CALGARY, Alberta--(BUSINESS WIRE)--Oct. 27, 2004--
ALL AMOUNTS ARE STATED IN U.S.$
Agrium Inc. (NYSE:AGU) (TSX:AGU) announced today that net earnings for the third quarter of 2004 were $87-million ($0.60 diluted earnings per share), a significant improvement over net earnings of $25-million ($0.17 diluted earnings per share) for the same period in 2003. Net earnings for the first nine months of the year were $174-million ($1.20 diluted earnings per share) exceeding 2003 net earnings of $88-million ($0.60 diluted earnings per share) for the same period. These earnings figures include income of $41-million ($25-million after tax or $0.17 diluted earnings per share) in Kenai-related damages resulting from the Arbitration Panel ruling. Excluding this income, third quarter earnings are still more than double the same period last year and 38 percent higher than the previous third quarter record achieved in 1995 ($45-million or $0.31 diluted earnings per share).
"The global supply and demand situation continues to be very tight for nutrients, particularly nitrogen and potash. Our record performance reflects these fundamentals and our continued focus on margin improvement," said Mike Wilson, Agrium's President and CEO. "We expect the current tight global situation for our products to continue. We believe the record U.S. crop yields and resulting decline in grain prices over the past quarter will have limited negative impact on U.S. or world fertilizer use, particularly for nitrogen. Exceptionally strong U.S. farm income, and economics that favor corn acreage over soybeans, are expected to more than offset any potential dampening effect on fertilizer demand due to lower crop prices."
Agrium is raising its earnings guidance for the year to $1.40 to $1.50 diluted earnings per share, excluding all income from Kenai-related damages. This implies fourth quarter earnings of $0.37 to $0.47 diluted earnings per share which would be among the highest on record. This earnings guidance reflects continued strong fertilizer and retail markets that are expected to offset the negative impact from higher gas costs in the fourth quarter, a higher Canadian dollar, and an unusually poor fall ammonia application season in Western Canada due to weather factors.
KEY DEVELOPMENTS
The world supply and demand balance for nutrients continued to tighten in the third quarter. Benchmark prices in the third quarter of 2004 were higher than both the previous quarter and the same quarter last year. On a year-over-year basis, benchmark nitrogen prices were 44 percent higher, while benchmark potash and phosphate prices increased 35 percent and 15 percent respectively. Agrium's gross margins increased for all product groups versus the same period last year, with nitrogen increasing by 43 percent to $76 per tonne; potash rising 76 percent to $65 per tonne; and phosphate increasing by 90 percent to $55 per tonne. These higher margins were realized in spite of Agrium's effective gas cost increasing by $0.78 /MMBtu from the third quarter of 2003 to $3.96 /MMBtu for third quarter 2004 production.
- Cash flow from operations for the first nine months of 2004 more than doubled to $251-million or $1.74 diluted earnings per share, compared to $119-million or $0.81 diluted earnings per share for the same period last year. The cash balance as at September 30, 2004 was $299-million.
- Agrium continues to be recognized for its corporate governance practices. Governance Metrics International, a New York based governance research and ratings agency announced in September that Agrium was one of only 25 North American companies to receive their highest score of 10. The Globe & Mail recently ranked Agrium's governance practices in the top 5 percent of the 218 companies that comprise Canada's S&P/TSX Composite Index.
- The appointment of Ms. Germaine Gibara and Mr. Russell Horner to the Board of Directors in September will further strengthen and diversify our Board.
- Our Kenai, Alaska, nitrogen facility operated at 80 percent of capacity in the third quarter. We anticipate seasonal reductions in gas supply may cause the facility to operate at 50 percent of capacity starting as early as November. The trial date to resolve the remaining Kenai-related litigation issues has been postponed from December 2004 to May 2005.
MANAGEMENT'S DISCUSSION AND ANALYSIS
October 27, 2004
The following interim management's discussion and analysis (MD&A) updates our annual MD&A included in our 2003 Annual Report to Shareholders, to which readers are referred. No update is provided where an item is not material or there has been no material change from the discussion in our annual MD&A.
OVERVIEW OF CONSOLIDATED FINANCIAL HIGHLIGHTS
Net Earnings
For the third quarter of 2004, Agrium's consolidated net earnings were up $62-million to $87-million compared with $25-million for the same quarter of 2003. Diluted earnings per share for the third quarter were $0.60 compared with $0.17 for the third quarter of 2003. For the nine months ended September 30, 2004, consolidated net earnings were $174-million, up $86-million from the $88-million of net earnings for the same period of 2003. Year-to-date diluted earnings per share were $1.20 compared with $0.60 for the comparative nine months ended September 30, 2003.
The largest contributor to increased consolidated net earnings was our North America Wholesale business segment which experienced growth in total product margin per tonne from $37/tonne in the third quarter of 2003 to $61/tonne in the third quarter of 2004 as seen on Schedule 2(a) of the attached financial statements. Continuing tight supply and demand fertilizer fundamentals, supplemented by the Kenai-related damages awarded to Agrium by the Arbitration Panel in July, resulted in significantly increased net earnings in this business segment.
Consolidated earnings before interest expense and income taxes (EBIT) were $141-million for the third quarter of 2004 and $299-million for the nine months ended September 30, 2004, up $87-million and $110-million from the comparative three and nine month periods in 2003.
Cash Provided by Operating Activities
Cash flow from operating activities for the third quarter of 2004 was $126-million compared to $47-million for the same quarter of 2003. The increase of $79-million is due to the $62-million in increased net earnings as well $14-million from working capital changes in the third quarter of 2004 compared to the same quarter of 2003.
Business Segment Performance
North America Wholesale
- Wholesale EBIT for the third quarter of 2004 was $99-million, up $73-million from EBIT of $26-million for the same period last year. Included in this quarter's results was $41-million of damages resulting from Unocal's failure to deliver gas under its supply obligations to our Kenai, Alaska nitrogen facility. The remaining $32-million increase in EBIT is related to positive impacts on gross profit partially offset by increased expenses.
- Gross profit was up by $58-million over the same quarter last year. Increased gross profit was reflected in every product category. The largest increase was reflected in nitrogen profitability due to high prices reflecting strong demand. Potash gross profit was also up significantly due to tightened supply/demand balance, both internationally and in North America.
South America Wholesale
- Wholesale EBIT was $29-million and gross profit was $34-million for the three months ended September 30, 2004, up $8-million and $7-million respectively from the same period last year. The increase is attributable to higher international prices which impacted both domestic and export urea prices, consistent with a tightened supply/demand balance.
North America Retail
- Retail EBIT was $13-million for the third quarter of 2004, down from $22-million for the same period of 2003. The $9-million decrease in EBIT is primarily attributable to a $6-million lower gross profit resulting from an earlier spring season in the Midwest, which shifted a significant amount of chemical and application revenue to the first half.
South America Retail
- Third quarter EBIT for Retail was $4-million for 2004 compared to $1-million for the same period last year. Gross profit is up this quarter, reflecting positive fertilizer price and volume variances compared to the same period last year.
SELECTED QUARTERLY INFORMATION
(Unaudited, in millions of U.S. dollars,
except per share information)
2004 2003 2002
---------------- --------------------------- ------
Q3 Q2 Q1 Q4 Q3 Q2 Q1 Q4
---------------- --------------------------- ------
Net sales 672 1,011 435 637 561 929 372 507
Gross Profit 231 283 142 204 172 252 111 142
Net earnings
(loss) 87 75 12 (109)(1) 25 69 (6) 12
Earnings (loss)
per share
-basic 0.65 0.56 0.07 (0.89) 0.18 0.53 (0.07) 0.07
-diluted 0.60 0.52 0.07 (0.89)(1) 0.17 0.47 (0.07) 0.07
(1) Net earnings were $31-million and diluted earnings per share were
$0.22 excluding the $235-million write down of our Kenai, Alaska,
nitrogen facility ($140-million after tax).
The fertilizer business is seasonal in nature. Consequently, quarter to quarter results are not directly comparable.
NON-GAAP MEASURES
In the discussion of our performance for the quarter, in addition to the primary measures of earnings and earnings per share, we make reference to EBIT (earnings before interest expense and income taxes) and EBITDA (earnings before interest expense, income taxes, depreciation and amortization). We consider EBIT and EBITDA to be useful measures of performance because income tax jurisdictions and business segments are not synonymous, and we believe that allocation of income tax charges distorts the comparability of historical performance for the different business segments. Similarly, financing and related interest charges cannot be allocated to all business segments on a basis that is meaningful for comparison with other companies. EBIT and EBITDA measures are also used extensively in the covenants relating to our financing arrangements.
EBIT and EBITDA are not recognized measures under GAAP, and our method of calculation may not be comparable to other companies. EBIT should therefore not be used as an alternative to net earnings (loss) determined in accordance with GAAP as an indicator of our performance. Similarly, EBITDA should not be used as an alternative to cash provided by (used in) operating activities as determined in accordance with GAAP.
KEY RISKS AND UNCERTAINTIES
Looking Forward to the 4th Quarter of 2004
As Agrium looks toward the 4th Quarter of 2004, there are a number of factors that may positively impact the Company's results:
- International ammonia and urea prices remain high supported by strong global nitrogen demand. This has been further supported by production problems at some competitor facilities in key exporting regions.
- Chinese domestic nitrogen demand has been strong and this factor combined with China's internal policy changes is expected to limit the availability of Chinese urea on the international market.
- Asian buying continues as Vietnam, India and Pakistan express concern about there being sufficient urea available to meet anticipated demand.
- Potash prices continue to improve due to strong U.S. and international demand. North American potash inventories remain low and are currently 49 percent below the 5-year average.
- Phosphate prices have been supported by low U.S. producer inventories for both DAP and MAP. Strong export sales to Latin America and production losses related to the hurricanes in Florida have contributed to the decline in phosphate inventories.
- Record U.S. corn and soybean yields should support both application rates, as a result of increased soil nutrient removal, and strong farm income.
- Yields and moisture conditions in Western Canada have improved significantly compared to 2003.
Offsetting these positive indicators are some negative factors that may adversely impact 4th Quarter results:
- High and volatile North American natural gas prices could negatively impact North America Wholesale's margins.
- Recent strength in the Canadian dollar will negatively impact Agrium's costs in its Canadian operations.
- Crop prices have declined from the highs achieved this past spring due to a significant increase in global and U.S. grain and oilseed production.
- Canadian farm income continues to be negatively impacted by the ongoing BSE situation and a reduction in crop quality resulting from cool/wet conditions during the growing season and harvest. The reduction in crop quality will be somewhat offset by higher average yields in 2004.
- A delayed harvest and an early snowfall may limit the fall ammonia application season in Western Canada.
- The Argentine government is extending an investigation on the competitive situation in the urea market that started in 2002, which found no uncompetitive practices in the urea market in the period under study. Given that Argentine retailers and farmers continue to be able to access world products, we would anticipate future reviews to reach similar conclusions.
The current tight supply and demand balance for fertilizers creates a positive environment, somewhat mitigating the potential impact of the above noted negative factors.
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, pending litigation between the Corporation and Union Oil Company of California (Unocal), the application and enforceability of a $50-million cap on the amount of liquidated damages under the Kenai gas supply contract with Unocal, the impact of any future reserves recertification on the volumes of gas reserves dedicated to the Kenai facility, the future gas prices and availability at Kenai, the exchange rates for U.S., Canadian and Argentine currencies, 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. Agrium disclaims any intention or obligation to update or revise any forward-looking information as a result of new information or future events.
A WEBSITE SIMULCAST of the 2004 3rd Quarter Conference Call will be available in a listen-only mode beginning Thursday, October 28th at 8:00 a.m. MDT (10:00 a.m. EDT). Please visit the following website: 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 Nine months ended
September 30, September 30,
--------------------------------------
2004 2003 2004 2003
--------------------------------------
Sales $ 716 $ 592 $ 2,235 $ 1,953
Direct freight 44 31 117 91
--------------------------------------
Net sales 672 561 2,118 1,862
Cost of product 441 389 1,462 1,327
--------------------------------------
Gross profit 231 172 656 535
--------------------------------------
Expenses
Selling, general and
administrative 75 71 218 204
Depreciation and amortization 40 34 117 101
Royalties and other taxes 9 4 23 13
Income from liquidated damages
(note 7) (41) - (41) -
Other expenses 7 9 40 28
--------------------------------------
90 118 357 346
--------------------------------------
Earnings before interest
expense and income taxes 141 54 299 189
Interest on long-term debt 12 15 38 44
Other interest (1) - 1 4
--------------------------------------
Earnings before income taxes 130 39 260 141
--------------------------------------
Current income taxes 38 6 75 35
Future income taxes 5 8 11 18
--------------------------------------
Income taxes 43 14 86 53
--------------------------------------
Net earnings 87 25 174 88
Retained earnings - beginning
of period 221 242 145 191
Common share dividends
declared - - (7) (7)
Preferred securities charges (3) (3) (7) (8)
--------------------------------------
Retained earnings -
end of period $ 305 $ 264 $ 305 $ 264
--------------------------------------
--------------------------------------
Earnings per share (note 6)
Basic $ 0.65 $ 0.18 $ 1.28 $ 0.64
Diluted $ 0.60 $ 0.17 $ 1.20 $ 0.60
AGRIUM INC.
Consolidated Statements of Cash Flows
(Millions of U.S. dollars)
(Unaudited)
Three months ended Nine months ended
September 30, September 30,
--------------------------------------
2004 2003 2004 2003
--------------------------------------
Operating
Net earnings $ 87 $ 25 $ 174 $ 88
Items not affecting cash
Depreciation and amortization 40 34 117 101
Future income taxes 5 8 11 18
Net change in non-cash working
capital (6) (20) (51) (88)
--------------------------------------
Cash provided by operating
activities 126 47 251 119
--------------------------------------
Investing
Capital expenditures (13) (36) (48) (67)
Increase in other assets (2) (2) (7) (2)
Proceeds from disposal of
assets and investments 1 - 3 11
Other 3 20 10 27
--------------------------------------
Cash used in investing
activities (11) (18) (42) (31)
--------------------------------------
Financing
Common shares 5 1 8 1
Bank indebtedness proceeds
(repayment) - - 1 (1)
Long-term debt repayment (7) (1) (98) (4)
Common share dividends paid (7) (7) (14) (14)
Preferred securities charges
paid (3) (3) (7) (8)
--------------------------------------
Cash used in financing
activities (12) (10) (110) (26)
--------------------------------------
Increase in cash and cash
equivalents 103 19 99 62
Cash and cash equivalents -
beginning of period 196 152 200 109
--------------------------------------
Cash and cash equivalents -
end of period $ 299 $ 171 $ 299 $ 171
--------------------------------------
--------------------------------------
AGRIUM INC.
Consolidated Balance Sheet
(Millions of U.S. dollars)
(Unaudited)
As at As at
September 30, December 31,
-------------------------------
2004 2003 2003
-------------------------------
ASSETS
Current assets
Cash and cash equivalents $ 299 $ 171 $ 200
Accounts receivable 454 271 314
Inventories 425 385 368
Prepaid expenses 44 41 60
-------------------------------
1,222 868 942
Capital assets 1,214 1,476 1,260
Other assets 73 85 71
-------------------------------
$ 2,509 $ 2,429 $ 2,273
-------------------------------
-------------------------------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable and accrued
liabilities $ 510 $ 383 $ 404
Current portion of long-term debt 47 104 121
-------------------------------
557 487 525
Long-term debt
Recourse debt 499 532 503
Non-recourse debt 91 125 111
-------------------------------
590 657 614
Other liabilities 214 174 181
Future income taxes 142 194 132
-------------------------------
1,503 1,512 1,452
-------------------------------
Shareholders' equity
Share capital
Authorized: unlimited common
shares and preferred
securities
Issued:
Common shares: 2004 - 131
million (2003 - 126 million) 548 485 490
Preferred securities:
8% Redeemable: 2004 - seven
million (2003 - seven million) 172 172 172
6% Convertible, redeemable:
2004 - nil (2003 - two million) - 50 50
(note 4)
Contributed surplus 2 - 1
Retained earnings 305 264 145
Cumulative translation
adjustment (21) (54) (37)
-------------------------------
1,006 917 821
-------------------------------
$ 2,509 $ 2,429 $ 2,273
-------------------------------
-------------------------------
AGRIUM INC.
Summarized Notes to the Consolidated Financial Statements
For the nine months ended September 30, 2004
(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, 2003. 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.
2. BANK INDEBTEDNESS
In May 2004, Agrium Inc. and its wholly owned subsidiary, Agrium U.S. Inc., entered into a $450-million three-year syndicated revolving unsecured credit facility. The new credit agreement replaced Agrium Inc.'s $225-million credit facility due in May 2004 and Agrium U.S. Inc.'s $56-million credit facility due in December 2004.
Under the terms of the agreement, Agrium Inc. and Agrium U.S. Inc. may borrow a maximum principal amount of $325-million and $125-million respectively. Interest rates are at either Canadian prime rate plus a variable margin, U.S. base rate established by a bank plus a variable margin, LIBOR plus a variable margin or bankers' acceptance rate plus a variable margin, at the election of the borrower.
The credit facility requires that Agrium Inc. maintain certain financial ratios and other covenants.
3. EMPLOYEE FUTURE BENEFITS
The total net employee future benefits expense for the Corporation's pension and post-retirement benefit plans are computed as follows:
Three months ended Nine months ended
September 30, September 30,
--------------------------------------
2004 2003 2004 2003
--------------------------------------
Defined benefit pension plans 2 2 6 6
Post-retirement benefit plans 1 1 4 3
Defined contribution pension
plans 1 1 8 7
--------------------------------------
Total expense 4 4 18 16
--------------------------------------
--------------------------------------
This expense is reflected in our cost of product and general and administrative expenses.
4. SHARE CAPITAL
In January 2004, all holders of the six percent convertible, redeemable preferred securities elected to convert the securities into common shares at the stated conversion price of $11.9677 per share, resulting in the issuance of an additional 4.18 million common shares.
5. STOCK BASED COMPENSATION
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 has recorded 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. The following table summarizes the pro-forma disclosure for stock options granted prior to 2003 that have not been expensed.
Three months ended September 30,
------------------------------------
2004 2003
------------------------------------
As Pro As Pro
Reported forma Reported forma
------------------------------------
Net earnings $ 87 $ 86 $ 25 $ 23
Earnings per share
Basic $ 0.65 $ 0.64 $ 0.18 $ 0.16
Diluted $ 0.60 $ 0.60 $ 0.17 $ 0.16
Nine months ended September 30,
------------------------------------
2004 2003
------------------------------------
As Pro As Pro
Reported forma Reported forma
------------------------------------
Net earnings $ 174 $ 171 $ 88 $ 84
Earnings per share
Basic $ 1.28 $ 1.26 $ 0.64 $ 0.60
Diluted $ 1.20 $ 1.18 $ 0.60 $ 0.57
6. EARNINGS PER SHARE
The following table summarizes the computation of net earnings per share:
Three months ended Nine months ended
September 30, September 30,
--------------------------------------
2004 2003 2004 2003
--------------------------------------
Numerator:
Net earnings $ 87 $ 25 $ 174 $ 88
Preferred securities charges
(net of tax) (3) (3) (7) (8)
--------------------------------------
Numerator for basic earnings
per share 84 22 167 80
--------------------------------------
--------------------------------------
Preferred securities charges
(net of tax) 3 3 7 8
--------------------------------------
Numerator for diluted earnings
per share $ 87 $ 25 $ 174 $ 88
--------------------------------------
--------------------------------------
Denominator:
Weighted average denominator
for basic earnings per share 131 126 131 126
--------------------------------------
--------------------------------------
Dilutive instruments:
Stock options (a) 1 1 1 1
Preferred securities converted
to common shares
$175-million, eight percent(a) 12 15 12 16
$50-million, six percent
(note 4)(a) - 4 - 4
--------------------------------------
Denominator for diluted
earnings per share 144 146 144 147
--------------------------------------
--------------------------------------
Basic earnings per share $ 0.65 $ 0.18 $ 1.28 $ 0.64
Diluted earnings per share $ 0.60 $ 0.17 $ 1.20 $ 0.60
(a) For diluted earnings per share, these dilutive instruments are
added back only when the impact of the instrument is dilutive
to basic earnings per share.
There were 131 million common shares outstanding at September 30, 2004 (2003 - 126 million). As at September 30, 2004, the Corporation has outstanding approximately nine million options and options with tandem stock appreciation rights to acquire common shares.
7. KENAI UPDATE
In July 2004, an Arbitration Panel awarded the Corporation damages for Union Oil Company of California's (Unocal) failure to deliver gas under its supply obligations to our Kenai, Alaska nitrogen facility. In the third quarter of 2004, $41-million of damages plus $2-million of interest have been recorded related to the award.
The nitrogen facility uses gas purchased under the Unocal gas supply contract to satisfy an annual supply obligation of 1.74 Bcf/year of natural gas under a power cogeneration agreement for the facility with an electric company. The initial term of the power cogeneration agreement expires December 31, 2013, subject to an automatic renewal which is terminable on 18 months notice after the expiry of the initial term. The cogeneration supply obligations may survive plant closure. The Corporation is seeking damages from Unocal respecting any ongoing obligations under the power cogeneration agreement.
8. 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 and South America.
9. 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.
Segmentation
(unaudited - millions of U.S. dollars)
Schedule 1
Three Months Ended September 30
-------------------------------------------
North America North America South America
Wholesale Retail Wholesale
-------------------------------------------
2004 2003 2004 2003 2004 2003
-------------------------------------------
Net sales - external $ 381 $ 281 $ 208 $ 214 $ 41 $ 33
- inter-segment 31 22 - - 6 5
-------------------------------------------
Total net sales 412 303 208 214 47 38
Cost of product 290 239 138 138 13 11
-------------------------------------------
Gross profit 122 64 70 76 34 27
Gross profit % 30% 21% 34% 36% 72% 71%
-------------------------------------------
-------------------------------------------
Selling Expenses $ 4 $ 4 $ 52 $ 50 $ 1 $ -
EBIT (1) $ 99 $ 26 $ 13 $ 22 $ 29 $ 21
EBITDA (2) $ 129 $ 50 $ 17 $ 26 $ 33 $ 25
Schedule 1
Three Months Ended September 30
-------------------------------------------
South America
Retail Other Total
-------------------------------------------
2004 2003 2004 2003 2004 2003
-------------------------------------------
Net sales - external $ 42 $ 33 $ - $ - $ 672 $ 561
- inter-segment - - (37) (27) - -
-------------------------------------------
Total net sales 42 33 (37) (27) 672 561
Cost of product 34 27 (34) (26) 441 389
-------------------------------------------
Gross profit 8 6 (3) (1) 231 172
Gross profit % 19% 18% 8% 4% 34% 31%
-------------------------------------------
-------------------------------------------
Selling Expenses $ 4 $ 4 $ (1) $ - $ 60 $ 58
EBIT (1) $ 4 $ 1 $ (4) $(16) $ 141 $ 54
EBITDA (2) $ 5 $ 1 $ (3) $(14) $ 181 $ 88
Schedule 1
Nine Months Ended September 30
-------------------------------------------
North America North America South America
Wholesale Retail Wholesale
-------------------------------------------
2004 2003 2004 2003 2004 2003
-------------------------------------------
Net sales - external $ 1,129 $ 975 $ 814 $ 747 $ 94 $ 77
- inter-segment 74 59 - - 10 8
-------------------------------------------
Total net sales 1,203 1,034 814 747 104 85
Cost of product 862 785 588 530 30 25
-------------------------------------------
Gross profit 341 249 226 217 74 60
Gross profit % 28% 24% 28% 29% 71% 71%
-------------------------------------------
-------------------------------------------
Selling Expenses $ 12 $ 11 $ 155 $ 145 $ 1 $ 1
EBIT (1) $ 209 $ 124 $ 57 $ 59 $ 60 $ 46
EBITDA (2) $ 296 $ 194 $ 70 $ 72 $ 71 $ 58
Schedule 1
Nine Months Ended September 30
-------------------------------------------
South America
Retail Other Total
-------------------------------------------
2004 2003 2004 2003 2004 2003
-------------------------------------------
Net sales - external $ 81 $ 63 $ - $ - $ 2,118 $1,862
- inter-segment - - (84) (67) - -
-------------------------------------------
Total net sales 81 63 (84) (67) 2,118 1,862
Cost of product 64 52 (82) (65) 1,462 1,327
-------------------------------------------
Gross profit 17 11 (2) (2) 656 535
Gross profit % 21% 17% 2% 3% 31% 29%
-------------------------------------------
-------------------------------------------
Selling Expenses $ 10 $ 8 $ (2) $ (1) $ 176 $ 164
EBIT (1) $ 7 $ 3 $ (34) $(43) $ 299 $ 189
EBITDA (2) $ 8 $ 4 $ (29) $(38) $ 416 $ 290
(1) Earnings (loss) before interest expense and income taxes.
(2) Earnings (loss) before interest expense, income taxes,
depreciation and amortization.
Schedule 2 (a)
AGRIUM INC.
Product Lines
Three Months Ended September 30
(unaudited - millions of U.S. dollars)
---------------------------------------------
2004
---------------------------------------------
Sales Selling
Net Gross Tonnes Price Margin
Sales Profit (000's) ($/Tonne) ($/Tonne)
---------------------------------------------
North America Wholesale
Nitrogen (1)
Ammonia $ 87 $ 29 325 268 89
Urea 128 38 579 221 66
Nitrate, Sulphate and
Other 70 13 396 177 33
---------------------------------------------
Total Nitrogen 285 80 1,300 219 62
Phosphate 79 17 311 254 55
Potash (2) 48 25 382 126 65
---------------------------------------------
412 122 1,993 207 61
South America
Wholesale (1) 47 34 191 246 178
North America Retail
Fertilizers 77 21
Chemicals 103 30
Other 28 19
---------------
208 70
South America Retail 42 8
Inter-segment (37) (3)
---------------
Total $ 672 $ 231
---------------
(1) International nitrogen sales were 586,000 tonnes (2003 - 471,000)
net sales were $129-million (2003 - $78-million) and gross profit
was $72-million (2003 - $40-million) for the quarter ended
September 30.
(2) International potash sales were 173,000 tonnes (2003 - 126,000)
net sales were $19-million (2003 - $10-million) and gross profit
was $12-million (2003 - $5-million) for the quarter ended
September 30.
Schedule 2 (a)
---------------------------------------------
2003
---------------------------------------------
Sales Selling
Net Gross Tonnes Price Margin
Sales Profit (000's) ($/Tonne) ($/Tonne)
---------------------------------------------
North America Wholesale
Nitrogen (1)
Ammonia $ 59 $ 11 253 $ 233 $ 43
Urea 97 19 528 184 36
Nitrate, Sulphate and
Other 47 11 276 170 40
---------------------------------------------
Total Nitrogen 203 41 1,057 192 39
Phosphate 62 8 276 225 29
Potash (2) 38 15 406 94 37
---------------------------------------------
303 64 1,739 174 37
South America
Wholesale (1) 38 27 196 194 138
North America Retail
Fertilizers 73 22
Chemicals 112 33
Other 29 21
---------------
214 76
South America Retail 33 6
Inter-segment (27) (1)
---------------
Total $ 561 $ 172
---------------
(1) International nitrogen sales were 586,000 tonnes (2003 - 471,000)
net sales were $129-million (2003 - $78-million) and gross profit
was $72-million (2003 - $40-million) for the quarter ended
September 30.
(2) International potash sales were 173,000 tonnes (2003 - 126,000)
net sales were $19-million (2003 - $10-million) and gross profit
was $12-million (2003 - $5-million) for the quarter ended
September 30.
Schedule 2 (b)
AGRIUM INC.
Product Lines
Nine Months Ended September 30
(unaudited - millions of U.S. dollars)
---------------------------------------------
2004
---------------------------------------------
Sales Selling
Net Gross Tonnes Price Margin
Sales Profit (000's) ($/Tonne) ($/Tonne)
---------------------------------------------
North America Wholesale
Nitrogen (1)
Ammonia $ 297 $ 88 1,113 267 79
Urea 333 81 1,562 213 52
Nitrate, Sulphate and
Other 214 52 1,159 185 45
---------------------------------------------
Total Nitrogen 844 221 3,834 220 58
Phosphate 207 47 810 256 58
Potash (2) 152 73 1,331 114 55
---------------------------------------------
1,203 341 5,975 201 57
South America
Wholesale (1) 104 74 485 214 153
North America Retail
Fertilizers 364 93
Chemicals 341 81
Other 109 52
---------------
814 226
South America Retail 81 17
Inter-segment (84) (2)
---------------
Total $2,118 $ 656
---------------
(1) International nitrogen sales were 1,444,000 tonnes (2003 -
1,491,000) net sales were $283-million (2003 - $229-million) and
gross profit was $144-million (2003 - $108-million) for nine
months ended September 30.
(2) International potash sales were 530,000 tonnes (2003 - 432,000)
net sales were $49-million (2003 - $33-million) and gross profit
was $28-million (2003 - $17-million) for the nine months ended
September 30.
Schedule 2 (b)
---------------------------------------------
2003
---------------------------------------------
Sales Selling
Net Gross Tonnes Price Margin
Sales Profit (000's) ($/Tonne) ($/Tonne)
---------------------------------------------
North America Wholesale
Nitrogen (1)
Ammonia $ 253 $ 60 1,070 $ 236 $ 56
Urea 300 68 1,597 188 43
Nitrate, Sulphate and
Other 179 46 1,022 175 45
---------------------------------------------
Total Nitrogen 732 174 3,689 198 47
Phosphate 186 31 777 239 40
Potash (2) 116 44 1,226 95 36
---------------------------------------------
1,034 249 5,692 182 44
South America
Wholesale (1) 85 60 480 177 125
North America Retail
Fertilizers 305 88
Chemicals 343 81
Other 99 48
---------------
747 217
South America Retail 63 11
Inter-segment (67) (2)
---------------
Total $1,862 $ 535
---------------
(1) International nitrogen sales were 1,444,000 tonnes (2003 -
1,491,000) net sales were $283-million (2003 - $229-million) and
gross profit was $144-million (2003 - $108-million) for nine
months ended September 30.
(2) International potash sales were 530,000 tonnes (2003 - 432,000)
net sales were $49-million (2003 - $33-million) and gross profit
was $28-million (2003 - $17-million) for the nine months ended
September 30.
CONTACT: Agrium Inc.
Richard Downey
Investor/Media Relations
(403) 225-7357
SOURCE: AGRIUM INC.
OUR MANAGEMENT
NITROGEN