A drop in potash demand and tighter retail margins have led Agrium’s run of record quarterly profits into the red.
The Calgary-based fertilizer and farm retail firm on May 6 posted a net loss of $60 million on net sales of $1.75 billion, down from its 2008 Q1 profit of $195 million on $1.11 billion in sales (all figures US$).
“The first quarter is traditionally our weakest quarter, as we build inventories in preparation for the spring season,” CEO Mike Wilson said in the company’s release. “This year’s results were also impacted by the drop in potash demand, a short-term squeeze on retail nutrient margins and the late spring.”
Among the line items dragging on its Q1 bottom line were non-qualifying natural gas and power hedge losses of $69 million; a $10 million expense in “stock-based compensation”; and an inventory writedown of $18 million tied to its wholesale-purchase-for-resale business.
As well, “the decrease in potash volumes versus 2008 and the costs associated with production curtailments resulted in reduction in gross profit of approximately $180 million,” Wilson said.
That said, he added, “spring applications have now commenced in all of our North American markets and the outlook for our business is strong… We anticipate demand for potash to recover in the second half of 2009.”