Agrium Reports In-Line Fourth Quarter Results: Foresees Solid Spring Season

CALGARY, AB--(Marketwired - February 09, 2017) - Agrium Inc. (TSX: AGU) (NYSE: AGU) announced today its 2016 fourth quarter results, with a net earnings to equity holders of Agrium of $67-million ($0.49 diluted earnings per share) compared to net earnings of $201-million ($1.45 diluted earnings per share) in the fourth quarter of 2015. The reduction in net earnings was driven primarily by lower year-over-year nutrient pricing. On an annual basis, 2016 earnings to equity holders of Agrium were $592-million ($4.29 diluted earnings per share) compared to $988-million ($6.98 diluted earnings per share) in 2015.

Highlights:

  • Fourth quarter guidance relevant earnings were $94-million or $0.68 diluted earnings per share1 which is in-line with our guidance. Retail reported record EBITDA2,3 for the fourth quarter, supported by strong crop protection product sales and record International earnings, as Australian operations delivered a 29 percent increase in annual EBITDA in 2016.
  • Cash provided by operating activities was $1.5-billion in the fourth quarter.
  • Wholesale achieved record production for nitrogen this year and successfully completed construction of the 610,000 tonne urea plant at its nitrogen facility in Borger, Texas, within the previously disclosed revised timeline and cost parameters. Commissioning is underway and production is expected to commence in the first quarter of 2017.
  • Agrium had a record year for retail small to mid-sized acquisitions, with over $500-million of expected annual sales.
  • Agrium's commitment to Operational Excellence continued to deliver results this quarter, and on an annual basis we delivered approximately $145-million of EBITDA cash cost savings across the company. Supporting this was $66-million in fixed cost savings in Wholesale, while Retail's cash operating coverage ratio3 improved to 61 percent on an annual basis.
  • Agrium has announced our 2017 annual guidance range of $4.50 to $6.00 diluted earnings per share (see page 3 for guidance assumptions and further details).

"Agrium continued to deliver solid results across our business this quarter, supported by record fourth quarter results in our Retail business and strong wholesale operating performance. We delivered on our promise of value-added growth in 2016 by successfully bringing our Borger expansion to completion and growing retail at a record pace through acquisitions," commented Chuck Magro, Agrium's President and CEO. "We have been encouraged by the recent firming in global nutrient markets and we anticipate solid demand for crop inputs in the coming spring application season," added Mr. Magro.

1 Effective tax rate of 25.5 percent for the fourth quarter and 27.3 percent for the year ended 2016 were used for the adjusted net earnings, guidance relevant earnings and per share calculations. These are non-IFRS measures which represent net earnings adjusted for certain income (expenses) that are considered to be non-operational in nature. We believe these measures provide meaningful comparison to the earnings of other companies and our guidance by eliminating share-based payments expense (recovery), gains (losses) on foreign exchange and related gains (losses) on non-qualifying derivative hedges and significant non-operating, non-recurring items. Our guidance is forward-looking information. We present guidance relevant earnings per share to provide an update to this previously disclosed forward-looking information. These should not be considered as a substitute for, or superior to, measures of financial performance prepared in accordance with IFRS and may not be directly comparable to similar measures presented by other companies.
2 Earnings (loss) from operations before finance costs, income taxes, depreciation and amortization.
3 This is a non-IFRS measure. Refer to section "Non-IFRS Measures".

ADJUSTED NET EARNINGS AND GUIDANCE RELEVANT EARNINGS RECONCILIATIONS

    Three months ended   Twelve months ended  
    December 31, 2016   December 31, 2016  
(millions of U.S. dollars, except per share amounts)

Expense

  Net earnings
 
(loss) impact
(post-tax)
 

Per share (a)

 

Expense

  Net earnings
impact
(post-tax)
 

Per share (a)

 
      67   0.49       596   4.29  
Adjustments:                        
  Share-based payments 33   25   0.18   55   40   0.29  
  Foreign exchange loss net of non-qualifying derivatives 3   2   0.01   13   9   0.06  
  Merger and related costs 14   10   0.07   31   23   0.17  
  Egyptian pound devaluation impact on MOPCO equity investment (35 ) (26 ) (0.19 ) (35 ) (25 ) (0.18 )
  IT outsourcing costs 7   5   0.04   14   10   0.07  
Adjusted net earnings(b)     83   0.60       653   4.70  
Additional items not included in earnings guidance:                        
  Investment impairment 15   11   0.08   15   11   0.08  
  Non-operational legal costs -   -   -   18   13   0.09  
  Guidance relevant earnings(b)     94   0.68       677   4.87  
(a) Diluted per share information attributable to equity holders of Agrium
(b) Effective tax rate of 25.5 percent for the fourth quarter and 27.3 percent for the year ended was used for the adjusted net earnings, guidance relevant earnings, and per share calculations.

MARKET OUTLOOK

Agricultural and Crop Input Fundamentals

  • Crop prices are similar to or higher than where they were a year ago, despite record global crop production in 2016/17.
  • Strong global demand for grains and oilseeds has helped to partly offset the impact from record grain production. The United States Department of Agriculture ("USDA") projects that combined global grain and oilseed demand will grow by over 3 percent in 2016/17. Over the past four years, global demand has grown at an annual rate of 2.8 percent, which is the highest four year growth rate in the past thirty five years.
  • We expect growers will continue to be cautious when making crop input decisions in 2017, despite improved margins partly associated with lower crop input prices. North American crop input prepay levels are higher than the same time last year, partly due to strong anticipated spring nutrient purchases in Canada due to the shortened fall ammonia season in 2016.
  • We expect U.S. corn acreage to be between 90 million to 92 million acres in 2017, down from 94 million acres in 2016. We anticipate the decline in corn acreage to result in a 1 to 3 percent decline in 2016/17 U.S. crop nutrient demand, as well as lower expenditures on seed. However, total crop protection expenditures are expected to be relatively stable in 2017.

Nitrogen

  • Global nitrogen prices rallied in late 2016 and early 2017, with benchmark urea and ammonia prices up between $80 and over $100 per tonne from second half 2016 lows. The rise in nitrogen prices was primarily in response to reduction in supply and export availability from China and Eastern Europe, largely due to low global prices earlier in the year.
  • Chinese coal prices increased by between 40 and 140 percent between the low and high of 2016, depending on the type of coal. The increase in costs and relatively low global urea prices resulted in Chinese urea exports in the fourth quarter declining by more than 65 percent year-over-year, while annual exports declined from 13.8 million tonnes in 2015 to 8.9 million tonnes in 2016. We anticipate exports will decline further in 2017 to between six and eight million tonnes, despite the recent removal of the Chinese urea export tax in late 2016.
  • U.S. offshore imports of urea were down more than one million tonnes in the second half of 2016 compared to 2015 levels, which was more than double the estimated increase in domestic production during the same time period. The shortfall in supply has lent further support to urea prices in early 2017.

Potash

  • Strong potash demand supported global potash prices in the second half of 2016 and into the first half of 2017 as most potash buyers had relatively low inventories by the end of 2016. We expect that global potash shipments will be between 60 to 62 million tonnes in 2017, up from 59 million tonnes in 2016.
  • Analysts expect new potash capacity to begin ramping up in the first half of 2017, which would increase available supply in the second half of 2017, however much will depend on the rate at which new supplies become available relative to the rate of international demand growth.

Phosphate

  • The phosphate market was relatively weak by the end of 2016, in part due to strong exports from China late in the year; however, exportable supplies from China have tightened in early 2017 and both global and North American prices have recently increased as a result.
  • Increased raw material costs are also supportive of phosphate prices, particularly the rise in the price of ammonia.

2017 ANNUAL GUIDANCE

Based on our assumptions set out under the heading "Market Outlook", Agrium expects to achieve annual diluted earnings per share of $4.50 to $6.00 in 2017. We have maintained a range width encompassing approximately $300-million of EBITDA variability to reflect the risk and opportunity associated with crop nutrient prices and demand for crop inputs at this time of year. We are assuming a normal spring and fall application season, recognizing there is always a risk that inclement weather could affect the timing and duration of each season. Our earnings per share guidance assumes some recovery from current nitrogen prices during the key application seasons.

Based on these and other assumptions regarding prices and demand for crop nutrients set out under the heading "Market Outlook", we expect Retail EBITDA to be $1.125-billion to $1.225-billion, and Retail nutrient sales volumes to range between 10.2 million to 10.6 million tonnes in 2017.

Based on our expected increase in utilization rate for our nitrogen assets, we anticipate nitrogen production to total 3.6 to 3.8 million tonnes. Agrium continues its hedging program for gas requirements in 2017 and is monitoring the market to mitigate any upward pressure on prices through near-term hedging. Our earnings per share guidance assumes NYMEX gas prices will be between $3.05 and $3.85 per MMBtu in 2017.

Agrium's expectation for potash production in 2017 assumes the full ramp-up of production following the expansion project at our Vanscoy mine. We expect to produce between 2.4 and 2.8 million tonnes of potash in 2017.

Total capital expenditures are expected to be in the range of $650-million to $750-million, of which approximately $500-million to $550-million is expected to be sustaining capital expenditures.

Agrium's annual effective tax rate for 2017 is expected to range between 27 to 29 percent.

This guidance and updated additional measures and related assumptions are summarized in the table below. Guidance excludes the impact of share-based payments expense (recovery), gains (losses) on foreign exchange and non-qualifying derivative hedges, and merger related costs. Volumetric and earnings estimates assume normal seasonal growing and harvest patterns in the geographies where Agrium operates.

2017 ANNUAL GUIDANCE RANGE AND ASSUMPTIONS

  Annual  
  Low   High  
Diluted EPS (in U.S. dollars) $4.50   $6.00  
Guidance assumptions:        
Wholesale:        
  Production tonnes:        
    Nitrogen (millions) 3.6   3.8  
    Potash (millions) 2.4   2.8  
Retail:        
  EBITDA (millions of U.S. dollars) $1,125   $1,225  
  Crop nutrient sales tonnes (millions) 10.2   10.6  
Other:        
  Tax rate 29 % 27 %
  Sustaining capital expenditures (millions of U.S. dollars) $500   $550  
  Total capital expenditures (millions of U.S. dollars) $650   $750  

February 9, 2017

All comparisons of results for the fourth quarter of 2016 (three months ended December 31, 2016) and for the twelve months ended December 31, 2016 are against results for the fourth quarter of 2015 (three months ended December 31, 2015) and twelve months ended December 31, 2015. All dollar amounts refer to United States (U.S.) dollars except where otherwise stated. This news release should be read in conjunction with our audited annual financial statements and related notes, prepared in accordance with IFRS, contained in our 2015 Annual Report, available at www.agrium.com.

The financial measures cash operating coverage ratio, cash selling and general and administrative expenses, cash cost of product manufactured, and EBITDA used in this news release are not prescribed by, and do not have any standardized meaning under International Financial Reporting Standards (IFRS). Our method of calculation may not be directly comparable to that of other companies. We consider these non-IFRS financial measures to provide useful information to both management and investors in measuring our financial performance and financial condition. These non-IFRS financial measures should not be considered as a substitute for, or superior to, measures of financial performance prepared in accordance with IFRS. Please refer to the section entitled "Non-IFRS Financial Measures" for further details, including a reconciliation of such measures to their most directly comparable measure calculated in accordance with IFRS.

2016 Fourth Quarter Operating Results

CONSOLIDATED NET EARNINGS

Financial Overview                
   
  Three months ended December 31,  
(millions of U.S. dollars, except per share amounts and where noted) 2016   2015   Change   % Change  
Sales 2,280   2,407   (127 ) (5 )
Gross profit 748   900   (152 ) (17 )
Expenses 586   576   10   2  
Earnings before finance costs and income taxes (EBIT) 162   324   (162 ) (50 )
Net earnings 67   200   (133 ) (67 )
Diluted earnings per share 0.49   1.45   (0.96 ) (66 )
Effective tax rate (%) 25   20   N/A   N/A  
Sales and Gross Profit  
               
    Three months ended December 31,  
(millions of U.S. dollars) 2016   2015   Change  
Sales            
  Retail 1,828   1,765   63  
  Wholesale 657   888   (231 )
  Other (205 ) (246 ) 41  
    2,280   2,407   (127 )
               
Gross profit            
  Retail 623   599   24  
  Wholesale 134   320   (186 )
  Other (9 ) (19 ) 10  
    748   900   (152 )
  • Retail's sales and gross profit increased in the fourth quarter of 2016 primarily as a result of higher crop protection product sales due to higher demand for herbicides and glyphosate in the U.S. Corn Belt and favorable weather conditions in Australia.
  • Wholesale's sales and gross profit decreased in the fourth quarter compared to the same period last year due to lower market prices for all nutrients.

Expenses

  • General and administrative expenses decreased by $9-million (12 percent) as a result of organization-wide cost control measures.
  • Earnings from associates and joint ventures increased as a result of the devaluation of the Egyptian pound that led to a $35-million foreign exchange gain in MOPCO, net of tax.
  • Our share price increased during the current quarter leading to higher share-based payments expense of $18-million.
  • Other expenses increased during the quarter primarily due to the following:
    • Merger and related costs of $14-million
    • Impairment loss of $15-million related to an international investment
    • Information Technology outsourcing costs of $7-million

For further breakdown on Other expenses, see table below:

Other expenses breakdown        
  Three months ended
December 31,
 
(millions of U.S. dollars) 2016   2015  
Loss (gain) on foreign exchange and related derivatives 3   (5 )
Interest income (17 ) (16 )
Gain on sale of assets -   (17 )
Asset impairment 15   19  
Environmental remediation and asset retirement obligations 1   1  
Bad debt expense 3   4  
Potash profit and capital tax 2   3  
Merger and related costs 14   -  
Outsourcing costs 7   -  
Other 15   38  
  43   27  

Depreciation and Amortization

Depreciation and amortization breakdown

    Three months ended December 31,  
  2016   2015  
(millions of U.S. dollars) Cost of
product
sold
 

Selling

  General
and
administrative
 

Total

  Cost of
product
sold
 

Selling

  General
and
administrative
 

Total

 
Retail 1   66   1   68   1   64   1   66  
Wholesale                                
  Nitrogen 22   -   1   23   18   -   -   18  
  Potash 26   -   -   26   28   -   -   28  
  Phosphate 15   -   -   15   14   -   -   14  
  Wholesale Other (a) 3   -   -   3   4   -   1   5  
    66   -   1   67   64   -   1   65  
Other -   -   6   6   -   -   4   4  
Total 67   66   8   141   65   64   6   135  
(a) This includes product purchased for resale, ammonium sulfate, Environmentally Smart Nitrogen® (ESN) and other products.

Effective Tax Rate

  • The effective tax rate of 25 percent for the fourth quarter of 2016 was higher than the tax rate of 20 percent for the same period in 2015 due to a decrease in the recognition of previously unrecognized tax assets in Canada.

BUSINESS SEGMENT PERFORMANCE

Retail            
             
  Three months ended December 31,  
(millions of U.S. dollars, except where noted) 2016   2015   Change  
Sales 1,828   1,765   63  
Cost of product sold 1,205   1,166   39  
Gross profit 623   599   24  
EBIT 134   133   1  
EBITDA 202   199   3  
Selling and general and administrative expenses 502   491   11  
  • Retail reported record fourth quarter gross profit and EBITDA1, supported by robust demand for crop protection products and application services in the U.S and Australia. On an annual basis, Retail, and specifically Australia, reported record EBITDA while U.S. operations reported a record EBITDA to sales margin of 10.4 percent supported by higher margin proprietary product sales and cost savings.
  • Total Retail selling and general and administrative expenses were up $11-million from the fourth quarter of last year. However, total cash expenses were down by $12-million after adjusting for costs associated with the retail locations acquired in 2016. Our cash operating coverage ratio also improved due to our continued focus on Operational Excellence, moving down to 61 percent on a rolling four quarter basis from 62 percent for the same period last year.
  • Regionally, U.S. EBITDA was up slightly this quarter, while our Canadian operations reported weaker results due to an early winter, which shortened the fall application season. Australia reported a $20-million increase in EBITDA primarily due to strong crop protection product sales and accompanying application services. Our South American Retail operations reported slightly higher gross profit but lower EBITDA this quarter.
1 Net earnings (loss) before finance costs, income taxes, depreciation and amortization, and net earnings (loss) from discontinued operations.
Retail sales and gross profit by product line
  Three months ended December 31,
  Sales   Gross profit   Gross profit (%)  
(millions of U.S. dollars, except where noted) 2016   2015   Change   2016   2015   Change   2016   2015  
Crop nutrients 779   843   (64 ) 147   154   (7 ) 19   18  
Crop protection products 620   541   79   296   268   28   48   50  
Seed 101   75   26   43   54   (11 ) 43   72  
Merchandise 167   156   11   27   27   -   16   17  
Services and other 161   150   11   110   96   14   68   64  

Crop nutrients

  • Total crop nutrient sales were 8 percent lower this quarter compared to the same period last year, due to significantly lower prices across all nutrients, partly offset by higher crop nutrient volumes.
  • The increase in crop nutrient volumes was due primarily to a 26 percent increase in U.S. sales tonnes this quarter, partly offset by a slight decline in nutrient volumes in Canada due to some fall weather challenges.
  • Total crop nutrient gross profit was 5 percent lower this quarter due to lower selling prices and margins. North American nutrient per tonne margins were down $19 this quarter due to weaker nutrient prices, but margins as a percentage of sales rose to 19 percent this quarter compared to 18 percent in the fourth quarter of 2015.

Crop protection products

  • Total crop protection product sales were up 15 percent this quarter due to strong demand in Australia, an open window in the U.S. for fall applications and some catch up in demand for crop protection products resulting from the reduced sales of these products experienced during the third quarter.
  • Gross profit in the fourth quarter was up 10 percent over last year due to strong volumes and an increase in proprietary product sales. Crop protection product margins as a percentage of sales were down slightly this quarter as a result of a higher sales mix to wholesalers and selling higher volumes of lower margin products such as glyphosate, which is used for post-harvest burndown.
  • Proprietary crop protection product sales as a percentage of total crop protection product sales reached 18 percent this quarter, up two percentage points over the same period last year. On an annual basis, proprietary crop protection sales grew 11 percent in 2016 and represented 24 percent of total crop protection product sales this year.

Seed

  • Total seed sales were 35 percent higher this period compared to last year due to increased sales of product to wholesalers in the U.S and higher demand in Australia. Gross profit declined by 20 percent, partly related to the higher sales mix to wholesalers which traditionally represents lower margins. As a result, total seed margins as a percentage of sales was 43 percent this quarter - a 29 percent decrease from the fourth quarter of 2015. On an annual basis, however, seed margins were 20 percent the same as in 2015.

Merchandise

  • Merchandise sales increased 7 percent, while gross profit remained in line with the same period last year. The increase in sales was primarily due to stronger results in Australia and increased merchandise sales in the U.S. due to some of the recent retail acquisitions.

Services and other

  • Sales for services and other was up 7 percent this quarter, while gross profit was 15 percent higher. The increase in sales and profit was related to higher crop nutrient and crop protection product applications in the U.S. and Australia this quarter.
Wholesale            
             
  Three months ended December 31,  
(millions of U.S. dollars, except where noted) 2016   2015   Change  
Sales 657   888   (231 )
Sales volumes (tonnes 000's) 2,273   2,292   (19 )
Cost of product sold 523   568   (45 )
Gross profit 134   320   (186 )
EBIT 149   287   (138 )
EBITDA 216   352   (136 )
Expenses (including earnings from associates and joint ventures) (15 ) 33   (48 )
Earnings from associates and joint ventures (34 ) (2 ) (32 )
  • Wholesale earnings this quarter were primarily impacted by lower global fertilizer prices across all nutrients compared to the same period last year. This was partly offset by lower fixed costs related to ongoing Operational Excellence initiatives.
Wholesale NPK product information  
  Three months ended December 31,  
  Nitrogen   Potash   Phosphate  
  2016   2015   Change   2016   2015   Change   2016   2015   Change  
Gross profit (U.S. dollar millions) 85   186   (101 ) 21   63   (42 ) 8   37   (29 )
Sales volumes (tonnes 000's) 954   912   42   590   656   (66 ) 303   325   (22 )
Selling price ($/tonne) 298   403   (105 ) 179   267   (88 ) 475   610   (135 )
Cost of product sold ($/tonne) 209   199   10   143   171   (28 ) 449   495   (46 )
Gross margin ($/tonne) 89   204   (115 ) 36   96   (60 ) 26   115   (89 )

Nitrogen

  • Nitrogen gross profit was down 54 percent compared to the same period last year primarily due to significantly lower global nitrogen prices.
  • Sales volumes were slightly higher than the same period last year due to strong demand for urea and nitrogen solutions. Ammonia sales volumes were 11 percent lower than the same period last year as a result of the early winter weather in Western Canada and the Northern Plains of the U.S. this year.
  • Realized selling prices per tonne were down 26 percent compared to the same period last year due to lower global benchmark nitrogen prices.
  • Cost of product sold per tonne increased by 5 percent compared to the same period last year partly due to higher natural gas input costs. Partially offsetting this were higher utilization rates and lower fixed costs at our facilities. Average nitrogen margins were $89 per tonne this quarter, while ammonia and urea margins averaged approximately $100 per tonne.
         
Natural gas prices: North American indices and North American Agrium prices
  Three months ended
December 31,
 
(U.S. dollars per MMBtu) 2016   2015  
Overall gas cost excluding realized derivative impact 2.52   2.15  
Realized derivative impact 0.07   0.31  
Overall gas cost 2.59   2.46  
Average NYMEX 2.99   2.28  
Average AECO 2.12   2.00  

Potash

  • Potash gross profit declined by 67 percent compared to the same period last year due to lower global potash prices.
  • Sales volumes were 10 percent lower in the current period primarily due to lower opening inventory levels this year.
  • Realized selling prices have declined over the past year with selling prices down 33 percent internationally and 25 percent for North American markets compared to the same period last year.
  • Our cost of product sold per tonne was 16 percent lower than the same period last year due to a product mix with higher proportion of sales to offshore markets, where freight is excluded from cost of product sold. A weaker Canadian dollar and fixed cost savings also contributed to reduced costs this quarter. Cash cost of product manufactured on an annual basis also declined by 18 percent to $79 per tonne compared to 2015 due to higher production volumes and lower fixed costs.

Phosphate

  • Phosphate gross profit was 78 percent lower than the same period last year due to continuing pressure on phosphate benchmark prices. Lower sales volumes also contributed to the decline in gross profit but were more than offset by lower cost of product sold per tonne.
  • Sales volumes were 7 percent lower than the same period last year due to an early winter in Western Canada this quarter and a shorter window for fall applications of phosphate.
  • Cost of product sold per tonne was down 9 percent compared to the same period last year due to lower input costs and the lower Canadian dollar benefiting the Redwater phosphate facility.
Wholesale Other            
             
Wholesale Other: gross profit breakdown  
  Three months ended December 31,  
(millions of U.S. dollars) 2016   2015   Change  
Ammonium sulfate 11   16   (5 )
ESN 8   15   (7 )
Product purchased for resale -   1   (1 )
Other 1   2   (1 )
  20   34   (14 )
  • Gross profit from Wholesale Other was lower than the same period last year primarily due to overall lower realized nutrient prices. This was partly offset by higher sales volumes of ESN and ammonium sulfate this quarter.

Expenses

  • Wholesale expenses decreased by $48-million in the current quarter due to higher equity earnings of $32-million from our investments, primarily as a result of the Egyptian pound devaluation leading to a foreign exchange gain; a 16 percent reduction in selling, general and administrative expenses as a result of our on-going Operational Excellence initiatives; and a $19-million goodwill impairment on our Europe purchased for resale business included in the same period last year. This was partially offset by a $17-million gain on the sale of the West Sacramento nitrogen upgrading facility recognized in the same period last year.

Other

EBITDA for our Other non-operating business unit for the fourth quarter of 2016 had a net expense of $115-million, compared to a net expense of $92-million for the fourth quarter of 2015. The variance was primarily due to:

  • Merger and related costs of $14-million
  • An increase of $18-million in share-based payments expense as a result of an increase in our share price
  • Impairment loss of $15-million on an international investment
  • Partially offset by a $10-million decrease in gross profit elimination as a result of lower intersegment inventory held at the end of the fourth quarter of 2016
Capital Spending and Expenditures (a)          
    Three months ended   Twelve months ended  
    December 31,   December 31,  
(millions of U.S. dollars) 2016   2015   2016   2015  
Retail                
  Sustaining 23   38   111   141  
  Investing 21   12   50   37  
    44   50   161   178  
  Acquisitions (b) 26   42   342   127  
  70   92   503   305  
Wholesale                
  Sustaining 38   189   244   388  
  Investing 90   26   312   604  
    128   215   556   992  
Other                
  Sustaining 1   9   4   12  
  Investing -   4   3   6  
    1   13   7   18  
Total                
  Sustaining 62   236   359   541  
  Investing 111   42   365   647  
    173   278   724   1,188  
  Acquisitions (b) 26   42   342   127  
  199   320   1,066   1,315  
(a) This excludes capitalized borrowing costs.
(b) This represents business acquisitions and includes acquired working capital; property, plant and equipment; intangibles; goodwill; and investments in associates and joint ventures.
  • Our total capital expenditures decreased in the fourth quarter and twelve months of 2016 compared to the same periods last year due to the ramp-up of our Vanscoy potash facility in 2015 combined with decreased spending on the Borger project in 2016.
  • We completed the acquisitions of 16 farm centers located in the provinces of Alberta and Saskatchewan from Andrukow Group Solutions Inc. and 18 farm centers located across the northern U.S. Corn Belt region from Cargill AgHorizons (U.S.) in 2016.

SHARE REPURCHASES

Pursuant to the agreement dated September 11, 2016 with PotashCorp, under which the companies will combine in a merger of equals, we are restricted from purchasing our outstanding shares prior to completion of the proposed plan of arrangement. No shares were repurchased under the Normal Course Issuer Bid in 2016 or the period from January 1, 2017 to February 18, 2017. During 2015, we purchased for cancellation 5,574,331 shares at an average share price of $100.25.

OUTSTANDING SHARE DATA

Agrium had 138,176,000 outstanding shares at February 3, 2017. At February 3, 2017, 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 937,528.

SELECTED QUARTERLY INFORMATION
                                   
(millions of U.S. dollars, except per share amounts) 2016
Q4
  2016
Q3
  2016
Q2
  2016
Q1
  2015
Q4
  2015
Q3
  2015
Q2
  2015
Q1
 
Sales 2,280   2,245   6,415   2,725   2,407   2,524   6,992   2,872  
Gross profit 748   568   1,525   554   900   696   1,708   584  
Net earnings (loss) 67   (39 ) 565   3   200   99   675   14  
Earnings (loss) per share attributable to equity holders of Agrium:                                
  Basic and diluted 0.49   (0.29 ) 4.08   0.02   1.45   0.72   4.71   0.08  
Dividends declared 121   120   122   121   121   120   125   112  
Dividends declared per share 0.875   0.875   0.875   0.875   0.875   0.875   0.875   0.780  

The agricultural products business is seasonal. Consequently, year-over-year comparisons are more appropriate than quarter-over-quarter comparisons. Crop input sales are primarily concentrated in the spring and fall crop input application seasons. Crop nutrient inventories are normally accumulated leading up to each application season. Our cash collections from accounts receivables generally occur after the application season is complete, and our customer prepayments are concentrated in December and January.

NON-IFRS FINANCIAL MEASURES

Financial measures that are not specified, defined or determined under IFRS are non-IFRS measures unless they are presented in our Consolidated Financial Statements. The following table outlines our non-IFRS financial measures, their definitions and why management uses the measures.

Non-IFRS financial measure   Definition   Why we use the measure and why it is useful to investors
Cash operating coverage ratio   Cash operating coverage ratio represents gross profit excluding depreciation and amortization less EBITDA, divided by gross profit excluding depreciation and amortization.   Assists management and investors in understanding the costs and underlying economics of our operations and in assessing our operating performance and our ability to generate free cash flow from our business units and overall as a company.
Cash selling and general and administrative expenses   Selected financial measures excluding depreciation and amortization.    
EBITDA   Net earnings (loss) before finance costs, income taxes, depreciation and amortization, and net earnings (loss) from discontinued operations.    EBITDA is frequently used by investors and analysts for valuation purposes when multiplied by a factor to estimate the enterprise value of a company. EBITDA is also used in determining annual incentive compensation for certain management employees and in calculating certain of our debt covenants.
Cash cost of product manufactured (COPM)   All fixed and variable costs are accumulated in cash COPM excluding depreciation and amortization expense and direct freight.   Enables investors to better understand the performance of our manufactured operations compared to other crop nutrient producers.
When cash COPM costs are divided by the production tonnes for the period, the result is actual cash COPM per tonne, which is compared to the standard cash COPM per tonne - a calculation of fixed and variable costs for a standard or typical period of production. The standard cash COPM per tonne is multiplied by the production tonnes for the period, and the resulting dollar amount is transferred to inventory. Any remaining costs are recorded directly to cost of product sold as production volume or cost efficiency variances.

Direct freight is a transportation cost to move the product from an Agrium location to the point of sale.

There is no directly comparable IFRS measure for cash COPM.

Retail cash operating coverage ratio      
  Rolling four quarters ended December 31,  
(millions of U.S. dollars, except as noted) 2016   2015  
Gross profit 2,786   2,728  
Depreciation and amortization in cost of product sold 6   6  
Gross profit excluding depreciation and amortization 2,792   2,734  
EBITDA 1,091   1,033  
Operating expenses excluding depreciation and amortization 1,701   1,701  
Cash operating coverage ratio (%) 61   62  
Cash selling and general and administrative expenses  
  Three months ended December 31,  
(millions of U.S. dollars) 2016   2015   2016   2015   2016   2015  
  Retail Wholesale Consolidated
Selling 476   462   9   7   480   465  
Depreciation and amortization in selling expense 66   64   -   -   66   64  
Cash selling 410   398   9   7   414   401  
General and administrative 26   29   7   12   65   74  
Depreciation and amortization in general and administrative 1   1   1   1   8   6  
Cash general and administrative 25   28   6   11   57   68  
  Three months ended December 31,  
Consolidated and business unit EBITDA                
(millions of U.S. dollars) Retail   Wholesale   Other   Consolidated  
2016                
Net earnings             67  
Finance costs related to long-term debt             51  
Other finance costs             21  
Income taxes             23  
EBIT 134   149   (121 ) 162  
Depreciation and amortization 68   67   6   141  
EBITDA 202   216   (115 ) 303  
2015                
Net earnings             200  
Finance costs related to long-term debt             53  
Other finance costs             20  
Income taxes             51  
EBIT 133   287   (96 ) 324  
Depreciation and amortization 66   65   4   135  
EBITDA 199   352   (92 ) 459  

FORWARD-LOOKING STATEMENTS

Certain statements and other information included in this document constitute "forward-looking information" and/or "financial outlook" 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 news release 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: 2017 annual guidance, including expectations regarding our diluted earnings per share and Retail EBITDA; capital spending expectations for 2017; expectations regarding performance of our business segments in 2017; expectations regarding completion of previously announced expansion projects (including timing and volumes of production associated therewith) and acquisitions; our market outlook for 2017, including nitrogen, potash and phosphate outlook and including anticipated supply and demand for our products and services, expected market and industry conditions with respect to crop nutrient application rates, planted acres, crop mix, prices and the impact of currency fluctuations and import and export volumes; and the proposed merger with PotashCorp, including timing of completion thereof. These forward-looking statements are subject to a number of assumptions, risks and uncertainties, many of which are beyond our control, which could cause actual results to differ materially from such forward-looking statements. As such, undue reliance should not be placed on these 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 referred to below and elsewhere in this document. 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 additional key assumptions that have been made include, among other things, assumptions with respect to Agrium's ability to successfully integrate and realize the anticipated benefits of its already completed and future acquisitions and that we will be able to implement our standards, controls, procedures and policies at any acquired businesses to realize the expected synergies; that future business, regulatory and industry conditions will be within the parameters expected by Agrium, including with respect to prices, margins, product availability and supplier agreements; the completion of our expansion projects on schedule, as planned and on budget; assumptions with respect to global economic conditions and the accuracy of our market outlook expectations for 2017 and in the future; the adequacy of our cash generated from operations and our ability to access our credit facilities or capital markets for additional sources of financing; our ability to identify suitable candidates for acquisitions and negotiate acceptable terms; our ability to maintain our investment grade rating and achieve our performance targets; the receipt, on time, of all necessary permits, utilities and project approvals with respect to our expansion projects and that we will have the resources necessary to meet the projects' approach; the receipt, on a timely basis, of regulatory approvals in respect of the proposed merger with PotashCorp and satisfaction of other closing conditions relating thereto. Also refer to the discussion under the heading "Key Assumptions and Risks in Respect of Forward-Looking Statements" in our 2015 annual MD&A and under the heading "Market Outlook" herein, with respect to further material assumptions associated with our forward-looking statements.

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 global economic, market and business conditions; weather conditions, including impacts from regional flooding and/or drought conditions; crop planted acreage, yield and prices; the supply and demand and price levels for our major products may vary from what we currently anticipate; 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, regional natural gas supply restrictions, as well as counterparty and sovereign risk; delays in completion of turnarounds at our major facilities; gas supply interruptions at the Egyptian Misr Fertilizers Production Company S.A.E. nitrogen facility expansion in Egypt; the risk of additional capital expenditure cost escalation or delays in respect of our expansion projects; the risks that are inherent in the nature of the proposed merger with PotashCorp, including the failure to obtain required regulatory approvals and failure to satisfy all other closing conditions in accordance with the terms of the proposed merger with PotashCorp, in a timely manner or at all; 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 U.S. including those disclosed under the heading "Risk Factors" in our Annual Information Form for the year ended December 31, 2015 and under the headings "Enterprise Risk Management" and "Key Assumptions and Risks in respect of Forward-Looking Statements" in our 2015 annual MD&A.

The purpose of our expected diluted earnings per share and Retail EBITDA guidance range is to assist readers in understanding our expected and targeted financial results, and this information may not be appropriate for other purposes.

Agrium disclaims any intention or obligation to update or revise any forward-looking statements in this document 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 global producer and distributor of agricultural products, services and solutions. Agrium produces nitrogen, potash and phosphate fertilizers, with a combined wholesale nutrient capacity of over nine million tonnes and with significant competitive advantages across our product lines. We supply key products and services directly to growers, including crop nutrients, crop protection, seed, as well as agronomic and application services, thereby helping growers to meet the ever growing global demand for food and fiber. Agrium retail-distribution has an unmatched network of over 1,400 facilities and over 3,800 crop consultants who provide advice and products to our grower customers to help them increase their yields and returns on hundreds of different crops. With a focus on sustainability, the company strives to improve the communities in which it operates through safety, education, environmental improvement and new technologies such as the development of precision agriculture and controlled-release nutrient products. Agrium is focused on driving operational excellence across our businesses, pursuing value-enhancing growth opportunities and returning capital to shareholders. For more information visit: www.agrium.com.

A WEBSITE SIMULCAST of the 2016 4th Quarter Conference Call will be available in a listen-only mode beginning Friday, February 10, 2017 at 8:00 a.m. MT (10:00 a.m. ET). Please visit the following website: www.agrium.com.

 

AGRIUM INC.  
Consolidated Statements of Operations  
(Unaudited)  
                   
    Three months ended   Twelve months ended  
    December 31,   December 31,  
(millions of U.S. dollars, unless otherwise stated) 2016   2015   2016   2015  
           
Sales 2,280   2,407   13,665   14,795  
Cost of product sold 1,532   1,507   10,270   10,907  
Gross profit 748   900   3,395   3,888  
Expenses                
  Selling 480   465   1,914   1,921  
  General and administrative 65   74   242   268  
  Share-based payments 33   15   55   51  
  (Earnings) loss from associates and joint ventures (35 ) (5 ) (66 ) 4  
  Other expenses 43   27   152   28  
Earnings before finance costs and income taxes 162   324   1,098   1,616  
  Finance costs related to long-term debt 51   53   204   181  
  Other finance costs 21   20   74   71  
Earnings before income taxes 90   251   820   1,364  
  Income taxes 23   51   224   376  
Net earnings 67   200   596   988  
Attributable to                
  Equity holders of Agrium 67   201   592   988  
  Non-controlling interest -   (1 ) 4   -  
Net earnings 67   200   596   988  
                   
Earnings per share attributable to equity holders of Agrium                
  Basic and diluted earnings per share 0.49   1.45   4.29   6.98  
  Weighted average number of shares outstanding for basic and diluted earnings per share (millions of common shares) 138   138   138   142  
See accompanying notes.                

Basis of preparation and statement of compliance

These consolidated interim financial statements ("interim financial statements") were prepared in accordance with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board and were approved for issuance by the Audit Committee on February 9, 2017. These interim financial statements do not include all information and disclosures normally provided in annual or quarterly financial statements and should be read in conjunction with our audited annual financial statements and related notes, prepared in accordance with IFRS, contained in our 2015 Annual Report, available at www.agrium.com.

The accounting policies applied in these interim financial statements are the same as those applied in our audited annual financial statements in our 2015 Annual Report.

AGRIUM INC.  
Consolidated Statements of Comprehensive Income  
(Unaudited)  
                         
          Three months ended   Twelve months ended  
          December 31,   December 31,  
(millions of U.S. dollars) 2016   2015   2016   2015  
                         
Net earnings 67   200   596   988  
  Other comprehensive (loss) income                
    Items that are or may be reclassified to earnings                
      Cash flow hedges                
        Effective portion of changes in fair value 19   (15 ) 7   (45 )
        Deferred income taxes (5 ) 4   (1 ) 12  
      Share of comprehensive (loss) income of associates and joint ventures (36 ) 1   (34 ) (6 )
      Foreign currency translation                
        (Losses) gains (94 ) (85 ) 59   (617 )
        Reclassifications to earnings -   7   -   8  
          (116 ) (88 ) 31   (648 )
    Items that will never be reclassified to earnings                
      Post-employment benefits                
        Actuarial gains (losses) 15   14   (10 ) 14  
        Deferred income taxes (4 ) (5 ) 3   (4 )
          11   9   (7 ) 10  
  Other comprehensive (loss) income (105 ) (79 ) 24   (638 )
Comprehensive (loss) income (38 ) 121   620   350  
Attributable to                
  Equity holders of Agrium (38 ) 124   616   350  
  Non-controlling interest -   (3 ) 4   -  
Comprehensive (loss) income (38 ) 121   620   350  
See accompanying notes.                
AGRIUM INC.  
Consolidated Balance Sheets  
(Unaudited)  
               
        December 31,  
(millions of U.S. dollars) 2016   2015  
Assets        
  Current assets        
    Cash and cash equivalents 412   515  
    Accounts receivable 2,208   2,053  
    Income taxes receivable 33   4  
    Inventories 3,230   3,314  
    Prepaid expenses and deposits 855   688  
    Other current assets 123   144  
      6,861   6,718  
  Property, plant and equipment 6,818   6,333  
  Intangibles 566   632  
  Goodwill 2,095   1,980  
  Investments in associates and joint ventures 541   607  
  Other assets 48   54  
  Deferred income tax assets 34   53  
    16,963   16,377  
Liabilities and shareholders' equity        
  Current liabilities        
    Short-term debt 604   835  
    Accounts payable 4,662   3,919  
    Income taxes payable 17   82  
    Current portion of long-term debt 110   8  
    Current portion of other provisions 59   85  
    5,452   4,929  
  Long-term debt 4,398   4,513  
  Post-employment benefits 141   124  
  Other provisions 322   336  
  Other liabilities 68   85  
  Deferred income tax liabilities 408   383  
    10,789   10,370  
  Shareholders' equity        
    Share capital 1,766   1,757  
    Retained earnings 5,634   5,533  
    Accumulated other comprehensive loss (1,231 ) (1,287 )
    Equity holders of Agrium 6,169   6,003  
    Non-controlling interest 5   4  
    Total equity 6,174   6,007  
    16,963   16,377  
See accompanying notes.        
AGRIUM INC.  
Consolidated Statements of Cash Flows  
(Unaudited)  
                     
      Three months ended   Twelve months ended  
      December 31,   December 31,  
(millions of U.S. dollars) 2016   2015   2016   2015  
                     
Operating                
  Net earnings 67   200   596   988  
  Adjustments for                
    Depreciation and amortization 141   135   532   480  
    (Earnings) loss from associates and joint ventures (35 ) (5 ) (66 ) 4  
    Share-based payments 33   15   55   51  
    Unrealized (gain) loss on derivative financial instruments -   (28 ) 36   (21 )
    Unrealized foreign exchange loss (gain) 1   (12 ) (19 ) (35 )
    Interest income (17 ) (16 ) (66 ) (68 )
    Finance costs 72   73   278   252  
    Income taxes 23   51   224   376  
    Other 26   2   23   (20 )
  Interest received 16   16   66   70  
  Interest paid (49 ) (51 ) (272 ) (212 )
  Income taxes paid (14 ) (30 ) (291 ) (111 )
  Dividends from associates and joint ventures 68   -   116   2  
  Net changes in non-cash working capital 1,130   743   455   (93 )
Cash provided by operating activities 1,462   1,093   1,667   1,663  
Investing                
  Business acquisitions, net of cash acquired (26 ) (42 ) (342 ) (127 )
  Capital expenditures (173 ) (278 ) (724 ) (1,188 )
  Capitalized borrowing costs (6 ) (8 ) (24 ) (45 )
  Purchase of investments (16 ) (18 ) (77 ) (128 )
  Proceeds from sale of investments 19   18   97   83  
  Proceeds from sale of property, plant and equipment 2   27   16   104  
  Other 51   (11 ) 33   (4 )
  Net changes in non-cash working capital 10   (9 ) 5   (198 )
Cash used in investing activities (139 ) (321 ) (1,016 ) (1,503 )
Financing                
  Short-term debt (1,092 ) (932 ) (188 ) (514 )
  Long-term debt issued -   -   -   1,000  
  Transaction costs on long-term debt -   -   -   (14 )
  Repayment of long-term debt (1 ) (2 ) (17 ) (19 )
  Dividends paid (120 ) (123 ) (482 ) (468 )
  Shares issued -   -   -   1  
  Shares repurchased -   -   -   (559 )
Cash used in financing activities (1,213 ) (1,057 ) (687 ) (573 )
Effect of exchange rate changes on cash and cash equivalents (9 ) 47   (67 ) 80  
Increase (decrease) in cash and cash equivalents 101   (238 ) (103 ) (333 )
Cash and cash equivalents - beginning of period 311   753   515   848  
Cash and cash equivalents - end of period 412   515   412   515  
See accompanying notes.                
AGRIUM INC.  
Consolidated Statements of Shareholders' Equity  
(Unaudited)  
                  Other comprehensive income (loss)              
(millions of U.S. dollars, except per share data) Millions
of
common
shares
 

Share
capital

 

Retained
earnings

  Cash
flow
hedges
  Comprehensive
loss of
associates and
joint ventures
  Foreign
currency
translation
 

Total

  Equity
holders of
Agrium
  Non-
controlling
interest
 

Total
equity

 
December 31, 2014 144   1,821   5,502   (27 ) (11 ) (605 ) (643 ) 6,680   7   6,687  
  Net earnings -   -   988   -   -   -   -   988   -   988  
  Other comprehensive income (loss), net of tax                                        
    Post-employment benefits -   -   10   -   -   -   -   10   -   10  
    Other -   -   -   (33 ) (6 ) (609 ) (648 ) (648 ) -   (648 )
  Comprehensive income (loss), net of tax -   -   998   (33 ) (6 ) (609 ) (648 ) 350   -   350  
  Dividends ($3.405 per share) -   -   (478 ) -   -   -   -   (478 ) -   (478 )
  Non-controlling interest transactions -   -   -   -   -   -   -   -   (3 ) (3 )
  Shares repurchased (6 ) (70 ) (489 ) -   -   -   -   (559 ) -   (559 )
  Share-based payment transactions -   6   -   -   -   -   -   6   -   6  
  Reclassification of cash flow hedges, net of tax -   -   -   4   -   -   4   4   -   4  
December 31, 2015 138   1,757   5,533   (56 ) (17 ) (1,214 ) (1,287 ) 6,003   4   6,007  
  Net earnings -   -   592   -   -   -   -   592   4   596  
  Other comprehensive income (loss), net of tax                                        
    Post-employment benefits -   -   (7 ) -   -   -   -   (7 ) -   (7 )
    Other -   -   -   6   (34 ) 59   31   31   -   31  
  Comprehensive income (loss), net of tax -   -   585   6   (34 ) 59   31   616   4   620  
  Dividends ($3.5 per share) -   -   (484 ) -   -   -   -   (484 ) -   (484 )
  Non-controlling interest transactions -   -   -   -   -   -   -   -   (3 ) (3 )
  Share-based payment transactions -   9   -   -   -   -   -   9   -   9  
  Reclassification of cash flow hedges, net of tax -   -   -   25   -   -   25   25   -   25  
December 31, 2016 138   1,766   5,634   (25 ) (51 ) (1,155 ) (1,231 ) 6,169   5   6,174  
See accompanying notes.  

AGRIUM INC.
Summarized Notes to the Consolidated Financial Statements
For the three and twelve months ended December 31, 2016
(millions of U.S. dollars, unless otherwise stated)
(Unaudited)

1. Corporate Management

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). Our Corporate head office is located at 13131 Lake Fraser Drive S.E., Calgary, Canada. We conduct our operations globally from our Wholesale head office in Calgary and our Retail head office in Loveland, Colorado, United States. In these financial statements, "we", "us", "our" and "Agrium" mean Agrium Inc., its subsidiaries and joint arrangements.

We categorize our operating segments within the Retail and Wholesale business units as follows:

  • Retail: Distributes crop nutrients, crop protection products, seed and merchandise and provides financial and other services directly to growers through a network of farm centers in two geographical segments:
    • North America: including the United States and Canada
    • International: including Australia and South America
  • Wholesale: Produces, markets and distributes crop nutrients and industrial products through the following businesses:
    • Nitrogen: Manufacturing in Alberta and Texas
    • Potash: Mining and processing in Saskatchewan
    • Phosphate: Production facilities in Alberta and production and mining facilities in Idaho
    • Wholesale Other: Purchasing and reselling crop nutrient products from other suppliers to customers primarily in Europe; producing blended crop nutrients and Environmentally Smart Nitrogen® (ESN) polymer-coated nitrogen crop nutrients; and operations of joint ventures and associates

Additional information on our operating segments is included in note 2.

Seasonality in our business results from increased demand for our products during planting seasons. Sales are generally higher in spring and fall.

2. Operating Segments

Segment information by business unit Three months ended December 31,  
      2016   2015  
      Retail   Wholesale   Other (a)   Total   Retail   Wholesale   Other (a)   Total  
Sales - external 1,816   464   -   2,280   1,758   649   -   2,407  
    - inter-segment 12   193   (205 ) -   7   239   (246 ) -  
Total sales 1,828   657   (205 ) 2,280   1,765   888   (246 ) 2,407  
Cost of product sold 1,205   523   (196 ) 1,532   1,166   568   (227 ) 1,507  
Gross profit 623   134   (9 ) 748   599   320   (19 ) 900  
Gross profit (%) 34   20       33   34   36       37  
Expenses                                
  Selling 476   9   (5 ) 480   462   7   (4 ) 465  
  General and administrative 26   7   32   65   29   12   33   74  
  Share-based payments -   -   33   33   -   -   15   15  
  Earnings from associates and joint ventures (1 ) (34 ) -   (35 ) (2 ) (2 ) (1 ) (5 )
  Other (income) expenses (12 ) 3   52   43   (23 ) 16   34   27  
Earnings (loss) before finance costs and income taxes 134   149   (121 ) 162   133   287   (96 ) 324  
  Finance costs -   -   72   72   -   -   73   73  
Earnings (loss) before income taxes 134   149   (193 ) 90   133   287   (169 ) 251  
  Depreciation and amortization 68   67   6   141   66   65   4   135  
  Finance costs -   -   72   72   -   -   73   73  
EBITDA (b) 202   216   (115 ) 303   199   352   (92 ) 459  
(a) Includes inter-segment eliminations.
(b) EBITDA is net earnings (loss) before finance costs, income taxes, depreciation and amortization, and net earnings (loss) from discontinued operations.
Segment information by business unit Twelve months ended December 31,
      2016   2015  
      Retail   Wholesale   Other (a)   Total   Retail   Wholesale   Other (a)   Total  
Sales - external 11,723   1,942   -   13,665   12,168   2,627   -   14,795  
    - inter-segment 43   764   (807 ) -   31   975   (1,006 ) -  
Total sales 11,766   2,706   (807 ) 13,665   12,199   3,602   (1,006 ) 14,795  
Cost of product sold 8,980   2,134   (844 ) 10,270   9,471   2,421   (985 ) 10,907  
Gross profit 2,786   572   37   3,395   2,728   1,181   (21 ) 3,888  
Gross profit (%) 24   21       25   22   33       26  
Expenses                                
  Selling 1,899   32   (17 ) 1,914   1,902   36   (17 ) 1,921  
  General and administrative 102   30   110   242   112   39   117   268  
  Share-based payments -   -   55   55   -   -   51   51  
  (Earnings) loss from associates and joint ventures (6 ) (61 ) 1   (66 ) (5 ) 10   (1 ) 4  
  Other (income) expenses (26 ) 62   116   152   (60 ) 23   65   28  
Earnings (loss) before finance costs and income taxes 817   509   (228 ) 1,098   779   1,073   (236 ) 1,616  
  Finance costs -   -   278   278   -   -   252   252  
Earnings (loss) before income taxes 817   509   (506 ) 820   779   1,073   (488 ) 1,364  
  Depreciation and amortization 274   242   16   532   254   211   15   480  
  Finance costs -   -   278   278   -   -   252   252  
EBITDA 1,091   751   (212 ) 1,630   1,033   1,284   (221 ) 2,096  
(a) Includes inter-segment eliminations.
Segment information - Retail Three months ended December 31,  
      2016   2015  
      North America    International   Retail (a)   North America   International   Retail  
Sales - external 1,332   484   1,816   1,333   425   1,758  
    - inter-segment 12   -   12   7   -   7  
Total sales 1,344   484   1,828   1,340   425   1,765  
Cost of product sold 860   345   1,205   853   313   1,166  
Gross profit 484   139   623   487   112   599  
Expenses                        
  Selling 376   100   476   375   87   462  
  General and administrative 18   8   26   22   7   29  
  Earnings from associates and joint ventures -   (1 ) (1 ) (1 ) (1 ) (2 )
  Other income (5 ) (7 ) (12 ) (17 ) (6 ) (23 )
Earnings before income taxes 95   39   134   108   25   133  
  Depreciation and amortization 60   8   68   61   5   66  
EBITDA 155   47   202   169   30   199  
(a) Included within the Retail business unit is a separate Financial Services operating segment with total sales of $7-million and EBITDA of $6-million.
Segment information - Retail Twelve months ended December 31,  
      2016   2015  
      North America   International   Retail (a)   North America   International   Retail  
Sales - external 9,565   2,158   11,723   10,093   2,075   12,168  
    - inter-segment 43   -   43   31   -   31  
Total sales 9,608   2,158   11,766   10,124   2,075   12,199  
Cost of product sold 7,306   1,674   8,980   7,826   1,645   9,471  
Gross profit 2,302   484   2,786   2,298   430   2,728  
Expenses                        
  Selling 1,555   344   1,899   1,571   331   1,902  
  General and administrative 72   30   102   79   33   112  
  Earnings from associates and joint ventures (4 ) (2 ) (6 ) (3 ) (2 ) (5 )
  Other expenses (income) 3   (29 ) (26 ) (35 ) (25 ) (60 )
Earnings before income taxes 676   141   817   686   93   779  
  Depreciation and amortization 249   25   274   229   25   254  
EBITDA 925   166   1,091   915   118   1,033  
(a) Included within the Retail business unit is a separate Financial Services operating segment with total sales of $16-million and EBITDA of $15-million.
Segment information - Wholesale Three months ended December 31,  
      2016   2015  
      Nitrogen   Potash   Phosphate   Wholesale
 
Other (a)
  Wholesale   Nitrogen   Potash   Phosphate   Wholesale Other (a)   Wholesale  
Sales - external 218   74   82   90   464   270   137   127   115   649  
    - inter-segment 67   31   62   33   193   97   38   72   32   239  
Total sales 285   105   144   123   657   367   175   199   147   888  
Cost of product sold 200   84   136   103   523   181   112   162   113   568  
Gross profit 85   21   8   20   134   186   63   37   34   320  
Expenses                                        
  Selling 4   2   1   2   9   3   1   1   2   7  
  General and administrative 4   2   1   -   7   5   2   1   4   12  
  Earnings from associates and joint ventures -   -   -   (34 ) (34 ) -   -   -   (2 ) (2 )
  Other expenses (income) 1   4   -   (2 ) 3   (12 ) 7   1   20   16  
Earnings before income taxes 76   13   6   54   149   190   53   34   10   287  
  Depreciation and amortization 23   26   15   3   67   18   28   14   5   65  
EBITDA 99   39   21   57   216   208   81   48   15   352  
(a) Includes product purchased for resale, ammonium sulfate, ESN and other products.
Segment information - Wholesale Twelve months ended December 31,  
      2016   2015  
      Nitrogen   Potash   Phosphate   Wholesale
 
Other (a)
  Wholesale   Nitrogen   Potash   Phosphate   Wholesale Other (a)   Wholesale  
Sales - external 860   280   356   446   1,942   1,129   364   471   663   2,627  
    - inter-segment 284   139   211   130   764   401   151   270   153   975  
Total sales 1,144   419   567   576   2,706   1,530   515   741   816   3,602  
Cost of product sold 757   367   523   487   2,134   801   335   599   686   2,421  
Gross profit 387   52   44   89   572   729   180   142   130   1,181  
Expenses                                        
  Selling 14   7   3   8   32   15   5   4   12   36  
  General and administrative 13   7   3   7   30   15   7   5   12   39  
  (Earnings) loss from associates and joint ventures -   -   -   (61 ) (61 ) -   -   -   10   10  
  Other expenses (income) 31   28   7   (4 ) 62   -   25   17   (19 ) 23  
Earnings before income taxes 329   10   31   139   509   699   143   116   115   1,073  
  Depreciation and amortization 75   99   55   13   242   72   71   51   17   211  
EBITDA 404   109   86   152   751   771   214   167   132   1,284  
(a) Includes product purchased for resale, ammonium sulfate, ESN and other products.
Gross profit by product line Three months ended December 31,   Twelve months ended December 31,  
    2016   2015   2016   2015  
    Sales   Cost of
product
 
sold
  Gross
profit
  Sales   Cost of
product
sold
  Gross profit   Sales   Cost of
product
 
sold
  Gross
profit
  Sales   Cost of
product
sold
  Gross profit  
Retail                                                
  Crop nutrients 779   632   147   843   689   154   4,310   3,478   832   4,944   4,097   847  
  Crop protection products 620   324   296   541   273   268   4,684   3,570   1,114   4,543   3,476   1,067  
  Seed 101   58   43   75   21   54   1,462   1,165   297   1,425   1,141   284  
  Merchandise 167   140   27   156   129   27   621   518   103   638   539   99  
  Services and other (a) 161   51   110   150   54   96   689   249   440   649   218   431  
    1,828   1,205   623   1,765   1,166   599   11,766   8,980   2,786   12,199   9,471   2,728  
Wholesale                                                
  Nitrogen 285   200   85   367   181   186   1,144   757   387   1,530   801   729  
  Potash 105   84   21   175   112   63   419   367   52   515   335   180  
  Phosphate 144   136   8   199   162   37   567   523   44   741   599   142  
  Product purchased for resale 37   37   -   53   52   1   215   211   4   398   387   11  
  Ammonium sulfate, ESN and other 86   66   20   94   61   33   361   276   85   418   299   119  
    657   523   134   888   568   320   2,706   2,134   572   3,602   2,421   1,181  
Other inter-segment eliminations (205 ) (196 ) (9 ) (246 ) (227 ) (19 ) (807 ) (844 ) 37   (1,006 ) (985 ) (21 )
Total 2,280   1,532   748   2,407   1,507   900   13,665   10,270   3,395   14,795   10,907   3,888  
                                                   
Wholesale share of joint ventures                                                
  Nitrogen 65   53   12   71   59   12   196   164   32   194   178   16  
  Product purchased for resale -   -   -   -   -   -   -   -   -   38   37   1  
    65   53   12   71   59   12   196   164   32   232   215   17  
Total Wholesale including proportionate share in joint ventures 722   576   146   959   627   332   2,902   2,298   604   3,834   2,636   1,198  
(a) Includes financial services products.
Selected volumes and per tonne information Three months ended December 31,
        2016   2015  
        Sales
 
tonnes
(000's)
  Selling
 
price
($/tonne)
  Cost of
 
product
 
sold
($/tonne)
  Margin
($/tonne)
  Sales tonnes
(000's)
  Selling
price
($/tonne)
  Cost of
product
sold
($/tonne)
  Margin
($/tonne)
 
Retail                                
  Crop nutrients                                
    North America 1,593   395   317   78   1,375   513   416   97  
    International 395   381   321   60   327   424   364   60  
  Total crop nutrients 1,988   392   318   74   1,702   496   406   90  
                                       
Wholesale                                
  Nitrogen                                
    North America                                
      Ammonia 334   371           374   499          
      Urea 439   274           386   356          
      Other 181   222           152   283          
  Total nitrogen 954   298   209   89   912   403   199   204  
                                       
  Potash                                
    North America 286   211           503   281          
    International 304   148           153   220          
  Total potash 590   179   143   36   656   267   171   96  
                                       
  Phosphate 303   475   449   26   325   610   495   115  
  Product purchased for resale 149   243   248   (5 ) 148   362   356   6  
  Ammonium sulfate 99   240   130   110   96   293   125   168  
  ESN and other 178               155              
Total Wholesale 2,273   289   230   59   2,292   387   248   139  
                                       
Wholesale share of joint ventures                                
  Nitrogen 222   293   235   58   198   359   295   64  
  Product purchased for resale -   -   -   -   -   -   -   -  
    222   293   235   58   198   359   295   64  
Total Wholesale including proportionate share in joint ventures 2,495   289   230   59   2,490   385   251   134  
Selected volumes and per tonne information Twelve months ended December 31,
        2016   2015  
        Sales
 
tonnes
(000's)
  Selling
 
price
($/tonne)
  Cost of
 
product
 
sold
($/tonne)
  Margin
($/tonne)
  Sales
 tonnes
(000's)
  Selling
 price
($/tonne)
  Cost of
 product
 sold
($/tonne)
  Margin
($/tonne)
 
Retail                                
  Crop nutrients                                
    North America 8,003   446   351   95   7,731   537   436   101  
    International 1,956   379   341   38   1,843   431   393   38  
  Total crop nutrients 9,959   433   349   84   9,574   516   427   89  
                                       
Wholesale                                
  Nitrogen                                
    North America                                
      Ammonia 1,165   402           1,209   530          
      Urea 1,620   294           1,583   395          
      Other 817   244           864   305          
  Total nitrogen 3,602   318   211   107   3,656   418   219   199  
                                       
  Potash                                
    North America 1,187   217           1,133   330          
    International 1,052   154           601   235          
  Total potash 2,239   187   164   23   1,734   297   193   104  
                                       
  Phosphate 1,106   512   472   40   1,166   635   513   122  
  Product purchased for resale 745   288   283   5   1,089   366   356   10  
  Ammonium sulfate 341   268   122   146   336   330   140   190  
  ESN and other 694               656              
Total Wholesale 8,727   310   245   65   8,637   417   280   137  
                                       
Wholesale share of joint ventures                                
  Nitrogen 669   293   245   48   506   384   352   32  
  Product purchased for resale -   -   -   -   117   321   309   12  
    669   293   245   48   623   372   343   29  
Total Wholesale including proportionate share in joint ventures 9,396   309   245   64   9,260   414   285   129  
 

FOR FURTHER INFORMATION:
Investor/Media Relations:
Richard Downey, Vice President, Investor & Corporate Relations
(403) 225-7357

Todd Coakwell, Director, Investor Relations
(403) 225-7437

Louis Brown, Analyst, Investor Relations
(403) 225-7761

Contact us at: www.agrium.com

For Further Information

Investor/Media Relations:

Richard Downey

VP, Investor/Corporate Relations and Market Research

(403) 225-7357

Todd Coakwell

Director, Investor Relations

(403) 225-7437

Louis Brown

Analyst, Investor Relations

(403) 225-7761