (income) for the second quarter and first half of 2012 and 2011:
Effective Tax Rate
The effective tax rate was 28 percent for the second quarter and first half of 2012 and is comparable to the effective tax rate of 28 percent for the same periods in 2011.
BUSINESS SEGMENT PERFORMANCE
Retail
Retail generated record 2012 second quarter sales of $5.2-billion, a $600-million increase over the $4.6-billion in sales for the second quarter of 2011. This significant increase was a result of strong demand across all crop input products and services, and a continuation of robust demand throughout the month of June, despite the very early start to the spring planting season. Gross profit was a record $1.1-billion this quarter, compared to the $996-million earned in the second quarter of 2011. Retail also achieved record earnings from continuing operations before finance costs, income taxes, depreciation and amortization ("EBITDA") of $605-million in the second quarter of 2012, a $76-million increase over the $529-million EBITDA reported in the second quarter last year.
Crop nutrient sales reached $2.4-billion this quarter, compared to $2.1-billion in the same quarter last year. The 12 percent increase was due primarily to record corn acreage planted this year in North America and growers taking advantage of favorable crop prices. Despite an earlier than normal spring planting season, North American nutrient sales volumes were approximately 4 percent higher this quarter than the second quarter of 2011 and were up approximately 13 percent for the first half of 2012 over the same period last year. Gross profit for crop nutrients was $400-million this quarter, $23-million higher than the $377-million reported in the second quarter of 2011. Total crop nutrient margins were 17 percent in the second quarter of 2012, just 1 percent lower than the same quarter last year.
Crop protection sales were $1.7-billion in the second quarter of 2012, an 18 percent increase over the $1.5-billion in sales for the same period last year. Total crop protection gross profit this quarter was $400-million, a 23 percent increase over the $325-million recorded in the second quarter of 2011. The increase in sales and gross profit was due to higher sales volumes across all of our global product lines and slightly higher margins. Crop protection product margins as a percentage of sales were 23 percent for the second quarter of 2012, up 1 percent from the second quarter last year due to a higher percentage sales mix of our private label products and improvement in margins for our Australian Landmark business, which were 18 percent this quarter, up 4 percent from the second quarter last year.
Seed sales reached $712-million in the second quarter of 2012, compared to $687-million in the second quarter last year. Gross profit was $125-million this quarter, compared to $132-million in the second quarter of 2011. Higher sales of soybeans and small grains as a percentage of the total seed sales caused the slight decline in margins this quarter.
Sales of merchandise in the second quarter of 2012 were $157-million, compared to $208-million in the second quarter of 2011. Gross profit for this product line was $32-million this quarter, a 19 percent increase over the $27-million reported in the second quarter last year.
Services and other sales were $264-million this quarter, 47 percent higher than the $180-million reported in the second quarter of 2011. Gross profit was $147-million in the second quarter of 2012, compared to $135-million for the same period last year. The increase in sales and gross profit this quarter was attributable to increased custom application services resulting from strong demand for nutrients and crop protection products in North America.
Retail selling expenses for the second quarter of 2012 were $520-million, up $47-million from last year. The increase was due to higher payroll expenses related to the increase in sales activity and performance incentives this quarter, as well as new acquisitions. However, selling expenses as a percentage of sales were 10 percent in the second quarter of 2012, unchanged from the second quarter of 2011.
Wholesale
Wholesale's 2012 second quarter sales were a record $1.7-billion, slightly higher than the previous record reported in the same quarter last year. Gross profit for this quarter was the highest in company history at $673-million, an increase of 9 percent over the previous record achieved in the second quarter of 2011. Wholesale's EBITDA of $686-million in the second quarter of 2012 was also a record, substantially exceeding the $617-million reported in the same period last year. These record earnings were primarily due to higher realized sales prices and lower input costs for our nitrogen business, which were driven by a tight supply/demand balance for nitrogen products globally and a decrease in North American benchmark gas prices compared to the second quarter last year.
Nitrogen gross profit was a record $431-million in the second quarter of 2012, an increase of 33 percent over the previous record of $324-million reported in the same quarter last year, due to higher realized sales prices and lower input costs. Both benchmark and Agrium's realized sales prices were higher for all nitrogen products in the second quarter of 2012 compared to the same period last year, with the exception of realized prices for nitrates. Total nitrogen sales volumes were 1.3 million tonnes, which was 9 percent lower than the same period last year due to tighter opening domestic inventories of urea this quarter and weaker demand in Argentina. Nitrogen cost of product sold was $241 per tonne this quarter, significantly lower than the $274 per tonne reported in the second quarter of 2011. This was due to a combination of lower natural gas costs in the second quarter of 2012 and higher costs resulting from planned and unplanned outages in the same quarter last year. Our average nitrogen margins were a record $332 per tonne this quarter, compared with $226 per tonne in the same period last year.
Agrium's average natural gas cost in cost of product sold was $2.62/MMBtu ($3.07/MMBtu including the impact of realized losses on natural gas derivatives) this quarter, compared to $4.00/MMBtu for the same period in 2011 ($4.11/MMBtu including the impact of realized losses on natural gas derivatives). Hedging gains or losses on all gas derivatives are not taken into account for the calculation of gross profit and are included in other expenses and therefore not included in cost of product sold. The U.S. benchmark (NYMEX) natural gas price for the second quarter of 2012 was $2.26/MMBtu, compared to $4.36/MMBtu in the same quarter last year. The AECO (Alberta) basis differential was a $0.44/MMBtu discount to NYMEX in the second quarter of 2012, which was similar to the $0.46/MMBtu differential that existed in the second quarter of 2011.
Potash gross profit for the second quarter of 2012 was $153-million, compared to $165-million in the same quarter last year. The decrease was attributable primarily to lower domestic sales volumes of 285,000 tonnes, compared to 316,000 tonnes in the second quarter of 2011. This was due to the combination of softer North American market conditions and shipping delays associated with a strike at Canadian Pacific Railway. International sales volumes were 227,000 tonnes in the second quarter of 2012, matching those reported in the second quarter of 2011. Potash cost of product sold was $181 per tonne this quarter, compared to $173 per tonne in the second quarter of 2011. The increase in cost of product sold per tonne was primarily due to lower volumes produced this quarter. Gross margin on a per tonne basis was $299 in the second quarter of 2012, compared to the $304 per tonne realized during the same quarter in 2011.
Phosphate gross profit was $42-million in the second quarter of 2012, compared to $83-million in the same quarter last year. This decrease was due to lower realized sales prices, resulting from a more balanced market relative to the tight supply/demand situation that existed in the second quarter of 2011, as well as higher input costs. This was partially offset by higher total phosphate sales volumes of 313,000 tonnes this quarter, compared to 259,000 tonnes sold in the second quarter of 2011. Phosphate cost of product sold was $581 per tonne in the second quarter of 2012 as compared to $475 per tonne in the same period last year. The increase in cost of product sold was due to planned turnarounds at both of our phosphate facilities and higher rock and sulphur costs compared to the same period last year. On a per tonne basis, gross margin in the second quarter of 2012 decreased to $132 per tonne, compared to $320 per tonne in the same period last year.
Wholesale's Other product category, which is primarily comprised of ammonium sulfate and Rainbow granulated products, achieved gross profit of $30-million in the second quarter of 2012, compared to $26-million in the same period last year. Gross profit from product purchased for resale was $17-million this quarter, compared to $22-million in the second quarter of 2011.
Wholesale expenses in the second quarter of 2012 were $39-million, compared to $51-million in the second quarter of 2011. The decrease is primarily attributable to non-recurring expenses in the second quarter of 2011, as well as a reduction in potash profit tax in 2012 due to deductions from the taxable base for investment related to our Vanscoy expansion project.
Advanced Technologies
AAT gross profit was $36-million in the second quarter of 2012, a decrease of $1-million from the $37-million reported in the second quarter of 2011. Higher gross profit from the Tetra Micronutrients and Evergro acquisitions in 2011, as well as stronger sales in the Direct Solutions segment in the United States this quarter were offset by lower sales volumes of Environmentally Smart Nitrogen ("ESN") as a result of the unplanned outages in the first half of 2012 at our Carseland nitrogen facility.
EBITDA was $20-million this quarter, exceeding the $18-million achieved in the second quarter of 2011. Other income was $3-million higher this quarter compared to $nil reported in the same period last year, resulting primarily from a new commercial arrangement with a former joint venture partner. This offset higher selling expenses for AAT as a result of the acquisitions made in the second half of 2011.
Other
EBITDA for our Other non-operating business unit for the second quarter of 2012 was $24-million, compared to a loss of $19-million for the second quarter of 2011. The favorable increase was primarily driven by:
This was offset by a $19-million increase in share-based payments expense, where there was a $9-million charge in the second quarter of 2012 compared to a $10-million recovery in the same quarter of 2011. The increase in share-based payments expense was largely caused by appreciation of our share price during the second quarter of 2012 compared to depreciation in the share price in the same period for 2011.
EBITDA for Other in the first half of 2012 was a loss of $104-million, compared to a loss of $112-million for the first half of 2011. The favorable change was comprised of:
This was offset by a $71-million increase in share-based payments expense, where there was a $73-million charge in the first half of 2012 compared to a $2-million charge in the first half of 2011.
FINANCIAL CONDITION
The following are changes to working capital on our Consolidated Balance Sheets in the six-month period ended June 30, 2012.
LIQUIDITY AND CAPITAL RESOURCES
Summary of Consolidated Statements of Cash Flows
Below is a summary of our cash provided by or used in operating, investing, and financing activities as reflected in the Consolidated Statements of Cash Flows:
The sources and uses of cash for the six months ended June 30, 2012 compared to the six months ended June 30, 2011 are summarized below:
Capital Expenditures
Our sustaining and investing capital expenditures increased in the first half of 2012 compared to the first half of 2011 due to continued activity on the Vanscoy potash expansion project.
Capital Management
In April 2012, we filed a base shelf prospectus in Canada and the U.S. permitting the issuance of up to $2.5-billion of common shares, preferred shares, subscription receipts, debt securities or units over the 25-month period that the base shelf prospectus remains effective. The base shelf replaced a base shelf prospectus that expired in 2011. We have not issued securities under the base shelf prospectus.
OUTSTANDING SHARE DATA
The number of Agrium's outstanding shares as at July 31, 2012 was approximately 158 million. As at July 31, 2012, the number of shares issuable pursuant to stock options outstanding (issuable assuming full conversion, where each option granted can be exercised for one common share) was approximately 0.1 million.
The agricultural products business is seasonal in nature. Consequently, comparisons made on a year-over-year basis are more appropriate than quarter-over-quarter. Crop input sales are primarily concentrated in the spring and fall crop input application seasons, which are in the second quarter and fourth quarter. Crop nutrient inventories are normally accumulated leading up to the application season. Cash collections generally occur after the application season is complete in the Americas and Australia.
BUSINESS ACQUISITION
On March 19, 2012, we signed an agreement to acquire the majority of the Agri-products business of Viterra Inc. ("Viterra"), consisting of approximately 90 percent of Viterra's 258 Canadian farm centres; 17 Australian retail farm centres; a 34 percent interest in a nitrogen facility in Medicine Hat, Canada; storage and distribution assets; and other assets and liabilities (collectively the "Agrium Assets"). The purchase price is expected to be approximately Cdn$1.65-billion, including estimated working capital of Cdn$500-million. For further information on this agreement, please refer to Form 51-102F3, Material Change Report, dated March 20, 2012 filed on SEDAR at . Agrium will acquire the Agrium Assets from Glencore International plc ("Glencore") after obtaining any required consents to transfers and regulatory clearances. Shareholders of Viterra approved the acquisition by Glencore on May 29, 2012. Glencore received approval of its acquisition of Viterra under the Investment Canada Act on July 15, 2012, however other regulatory approvals remain outstanding.
On August 2, 2012, Agrium and Glencore announced that CF Industries Holdings Inc. ("CF"), owner of a 66 percent interest in the Medicine Hat nitrogen facility, will acquire Viterra's 34 percent interest for Cdn$915-million. Accordingly, Agrium will not acquire an interest in the Medicine Hat facility. The agreement between Glencore and CF is subject to regulatory approval. Agrium will continue to receive the benefit of Viterra's operating cash flow on the Medicine Hat nitrogen facility from March 31, 2012 to closing of the purchase of Viterra's 34 percent interest by CF.
DUTCH AUCTION SUBSTANTIAL ISSUER BID
On August 2, 2012, Agrium's Board of Directors authorized a Dutch auction substantial issuer bid (the "Bid"). Under the Bid, we will repurchase Cdn$900-million of our outstanding common shares.
NON-IFRS FINANCIAL MEASURES
In the discussion of our performance for the quarter, in addition to the primary measures of earnings and earnings per share reported in accordance with IFRS, we make reference to EBITDA. We consider EBITDA to be a useful measure of performance because income tax jurisdictions and business segments are not synonymous and we believe that allocation of income tax charges distorts the comparability of historical performance for the different business segments. Similarly, financing and related interest charges cannot be allocated to all business units on a basis that is meaningful for comparison with other companies.
EBITDA is not a recognized measure under IFRS, and our method of calculation may not be comparable to other companies. Similarly, EBITDA should not be used as an alternative to net earnings from continuing operations as determined in accordance with IFRS.
The following table is a reconciliation of EBITDA to consolidated net earnings from continuing operations as determined in accordance with IFRS:
CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS
We prepare our financial statements in accordance with IFRS, which requires us to make assumptions and estimates about future events and apply significant judgments. We base our assumptions, estimates and judgments on our historical experience, current trends and all available information that we believe is relevant at the time we prepare the financial statements. However future events and their effects cannot be determined with certainty. Accordingly, as confirming events occur, actual results could ultimately differ from our assumptions and estimates. Such differences could be material. For further information on the Company's critical accounting estimates, please refer to the "Critical Accounting Estimates" section of our 2011 annual Management's Discussion and Analysis, which is contained in our 2011 Annual Report. Since the date of our 2011 annual Management's Discussion and Analysis, there have not been any significant changes to our critical accounting estimates and judgments.
CHANGES IN ACCOUNTING POLICIES
For information regarding changes in accounting policies, please refer to the "Accounting Standards and Policy Changes Not Yet Implemented" section of our 2011 annual Management's Discussion and Analysis, which is contained in our 2011 Annual Report.
BUSINESS RISKS
The information presented on Enterprise Risk Management and Key Business Risks on pages 68 - 71 in our 2011 Annual Report has not changed materially since December 31, 2011.
CONTROLS AND PROCEDURES
There have been no changes in our internal control over financial reporting during the quarter ended June 30, 2012 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
PUBLIC SECURITIES FILINGS
Additional information about our company, including our 2011 Annual Information Form is filed with the Canadian securities regulatory authorities through SEDAR at and with the U.S. securities regulatory authorities through EDGAR at .
OUTLOOK, KEY RISKS AND UNCERTAINTIES
The outlook for grain and oilseed prices has improved dramatically over the past two months as several significant weather-related problems have reduced crop production expectations in key growing regions. The most severe weather damage has occurred in the U.S. Corn Belt region. The U.S. National Oceanic and Atmospheric Administration reported that the drought in the U.S. is the worst since 1956. U.S. corn condition ratings are at the lowest levels since the severe drought in 1988, when corn yields were 25 percent below trend levels. In its July crop production forecast, the U.S. Department of Agriculture ("USDA") reduced its U.S. corn yield forecast by 20 bushels per acre to 146 bushels per acre, and most analysts expect final yields to decline further from those projections. In addition to the devastating crop damage in the U.S., Russian and Ukrainian wheat production and export forecasts have been reduced significantly and the Indian monsoon rains have been below average levels so far in 2012.
The drought in the U.S. Corn Belt will impact both growers and consumers of grains and oilseeds. Fortunately, most growers in the U.S. entered the 2012 growing season with a historically strong balance sheet and are covered by crop insurance, which should provide significant cash flow to pay for crop inputs in 2012/2013. Globally, growers in geographies with more favourable growing conditions stand to be the largest beneficiaries. In Western Canada, crop conditions are generally good and growers planted over 8 million more acres this spring compared to the same period in 2011. In South America, it is expected that growers will maximize planting of corn and soybeans beginning in October. Finally, in Australia, the winter crop is early in development, but growers stand to benefit from increased wheat prices.
U.S. crop nutrient demand has historically increased in years following droughts, in part due to higher crop prices the following year and the resulting increase in acreage. We do not expect soil test results to alter historical recommendations on nitrogen, phosphate and potash application rates for 2013, especially given the long-term trend of declining phosphate and potash levels in many soils and the fact that a large portion of crop nutrient uptake occurs in early plant development. U.S. growers started the year in a very strong financial position and with high crop prices in 2012/2013, we do not expect a reduction in application rates. However, if drought conditions extend into the fall of 2012, there is the potential for growers in the hardest hit regions to delay crop nutrient application decisions until moisture is received. Crop protection demand in the first half of 2012 was strong with the exception of fungicides which is directly related to the drought in the U.S. this year. Back half demand for crop protection products may be negatively impacted depending on the severity and length of the heat and lack of moisture in the U.S. Midwest. Seed demand should be supported by strong wheat prices and planted acreage this fall and increased total North American planted area in 2013.
Global nitrogen prices have been volatile, at relatively high levels, over the past few months. Urea prices declined in June as the spring season wrapped up, but have rebounded off of lows faster than many analysts had expected. The North American granular urea market has maintained a strong premium to other markets over the past few months. Indian demand for urea has been strong, but demand in the second half of 2012 will partially depend on the Indian monsoon over the next couple of months. The supply/demand balance in the global ammonia market has remained tight due to gas restrictions, primarily in Trinidad, and lower than expected production at the new Qafco 5 and 6 plants. The high crop prices are expected to support nitrogen demand in the second half of 2012. Northern hemisphere winter wheat prospects look much more positive than they did a couple of months ago, and the signal to boost corn production in South America is also strong.
The global phosphate market has been balanced to tight over the past couple of months, aided by India purchasing DAP on the spot market. Import demand from Brazil has been running at levels slightly lower than in the first half of 2011, but has picked up over the past couple of months. Reportedly tight domestic inventories and strong crop prices are expected to support strong Brazilian import demand in the second half of 2012. The Ma'aden phosphate project continues to struggle to achieve capacity utilization above 50 percent, which has further contributed to tight global DAP export supply. China is in the midst of its low export tax season but is expected to ship lower levels of phosphate fertilizers this year.
Global potash deliveries have improved over the past couple of months, but North American producer potash inventories remain at relatively high levels. Brazilian demand has lagged behind 2011 levels so far this year, however, low inventories and record high crop prices should support strong seasonal demand over the coming months. Chinese potash imports are up approximately 20 percent in the first half of 2012 compared to the same period in 2011. Chinese buyers are currently negotiating second half contracts with key potash suppliers. Indian potash purchases have been impacted by reduced demand due to changes in domestic subsidy levels and devaluation of the Rupee. Indian domestic potash shipments have increased recently, but uncertainty exists regarding completion of supply agreements for the back half of 2012. In general, there has been a drawdown in retail potash inventories globally in the first half of 2012 and we expect replenishment of the pipeline in the second half of the year.
Forward-Looking Statements
Certain statements and other information included in this MD&A constitute "forward-looking information" within the meaning of applicable Canadian securities legislation or constitute "forward-looking statements" within the meaning of applicable U.S. securities legislation (collectively, the "forward-looking statements"). All statements in this MD&A, other than those relating to historical information or current conditions, are forward-looking statements, including, but not limited to, statements as to management's expectations with respect to: future crop and crop input volumes, demand, margins, prices and sales; business and financial prospects; and other plans, strategies, objectives and expectations, including with respect to future operations of Agrium. These forward-looking statements are subject to a number of risks and uncertainties, many of which are beyond our control, which could cause actual results to differ materially from such forward-looking statements.
All of the forward-looking statements are qualified by the assumptions that are stated or inherent in such forward-looking statements, including the assumptions listed below. Although Agrium believes that these assumptions are reasonable, this list is not exhaustive of the factors that may affect any of the forward-looking statements and the reader should not place an undue reliance on these assumptions and such forward-looking statements. The key assumptions that have been made in connection with the forward-looking statements include Agrium's ability to successfully integrate and realize the anticipated benefits of its already completed and future acquisitions, including the acquisition of retained AWB Limited ("AWB") businesses and the proposed acquisition of the Agri-products business of Viterra.
Events or circumstances that could cause actual results to differ materially from those in the forward-looking statements include, but are not limited to: general economic, market and business conditions, weather conditions including impacts from regional flooding and/or drought conditions; crop prices; the supply and demand and price levels for our major products; governmental and regulatory requirements and actions by governmental authorities, including changes in government policy, government ownership requirements, changes in environmental, tax and other laws or regulations and the interpretation thereof, and political risks, including civil unrest, actions by armed groups or conflict. There is a risk that the Egyptian Misr Fertilizers Production Company S.A.E. ("MOPCO") nitrogen facility in Egypt may not be allowed to restart production or proceed with the completion of the two new facilities. Additionally, there are risks associated with Agrium's acquisition of AWB, including: size and timing of expected synergies could be less favourable than anticipated; AWB is subject to dispute and litigation risk (including as a result of being named in litigation commenced by the Iraqi Government relating to the United Nations Oil-For-Food Programme), as well as counterparty and sovereign risk; and other risk factors detailed from time to time in Agrium reports filed with the Canadian securities regulators and the Securities and Exchange Commission in the United States. Furthermore, there are risks associated with the proposed acquisition of the Agri-products business of Viterra, including: completion of the acquisition of Viterra by Glencore International plc and the subsequent acquisition and further divestiture of the assets proposed to be purchased by Agrium, as well as the timing thereof; the receipt of the necessary regulatory approvals in respect of the assets proposed to be purchased by Agrium and the satisfaction of other conditions precedent to closing; potential liabilities associated with the assets proposed to be assumed by Agrium, which may not be known to Agrium at this time due, in part, to the fact that the nature of the transaction did not allow for Agrium to complete customary due diligence prior to entering into the agreement to purchase the assets; and the amount of the final purchase price for the purchased assets.
Agrium disclaims any intention or obligation to update or revise any forward-looking statements in this press release as a result of new information or future events, except as may be required under applicable U.S. federal securities laws or applicable Canadian securities legislation.
OTHER
Agrium Inc. is a major Retail supplier of agricultural products and services in North America, South America and Australia and a leading global Wholesale producer and marketer of all three major agricultural nutrients and the premier supplier of specialty fertilizers in North America through our Advanced Technologies business unit. Agrium's strategy is to grow across the value chain through acquisition, incremental expansion of its existing operations and through the development, commercialization and marketing of new products and international opportunities. Our strategy places particular emphasis on growth opportunities that both increase and stabilize our earnings profile in the continuing transformation of Agrium.
A WEBSITE SIMULCAST of the 2012 2nd Quarter Conference Call will be available in a listen-only mode beginning Friday, August 3, 2012 at 6:30 a.m. MT (8:30 a.m. ET). Please visit the following website: .
AGRIUM INC.
Summarized Notes to the Consolidated Financial Statements
For the six months ended June 30, 2012
(Millions of U.S. dollars, except per share amounts)
(Unaudited)
1. Corporate Information
Corporate information
Agrium Inc. ("Agrium") is incorporated under the laws of Canada with common shares listed under the symbol "AGU" on the New York Stock Exchange (NYSE) and the Toronto Stock Exchange (TSX). Agrium (with its subsidiaries) is a major retail supplier of agricultural products and services in North and South America, Australia and Europe and a leading global producer and marketer of agricultural nutrients and industrial products. We produce and market three primary groups of nutrients: nitrogen, phosphate and potash as well as controlled-release crop nutrients and micronutrients. Our Corporate head office is located at 13131 Lake Fraser Drive S.E. Calgary, Alberta, Canada. Our operations are conducted globally from our Wholesale head office in Calgary, and our Retail and Advanced Technologies head offices in Loveland, Colorado, U.S.
Basis of preparation and statement of compliance
These consolidated interim financial statements ("interim financial statements") were approved for issuance by the Audit Committee on August 2, 2012. We prepared these interim financial statements in accordance with IAS 34 Interim Financial Reporting. They do not include all information and disclosures normally provided in annual financial statements and should be read in conjunction with our audited annual financial statements and related notes contained in our 2011 Annual Report, available at . We prepared these interim financial statements using the same accounting policies and critical accounting estimates we applied in our 2011 Annual Report.
Seasonality in our business results from increased demand for our products during planting seasons. Sales are generally higher in spring and fall.
2. Business Acquisition
On March 19, 2012, we signed an agreement with Glencore International plc ("Glencore") to acquire the majority of the Agri-products business of Viterra Inc. ("Viterra"), consisting of approximately 90 percent of Viterra's 258 Canadian farm centres; 17 Australian retail farm centres; a 34 percent interest in a nitrogen facility in Medicine Hat, Canada; storage and distribution assets; and other assets and liabilities (collectively the "Agrium Assets").
On August 2, 2012, Agrium and Glencore announced that CF Industries Holdings Inc. ("CF"), owner of a 66 percent interest in the Medicine Hat nitrogen facility, will acquire Viterra's 34 percent interest for Cdn$915-million. Accordingly, Agrium will not acquire an interest in the Medicine Hat facility. The agreement between Glencore and CF is subject to regulatory approval. Agrium will continue to receive the benefit of Viterra's operating cash flow on the Medicine Hat nitrogen facility from March 31, 2012 to closing of the purchase of Viterra's 34 percent interest by CF.
On August 2, 2012, Agrium's Board of Directors authorized a Dutch auction substantial issuer bid (the "Bid"). Under the Bid, we will repurchase Cdn$900-million of our outstanding common shares.
6. Property, Plant and Equipment
During the six months ended June 30, 2012, we added $289-million to assets under construction at our Vanscoy Potash facility.
In March 2012, we recorded an asset retirement obligation for the phosphogypsum stack system at our Conda, Idaho phosphate facility. Included in the provision of $139-million are costs to address phosphogypsum stack decommissioning at the Conda facility, including post-closure monitoring. The provision was based on negotiations with government authorities, which are ongoing. Timing of the expenditures is contingent on, among other things, the completion of negotiations with government authorities, completion of engineering and planning for the work, and approval of engineering and planning by government authorities. Because various circumstances may affect the timing and amount of expenditures, we may change our provision as new information becomes available.
Contacts:
Agrium Inc.
Richard Downey
Vice President, Investor & Corporate Relations
(403) 225-7357
Agrium Inc.
Todd Coakwell
Manager, Investor Relations
(403) 225-7437
Agrium Inc.
Mark Thompson
Analyst, Investor Relations
(403) 225-7761
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Datum: 02.08.2012 - 21:07 Uhr
Sprache: Deutsch
News-ID 1139193
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Commodity Chemicals
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