CALGARY, Alberta, Feb 10, 2004 (BUSINESS WIRE) -- Agrium Inc. (TSX:AGU) (NYSE:AGU) announced today that net earnings for the fourth quarter of 2003, excluding a loss due to the carrying cost reduction to its Kenai, Alaska nitrogen facility, were $31-million ($0.22 diluted earnings per share), slightly above the market consensus and well above the $12-million net earnings ($0.07 diluted earnings per share) for the same quarter in 2002. Inclusion of the previously announced carrying cost reduction to Kenai resulted in a net loss for the fourth quarter ended December 31, 2003, of $109-million ($0.89 diluted loss per share).
"Our operating results continue to reflect the ongoing strength in the fertilizer sector as average prices for all three nutrients have increased considerably. Our wholesale margins for our main products increased compared to the third quarter of 2003," said Mike Wilson, Agrium's President and CEO. "It is unfortunate that our strong results were negatively impacted by the reduction in carrying cost to Kenai. However, we have ended 2003 in a strong financial position and anticipate fertilizer markets will remain tight through the spring season."
For the first half of 2004, Agrium anticipates the trend in year-over-year improved results to continue.
KEY DEVELOPMENTS
Grain and oilseed prices rose significantly over the past month on news from the U.S. Department of Agriculture that inventories were tighter than originally expected, and reports that China may require additional grain and oilseed imports. NYMEX natural gas prices averaged $4.58/MMBtu in the fourth quarter, while Agrium's average natural gas cost was $3.31/MMBtu. Despite the relatively high NYMEX natural gas price, there has been no significant change to North American nitrogen operating rates over the past six months given the strong nitrogen prices.
-- The carrying cost of Agrium's Kenai, Alaska facility was
revised, resulting in a non-cash, after tax charge of
$140-million.
-- North America Wholesale EBIT for the fourth quarter (excluding
the carrying cost reduction at Kenai) was $62-million, this
compares against $39-million during the same quarter in 2002.
-- Profertil's nitrogen margins were $144/tonne in the fourth
quarter, an increase of $11/tonne over the previous quarter
and more than double the level in the fourth quarter of 2002.
This was due to continued high global prices and low
production costs.
-- Convertible redeemable preferred securities in the amount of
$50-million were converted into common shares in January of
2004, which resulted in the issuance of an additional 4.18
million common shares. This will have no impact on earnings
per share on a diluted basis.
MANAGEMENT'S DISCUSSION AND ANALYSIS
CONSOLIDATED RESULTS
Agrium's consolidated net loss for the fourth quarter of 2003 was $109-million compared to net earnings of $12-million for the same quarter 2002. Diluted loss per share for the quarter was $0.89 compared to diluted earnings per share of $0.07 for the fourth quarter of 2002. Before the Kenai asset impairment, Agrium had net earnings of $31-million or $0.22 diluted earnings per share for the quarter.
Earnings (loss) before interest and income taxes (EBIT) was a loss of $168-million for the fourth quarter of 2003, compared to earnings of $26-million during the same period in 2002. This decrease in EBIT is attributable to the pre-tax $235-million Kenai asset impairment which was partially offset by improved profitability in the Wholesale operations.
Consolidated net loss for year-end 2003 was $21-million compared to break-even results for 2002. Diluted loss per share for year-end 2003 was $0.25, compared to $0.08 diluted loss per share for 2002. Excluding the Kenai asset impairment, Agrium had 2003 annual net earnings of $119-million or $0.82 diluted earnings per share.
Business Unit Discussion
North America Wholesale
-- Wholesale fourth quarter EBIT, excluding the Kenai asset
impairment, was up $23-million compared to the fourth quarter
of 2002, as Agrium's averaged realized selling price for
nitrogen increased 43 percent. Nitrogen prices rose
significantly due to tightening global supply as a result of
shutdowns by some North American producers, coupled with an
increase in demand as a result of improving agricultural
fundamentals. Excluding the Kenai asset impairment, 2003
year-end EBIT reached $186-million compared to $40-million in
2002.
North America Retail
-- EBIT for the fourth quarter was down $1-million compared to
the same period in 2002. This was largely due to higher
selling costs compared to the prior year. North America Retail
achieved its seventh consecutive record year of EBIT, totaling
$64-million, an increase of $12-million over 2002.
South America Wholesale
-- Wholesale EBIT for the fourth quarter increased by $15-million
over the previous year. This was a result of higher
international nitrogen prices. EBIT reached $63-million for
year-end 2003, compared to a loss of $2-million for the same
period in 2002.
South America Retail
-- EBIT for Retail decreased $6-million from the same quarter in
2002, primarily due to foreign exchange effects along with
increased transaction taxes. Excluding the Kenai asset
impairment, South America Retail was the only business segment
to register a decline in year-over-year EBIT, ending the year
with EBIT of $2-million, compared to the foreign exchange
aided $25-million for year-end 2002.
Financial
Cash flow from operating activities for the fourth quarter was $69-million compared to $119-million for the same quarter in 2002. This decrease in cash flow from operations was due to an increase in working capital resulting from higher accounts receivable, partially offset by higher accounts payable. As a result of our favourable cash position, we did not use our accounts receivable securitization program at year-end, 2003, compared to the $114-million in cash generated by this program at year-end, 2002.
Selling, general and administrative expenses for the fourth quarter of 2003 were up $19-million over the fourth quarter of 2002. Selling expenses comprised $11-million, primarily related to higher activity in both North America and South America Retail. General and Administrative expenses were up $8-million, largely related to staff incentive payouts and the foreign exchange effect of a stronger Canadian dollar. Segmented results for the Business Units were affected in the fourth quarter of both 2003 and 2002 as a result of reallocation of general and administrative costs, primarily affecting North America Wholesale and Corporate.
Earnings excluding carrying cost reduction and EBIT excluding carrying cost reduction are not recognized measures under GAAP. Earnings excluding carrying cost reduction are determined by adding to net earnings (loss) the expense shown in our financial statements for asset impairment. EBIT excluding carrying cost reduction is determined by adding the asset impairment to earnings before interest expense and income taxes. We consider the exclusion of the carrying cost reduction from these measures to be useful as the carrying cost reduction does not directly relate to operations for 2003.
OUTLOOK
As Agrium looks toward the first half of 2004, there are a number of factors that may positively impact first half results:
-- Prices for ammonia are expected to remain high during the
first quarter of 2004. North American urea prices are also
expected to remain strong through the spring season.
-- China's net exports for urea were over two million tonnes for
2003. Its export activity is expected to slow into the first
half of 2004.
-- U.S. urea production was down 28 percent in 2003 compared to
the previous year, while producer urea inventories ended the
year 36 percent lower. In Canada, urea production was down 13
percent and ending inventories down three percent, which
contributed to the current tight supply situation. The North
American nitrogen supply/demand situation is expected to
remain tight into the spring, with nitrogen imports to remain
high in order to meet anticipated strong demand.
-- Relatively high natural gas prices in 2004 are expected to
prevent the estimated 20 percent of North American nitrogen
capacity that has been curtailed for the past six months from
coming back on-stream.
-- Phosphate prices are up 19 percent from the recent lows in
October 2003. Some of this increase has been offset by the
rise in the price of ammonia as an input cost. Inventories
remain low, and the recent higher prices are expected to hold
into the spring.
-- Potash prices increased during the second half of 2003 and
further increases in prices have been announced, partly due to
higher costs. These price increases should bring margins back
to more historical levels.
-- Industry analysts estimate U.S. farm income rose 32 percent in
2003 to $65-billion. This is largely a result of a good
harvest and increased government payments in 2003.
-- Grain prices are expected to trend upward into 2004 as a
result of a continuing record low global stocks-to-use ratio.
Corn prices have strengthened due to firm demand and lower
than expected U.S. production.
-- Industry analysts anticipate U.S. corn and soybean acreage to
increase in 2004, with a decline in wheat acreage and a
significant increase in cotton area. This should support U.S.
fertilizer use in 2004.
-- Argentina and Brazil continue to expand cropped acreage and
have planted a record soybean crop in 2003. Brazil has
experienced some crop disease problems in soybeans during the
past planting season which should favour increased use of
rotations into more nitrogen intensive crops such as wheat and
corn. The agricultural sector in both countries remains very
strong with increased demand for crop inputs.
Offsetting these positive indicators are some negative factors that may adversely impact first half results:
-- The continuation of high and volatile North American natural
gas prices could negatively impact North America Wholesale's
margins, to the extent that higher natural gas prices are not
fully reflected in selling prices.
-- Any further strengthening in the Canadian dollar in the first
quarter would negatively impact Agrium's cost of production
for Canadian operations.
-- The ban on beef exports by key trading partners as a result of
Bovine Spongiform Encephalopathy (BSE) has had a negative
impact on Canadian farm income in 2003. There has been no
major impact on fertilizer demand to date.
-- The impact of BSE on the U.S. agriculture sector is likely to
be small, as the U.S. exports only approximately 10 percent of
their total beef supply. However, there may be some negative
impact on U.S. farm income for 2004 as cattle prices initially
dropped by 20 percent following the announcement of a case of
BSE in the U.S.
-- Soil conditions in Western Canada remain very dry. While
moisture early in the first quarter is not a critical
indicator of moisture levels in the spring, Western Canada
requires above-average precipitation in order to have adequate
moisture for spring planting in 2004.
OTHER
Agrium Inc. is a leading global producer and marketer of agricultural nutrients and industrial products and a major retail supplier of agricultural products and services in both North America and Argentina. Agrium produces and markets three primary groups of nutrients: nitrogen, phosphate and potash as well as micronutrients. Agrium's strategy is to grow through incremental expansion of its existing operations and acquisitions as well as the development, commercialization and marketing of new products and international opportunities.
Certain statements in this press release constitute forward-looking statements. Such forward-looking statements involve known and unknown risks and uncertainties, including those referred to in the management discussion and analysis section of the Corporation's most recent annual report to shareholders, which may cause the actual results, performance or achievements of the Corporation to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. A number of factors could cause actual results to differ materially from those in the forward-looking statements, including, but not limited to, weather conditions, the future supply, demand, price level and volatility of natural gas, future prices of nitrogen, phosphate and potash, the differential pricing of natural gas in various markets, the outcome of the dispute between the Corporation and Unocal, the future gas prices and availability at Kenai, the exchange rates for US, Canadian and Argentine currencies, the outcome of the Argentine gas price negotiations, Argentine domestic fertilizer consumption, future fertilizer inventory levels, future nitrogen, potassium and phosphate consumption in North America, future crop prices, future levels of nitrogen imports into North America and future additional fertilizer capacity and operating rates.
A WEBSITE SIMULCAST of the 2003 4th Quarter Conference Call will be available in a listen-only mode beginning Wednesday, February 11th at 8:00 a.m. MST (10:00 a.m. EST). Please visit the following website: http://www.agrium.com/
AGRIUM INC.
Consolidated Statements of Operations and Retained Earnings
(Millions of U.S. dollars except per share information)
(Unaudited)
Three months ended Twelve months ended
December 31, December 31,
------------------ -------------------
2003 2002 2003 2002
------------------ -------------------
Sales $ 677 $ 538 $2,630 $2,198
Direct freight 40 31 131 115
------------------ -------------------
Net sales 637 507 2,499 2,083
Cost of product 433 365 1,760 1,564
------------------ -------------------
Gross profit 204 142 739 519
------------------ -------------------
Expenses
Selling, general and
administrative 82 63 286 246
Depreciation, depletion and
amortization 39 40 140 148
Asset impairment (note 3) 235 - 235 -
Royalties and other taxes 4 5 17 19
Other expenses and Argentine
charges 12 8 40 42
------------------ -------------------
372 116 718 455
------------------ -------------------
Earnings (loss) before interest
expense and income taxes (168) 26 21 64
Interest on long-term debt 14 13 58 59
Other interest 1 3 5 9
------------------ -------------------
Earnings (loss) before income
taxes (183) 10 (42) (4)
------------------ -------------------
Current income taxes
(recovery) (13) (15) 22 (21)
Future income taxes
(reduction) (61) 13 (43) 17
------------------ -------------------
Income taxes (74) (2) (21) (4)
------------------ -------------------
Net earnings (loss) (109) 12 (21) -
Retained earnings
- beginning of period 264 189 191 245
Change in accounting policy
(Note 2) - - - (29)
Common share dividends
declared (7) (7) (14) (14)
Preferred securities
dividends (3) (3) (11) (11)
------------------ -------------------
Retained earnings
- end of period $ 145 $ 191 $ 145 $ 191
------------------ -------------------
------------------ -------------------
Earnings (loss) per share
(note 6)
Basic and diluted $(0.89) $0.07 $(0.25) $(0.08)
AGRIUM INC.
Consolidated Statements of Cash Flows
(Millions of U.S. dollars)
(Unaudited)
Three months ended Twelve months ended
December 31, December 31,
------------------ -------------------
2003 2002 2003 2002
------------------ -------------------
Operating:
Net earnings (loss) $ (109) $ 12 $ (21) $ -
Depreciation, depletion and
amortization 39 40 140 148
Asset impairment (note 3) 235 - 235 -
Future income taxes (reduction) (61) 13 (43) 17
Foreign exchange and Argentine
charges (3) (2) (8) 14
Net change in non-cash working
capital (32) 56 (114) 45
------------------ -------------------
Cash provided by operating
activities 69 119 189 224
------------------ -------------------
Investing:
Capital expenditures (32) (29) (99) (52)
Decrease (increase) in other
assets 5 (9) 3 2
Proceeds from disposal of
assets and investments - 1 12 9
Net change in non-cash working
capital 8 9 26 9
Other 1 15 7 3
------------------ -------------------
Cash used in investing
activities (18) (13) (51) (29)
------------------ -------------------
Financing:
Common shares issued 5 1 6 108
Bank indebtedness repayment - (21) (1) (211)
Long-term debt issue (repayment) (24) 5 (27) (9)
Common share dividends paid - - (14) (14)
Preferred securities dividends
paid (3) (3) (11) (11)
------------------ -------------------
Cash used in financing
activities (22) (18) (47) (137)
------------------ -------------------
Increase in cash position 29 88 91 58
Cash and cash equivalents
- beginning of period 171 21 109 51
------------------ -------------------
Cash and cash equivalents
- end of period 200 109 200 109
------------------ -------------------
------------------ -------------------
AGRIUM INC.
Consolidated Balance Sheets
(Millions of U.S. dollars)
(Unaudited)
As at
December 31,
--------------------
2003 2002
--------------------
ASSETS
Current assets
Cash and cash equivalents $ 200 $ 109
Accounts receivable 314 187
Inventories 368 353
Prepaid expenses 60 35
--------------------
942 684
Capital assets 1,260 1,422
Other assets 71 85
--------------------
$ 2,273 $ 2,191
--------------------
--------------------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Bank indebtedness $ - $ 1
Accounts payable and accrued liabilities 404 340
Current portion of long-term debt 121 25
--------------------
525 366
Long-term debt
Recourse debt 503 604
Non-recourse debt - Profertil 111 132
--------------------
614 736
Other liabilities (note 2) 181 160
Future income taxes 132 165
--------------------
1,452 1,427
Shareholders' equity
Share capital
Authorized: unlimited common shares and
preferred securities
Issued:
Common shares: 2003 - 127 million
(2002 - 126 million) 490 484
Preferred securities:
8% Redeemable 2003 - 7 million
(2002 - 7 million) 172 171
6% Convertible, redeemable 2003 - 2 million
(2002 - 2 million) (note 4) 50 50
Contributed surplus (note 2) 1 -
Retained earnings 145 191
Cumulative translation adjustment (37) (132)
--------------------
821 764
--------------------
$ 2,273 $ 2,191
--------------------
--------------------
AGRIUM INC.
Summarized Notes to the Consolidated Financial Statements
For the year ended December 31, 2003
(Millions of U.S. dollars, except per share amounts)
(Unaudited)
1. SIGNIFICANT ACCOUNTING POLICIES
The Corporation's accounting policies are in accordance with accounting principles generally accepted in Canada and are consistent with those outlined in the annual audited financial statements except where stated below. These interim consolidated financial statements do not include all disclosures normally provided in annual financial statements and should be read in conjunction with the Corporation's audited consolidated financial statements for the year ended December 31, 2002. In management's opinion, the interim consolidated financial statements include all adjustments necessary to present fairly such information.
Certain comparative figures have been reclassified to conform to the current year's presentation.
The interim consolidated financial statements include the accounts of Agrium Inc. and its subsidiaries.
FOREIGN CURRENCY TRANSLATION
Effective October 1, 2003, foreign currency translation of the Corporation's South America Retail operations was prospectively changed from the current rate method due to a significant change in economic facts and circumstances. The functional currency changed from the Argentine Peso to U.S. dollars. The circumstances supporting the change include the transacting of sales in U.S. dollars and the reduction in banking restrictions in Argentina. From the effective date of change, the exchange gains and losses deferred in cumulative translation adjustment remain unless there is a reduction in the Corporation's investment. The non-monetary balance sheet values at October 1, 2003 became the historic values going forward.
2. CHANGES IN ACCOUNTING POLICY
STOCK-BASED COMPENSATION
In the fourth quarter of 2003, the Corporation expensed stock options on a prospective basis effective January 1, 2003. Prospective adoption requires the fair value of compensation cost related to stock options granted in 2003 be expensed in the financial statements over the vesting period. The liability for stock options that have been expensed is recorded in contributed surplus until the options are exercised. For stock options granted prior to 2003, the Corporation will continue to provide pro-forma disclosure of the effect on net earnings (loss) and earnings (loss) per share had the fair value been expensed.
ASSET RETIREMENT OBLIGATIONS
Effective January 1, 2003, the Corporation early-adopted the new Canadian accounting standard for asset retirement obligations. Previously, when the cost of site restoration exceeded the salvage value of the asset, the Corporation accrued for retirement costs systematically to the expected settlement amount in the year the obligation was anticipated to settle. Under the new accounting policy, the Corporation recognizes asset retirement obligations in the period in which they are incurred if a reasonable estimate of fair value can be determined. The liability is measured at fair value and is adjusted to its present value in subsequent periods as accretion expense is recorded. The associated asset retirement costs are capitalized as part of the carrying amount of the long-lived asset and the asset is depreciated over the asset's estimated useful life.
The change in accounting policy was recorded retroactively. The effect of adoption on the balance sheet as at January 1, 2003 and 2002 is presented below as increases (decreases):
---------------------------------------------------------------------
2003 2002
---------------------------------------------------------------------
Asset retirement cost, included in
capital assets $ 28 $ 28
Accumulated depreciation on
capital assets 6 4
Asset retirement obligations,
included in other liabilities 35 33
Site restoration and reclamation,
formerly included in other liabilities (15) (9)
Long-term future income tax liabilities 2 -
Opening retained earnings $ - $ -
---------------------------------------------------------------------
Comparative consolidated balance sheets have been restated. Site restoration and reclamation expense recorded under the accounting policy for prior periods approximated the depreciation and accretion expense under the retroactive application of the new accounting policy. As a result, prior period statements of operations were not restated.
The Corporation recognizes asset retirement obligations associated with nitrogen, phosphate and potash production facilities, marketing and distribution facilities and phosphate and potash mine assets. These obligations generally relate to dismantlement and site restoration.
A reconciliation between the opening and closing asset retirement obligation balances is provided below:
---------------------------------------------------------------
2003 2002
---------------------------------------------------------------
Balance, beginning of year $ 35 $ 33
Foreign exchange translation 5 -
Accretion, included in other expense 3 2
---------------------------------------------------------------
Balance, end of year $ 43 $ 35
---------------------------------------------------------------
---------------------------------------------------------------
The Corporation estimates that the undiscounted cash flow required to settle the asset retirement obligation is approximately $216-million, which will be settled between 2004 and 2080.
GOODWILL AND OTHER INTANGIBLE ASSETS
Effective January 1, 2002, the Corporation adopted the new accounting standard for goodwill. This standard requires that goodwill be subject to an annual impairment test rather than being amortized. In 2002, the Corporation completed the transitional impairment test using a discounted cash flow method for the reporting unit that includes goodwill. The results of the test indicated that goodwill recorded in the Corporation's phosphate business, which was included in the reportable segment entitled "North America Wholesale," was impaired. The amount of the impairment represented the entire goodwill balance of $45-million or $29-million net of tax. The resulting impairment loss was recognized as a change in accounting policy and charged to retained earnings as of January 1, 2002.
3. CAPITAL ASSETS
In the fourth quarter of 2003, the Corporation's Kenai, Alaska, nitrogen facility in the reportable segment entitled "North America Wholesale" was determined to be impaired in the amount of $235-million ($140-million net of tax). The asset impairment was calculated as the difference between the carrying amount and the fair value of the Kenai assets. The impairment loss was proportionately allocated to reduce the cost base of the facility's asset categories.
4. SHARE CAPITAL
On December 17, 2003, the Corporation issued a redemption notice on the outstanding $50-million six percent convertible, redeemable preferred securities. The holders of the securities had the right to elect conversion of the securities into common shares at a price of $11.9677 per share for a maximum issuance of an additional 4.18 million common shares or accept redemption. The redemption price was 103 percent of the principal amount, plus accrued and unpaid dividends. Subsequent to December 31, 2003, all holders of the securities elected to convert the securities into common shares at the stated conversion price.
5. STOCK BASED COMPENSATION
As disclosed in note 2, the Corporation began prospectively expensing the fair value of stock options granted in 2003 over their vesting period. In accordance with the prospective method of adoption, the Corporation will record no compensation expense for stock options granted prior to January 1, 2003, and will continue to provide pro-forma disclosure of the effect on net earnings (loss) and earnings (loss) per share had the fair value been expensed. In 2003, the Corporation recognized total compensation expense of $1-million for stock options granted in 2003. The following table summarizes the pro-forma disclosure for stock options granted prior to 2003 that have not been expensed.
Three months ended
December 31,
--------------------------------------------
2003 2002
--------------------- ---------------------
As Reported Pro forma As Reported Pro forma
--------------------- ---------------------
Net earnings (loss) $ (109) $ (109) $ 12 $ 10
Earnings (loss) per share
Basic and diluted $(0.89) $(0.89) $ 0.07 $ 0.06
Twelve months ended
December 31,
--------------------------------------------
2003 2002
--------------------- ---------------------
As Reported Pro forma As Reported Pro forma
--------------------- ---------------------
Net loss $ (21) $ (26) $ - $ (6)
Loss per share
Basic and diluted $(0.25) $(0.29) $(0.08) $(0.14)
6. EARNINGS (LOSS) PER SHARE
The following table summarizes the computation of net earnings (loss) per share:
Three months ended Twelve months ended
December 31, December 31,
------------------ -------------------
2003 2002 2003 2002
------------------ -------------------
Numerator:
Net earnings (loss) $(109) $ 12 $ (21) $ -
Preferred securities dividends
(net of tax) (3) (3) (11) (11)
------------------ -------------------
Numerator for basic earnings
(loss) per share (112) 9 (32) (11)
------------------ -------------------
Denominator:
Weighted average denominator
for basic earnings per share 126 126 126 123
------------------ -------------------
------------------ -------------------
Dilutive instruments:
Stock options using the
treasury stock method (a) - 1 - -
Preferred securities converted
to common shares
$175-million, eight percent (a) - - - -
$50-million, six percent
(note 4) (a) - - - -
------------------ -------------------
Denominator for diluted
earnings per share 126 127 126 123
------------------ -------------------
------------------ -------------------
Basic and diluted earnings
(loss) per share $(0.89) $0.07 $(0.25) $(0.08)
(a) For diluted earnings (loss) per share, these dilutive instruments are added back only when the impact of the instrument is dilutive to basic earnings (loss) per share.
There were 127 million common shares outstanding at December 31, 2003 (2002 - 126 million). The average common shares outstanding during the fourth quarter of 2003 and 2002 were 126 million. As at December 31, 2003, the Corporation has outstanding approximately nine million options to acquire common shares.
7. SEASONALITY
The fertilizer business is seasonal in nature. Sales are concentrated in the spring and fall planting seasons while produced inventories are accumulated throughout the year. Cash collections generally occur after the planting seasons in North America and after harvest in South America.
8. SEGMENTED INFORMATION
The Corporation's primary activity is the production and wholesale marketing of nitrogen, potash and phosphate and the retail sales of fertilizers, chemicals and other agricultural inputs and services. The Corporation operates principally in Canada, the United States and Argentina.
Net sales between segments are accounted for at prices which approximate fair market value and are eliminated on consolidation. The reportable segment entitled "Other" includes Corporate functions and inter-segment eliminations.
AGRIUM INC.
Segmented Earnings (Loss) Before Interest Expense and Income Taxes
(Millions of U.S. dollars)
(Unaudited)
Three months ended December 31,
----------------------------------------------
2003
----------------------------------------------
North America South America
Wholesale Retail Wholesale Retail Other Total
----------------------------------------------
Net sales
- external customers $ 401 $ 176 $ 30 $ 30 $ - $ 637
- internal customers 29 - 1 - (30) -
----------------------------------------------
Total net sales 430 176 31 30 (30) 637
Cost of product 320 112 9 23 (31) 433
----------------------------------------------
Gross profit 110 64 22 7 1 204
Gross profit % 26% 36% 71% 23% 3% 32%
Expenses:
Selling, general
and administrative 12 57 1 6 6 82
Depreciation,
depletion and
amortization 29 5 4 - 2 40
Asset impairment
(note 3) 235 - - - - 235
Royalties and
Other taxes 3 1 - - - 4
Other (income)
expenses and
Argentine charges 4 (5) 1 1 10 11
----------------------------------------------
283 58 6 7 18 372
----------------------------------------------
Earnings (loss) before
interest expense and
income taxes $ (173) $ 6 $ 16 $ - $(17) $(168)
----------------------------------------------
----------------------------------------------
Three months ended December 31,
----------------------------------------------
2002
----------------------------------------------
North America South America
Wholesale Retail Wholesale Retail Other Total
----------------------------------------------
Net sales
- external customers $ 296 $ 163 $ 13 $ 35 $ - $ 507
- internal customers 24 - 1 - (25) -
----------------------------------------------
Total net sales 320 163 14 35 (25) 507
Cost of product 254 105 7 24 (25) 365
----------------------------------------------
Gross profit 66 58 7 11 - 142
Gross profit % 21% 36% 50% 31% 0% 28%
Expenses:
Selling, general
and administrative 1 49 1 1 11 63
Depreciation,
depletion and
amortization 28 5 5 - 2 40
Asset impairment
(note 3) - - - - - -
Royalties and
other taxes 3 2 - - - 5
Other (income)
expenses and
Argentine charges (5) (5) - 4 14 8
----------------------------------------------
27 51 6 5 27 116
----------------------------------------------
Earnings (loss) before
interest expense and
income taxes $ 39 $ 7 $ 1 $ 6 $(27) $ 26
----------------------------------------------
----------------------------------------------
Twelve months ended December 31,
----------------------------------------------
2003
----------------------------------------------
North America South America
Wholesale Retail Wholesale Retail Other Total
----------------------------------------------
Net sales
- external customers $ 1,377 $ 923 $ 107 $ 92 $ - $2,499
- internal customers 88 - 9 - (97) -
----------------------------------------------
Total net sales 1,465 923 116 92 (97) 2,499
Cost of product 1,106 642 34 75 (97) 1,760
----------------------------------------------
Gross profit 359 281 82 17 - 739
Gross profit % 25% 30% 71% 18% 0% 30%
Expenses:
Selling, general
and administrative 35 208 4 14 25 286
Depreciation,
depletion and
amortization 99 18 15 1 7 140
Asset impairment
(note 3) 235 - - - - 235
Royalties and
other taxes 11 5 - - 1 17
Other (income)
expenses and
Argentine charges 28 (14) - - 26 40
----------------------------------------------
408 217 19 15 59 718
----------------------------------------------
Earnings (loss) before
interest expense and
income taxes $ (49) $ 64 $ 63 $ 2 $ (59) $ 21
----------------------------------------------
----------------------------------------------
Twelve months ended December 31,
----------------------------------------------
2002
----------------------------------------------
North America South America
Wholesale Retail Wholesale Retail Other Total
----------------------------------------------
Net sales
- external customers $ 1,094 $ 849 $ 60 $ 80 $ - $2,083
- internal customers 78 - 4 - (82) -
----------------------------------------------
Total net sales 1,172 849 64 80 (82) 2,083
Cost of product 976 593 28 50 (83) 1,564
----------------------------------------------
Gross profit 196 256 36 30 1 519
Gross profit % 17% 30% 56% 38% (1)% 25%
Expenses:
Selling, general
and administrative 24 191 4 8 19 246
Depreciation,
depletion and
amortization 102 20 18 1 7 148
Asset impairment
(note 3) - - - - - -
Royalties and
other taxes 13 5 - - 1 19
Other (income)
expenses and
Argentine charges 17 (12) 16 (4) 25 42
----------------------------------------------
156 204 38 5 52 455
----------------------------------------------
Earnings (loss) before
interest expense and
income taxes $ 40 $ 52 $ (2) $ 25 $ (51) $ 64
----------------------------------------------
----------------------------------------------
AGRIUM INC.
Net Sales and Gross Profit by Operating Unit and Product Line
(Millions of U.S. dollars)
(Unaudited)
Three months ended December 31,
---------------------------------------------
2003
---------------------------------------------
Tonnes (000's)
Net Cost of Gross --------------- Margin
Sales Product Profit Sales Inventory ($/Tonne)
---------------------------------------------
North America Wholesale
Nitrogen
Ammonia $ 130 $ 93 $ 37 485 176 $ 76
Urea 123 91 32 623 128 51
Nitrate and other 42 34 8 244 129 33
---------------------------------------------
Total Nitrogen 295 218 77 1,352 433 57
Phosphate - Dry 61 52 9 277 40 32
Phosphate - Liquid 13 10 3 36 11 83
Potash 44 27 17 436 188 39
Sulphate and other
products 17 13 4 114 115 35
---------------------------------------------
430 320 110 2,215 787 50
------------------------
North America Retail
Fertilizers 97 74 23
Chemicals 56 27 29
Other products and
services 23 11 12
--------------------
176 112 64
South America Wholesale
Nitrogen 30 8 22 153 43 144
Other products and
services 1 1 -
--------------------
31 9 22
South America Retail
Fertilizers 21 19 2
Other products and
services 9 4 5
--------------------
30 23 7
Other (30) (31) 1
--------------------
Total $ 637 $ 433 $204
--------------------
--------------------
Three months ended December 31,
---------------------------------------------
2002
---------------------------------------------
Tonnes (000's)
Net Cost of Gross --------------- Margin
Sales Product Profit Sales Inventory ($/Tonne)
---------------------------------------------
North America Wholesale
Nitrogen
Ammonia $ 77 $ 70 $ 7 433 240 $ 16
Urea 99 83 16 704 141 23
Nitrate and other 29 25 4 216 219 19
---------------------------------------------
Total Nitrogen 205 178 27 1,353 600 20
Phosphate - Dry 45 37 8 234 72 34
Phosphate - Liquid 16 12 4 46 10 87
Potash 38 22 16 370 195 43
Sulphate and other
products 16 5 11 97 136 113
---------------------------------------------
320 254 66 2,100 1,013 31
------------------------
North America Retail
Fertilizers 87 65 22
Chemicals 51 28 23
Other products and
services 25 12 13
--------------------
163 105 58
South America Wholesale
Nitrogen 14 7 7 98 61 71
Other products and
services - - -
--------------------
14 7 7
South America Retail
Fertilizers 21 14 7
Other products and
services 14 10 4
--------------------
35 24 11
Other (25) (25) -
--------------------
Total $ 507 $ 365 $142
--------------------
--------------------
Twelve months ended December 31,
---------------------------------------------
2003
---------------------------------------------
Tonnes (000's)
Net Cost of Gross --------------- Margin
Sales Product Profit Sales Inventory ($/Tonne)
---------------------------------------------
North America Wholesale
Nitrogen
Ammonia $ 382 $ 286 $ 96 1,555 176 $ 62
Urea 423 323 100 2,220 128 45
Nitrate and other 168 136 32 981 129 33
---------------------------------------------
Total Nitrogen 973 745 228 4,756 433 48
Phosphate - Dry 204 173 31 923 40 34
Phosphate - Liquid 57 44 13 167 11 78
Potash 160 99 61 1,662 188 37
Sulphate and other
products 71 45 26 400 115 65
---------------------------------------------
1,465 1,106 359 7,908 787 45
------------------------
North America Retail
Fertilizers 402 292 110
Chemicals 399 288 111
Other products and
services 122 62 60
--------------------
923 642 281
South America Wholesale
Nitrogen 111 31 80 634 43 126
Other products and
services 5 3 2
--------------------
116 34 82
South America Retail
Fertilizers 66 59 7
Other products and
services 26 16 10
--------------------
92 75 17
Other (97) (97) -
--------------------
Total $2,499 $1,760 $ 739
--------------------
--------------------
Twelve months ended December 31,
---------------------------------------------
2002
---------------------------------------------
Tonnes (000's)
Net Cost of Gross --------------- Margin
Sales Product Profit Sales Inventory ($/Tonne)
---------------------------------------------
North America Wholesale
Nitrogen
Ammonia $ 242 $ 222 $ 20 1,543 240 $ 13
Urea 330 292 38 2,517 141 15
Nitrate and other 140 135 5 1,099 219 5
---------------------------------------------
Total Nitrogen 712 649 63 5,159 600 12
Phosphate - Dry 187 161 26 976 72 27
Phosphate - Liquid 52 41 11 153 10 72
Potash 158 91 67 1,598 195 42
Sulphate and other
products 63 34 29 397 136 73
---------------------------------------------
1,172 976 196 8,283 1,013 24
------------------------
North America Retail
Fertilizers 366 265 101
Chemicals 361 266 95
Other products and
services 122 62 60
--------------------
849 593 256
South America Wholesale
Nitrogen 61 26 35 517 61 68
Other products and
services 3 2 1
--------------------
64 28 36
South America Retail
Fertilizers 53 31 22
Other products and
services 27 19 8
--------------------
80 50 30
Other (82) (83) 1
--------------------
Total $2,083 $1,564 $519
--------------------
--------------------
AGRIUM INC.
Net Sales and Gross Profit by Market Destination
(Millions of U.S. dollars)
(Unaudited)
Three months ended December 31,
-------------------------------------------------
2003
-------------------------------------------------
Net Cost of Gross Gross Tonnes Margin
Sales Product Profit Profit % (000's) ($/Tonne)
-------------------------------------------------
North America
Nitrogen $ 238 $ 187 $ 51 21% 1,046 $ 49
Phosphate 74 62 12 16% 313 38
Potash 34 22 12 35% 298 40
Sulphate and
other products 13 10 3 23% 74 41
North America
Retail 176 112 64 36% - -
Other (28) (30) 2 7% - -
---------------------------------------
507 363 144 28% 1,731
International
Nitrogen 86 39 47 55% 459 102
Potash 10 5 5 50% 138 36
Sulphate and
Other products 5 5 - 0% 40 -
South America
Retail 30 23 7 23% - -
Other (1) (2) 1 100% - -
---------------------------------------
130 70 60 46% 637
---------------------------------------
Total $ 637 $ 433 $ 204 32% 2,368
---------------------------------------
---------------------------------------
Three months ended December 31,
-------------------------------------------------
2002
-------------------------------------------------
Net Cost of Gross Gross Tonnes Margin
Sales Product Profit Profit % (000's) ($/Tonne)
-------------------------------------------------
North America
Nitrogen $ 171 $ 151 $ 20 12% 1,069 $ 19
Phosphate 61 49 12 20% 280 43
Potash 29 18 11 38% 265 42
Sulphate and
other products 14 4 10 71% 83 -
North America
Retail 163 105 58 36% - -
Other (24) (24) - 0% - -
---------------------------------------
414 303 111 27% 1,697
International
Nitrogen 48 34 14 29% 382 37
Potash 9 4 5 56% 105 48
Sulphate and
other products 2 1 1 50% 14 -
South America
Retail 35 24 11 31% - -
Other (1) (1) - - - -
---------------------------------------
93 62 31 33% 501
---------------------------------------
Total $ 507 $ 365 $ 142 28% 2,198
---------------------------------------
---------------------------------------
Twelve months ended December 31,
-------------------------------------------------
2003
-------------------------------------------------
Net Cost of Gross Gross Tonnes Margin
Sales Product Profit Profit % (000's) ($/Tonne)
-------------------------------------------------
North America
Nitrogen $ 775 $ 621 $ 154 20% 3,501 $ 44
Phosphate 261 217 44 17% 1,090 40
Potash 117 78 39 33% 1,092 36
Sulphate and
other products 60 36 24 40% 298 81
North America
Retail 923 642 281 30% - -
Other (88) (88) - 0% - -
---------------------------------------
2,048 1,506 542 26% 5,981
International
Nitrogen 309 155 154 50% 1,889 82
Potash 43 21 22 51% 570 39
Sulphate and
other products 15 12 3 20% 102 29
South America
Retail 92 75 17 18% - -
Other (8) (9) 1 13% - -
---------------------------------------
451 254 197 44% 2,561
---------------------------------------
Total $2,499 $ 1,760 $ 739 30% 8,542
---------------------------------------
---------------------------------------
Twelve months ended December 31,
-------------------------------------------------
2002
-------------------------------------------------
Net Cost of Gross Gross Tonnes Margin
Sales Product Profit Profit % (000's) ($/Tonne)
-------------------------------------------------
North America
Nitrogen $ 567 $ 516 $ 51 9% 3,786 $ 14
Phosphate 239 202 37 15% 1,129 33
Potash 118 74 44 37% 1,110 40
Sulphate and
other products 55 28 27 49% 317 -
North America
Retail 849 593 256 30% - -
Other (78) (79) 1 1% - -
---------------------------------------
1,750 1,334 416 24% 6,342
International
Nitrogen 206 159 47 23% 1,890 25
Potash 40 17 23 58% 488 48
Sulphate and
other products 11 8 3 27% 80 -
South America
Retail 80 50 30 38% - -
Other (4) (4) - - - -
---------------------------------------
333 230 103 31% 2,458
---------------------------------------
Total $2,083 $ 1,564 $ 519 25% 8,800
---------------------------------------
---------------------------------------
SOURCE: Agrium Inc.
CONTACT: Agrium Inc.
Richard Downey, 403-225-7357
403-225-7609 (FAX)
OUR MANAGEMENT
NITROGEN