Agrium (AGU) earns about 73% of its revenue and 65% of its gross profit from its Retail segment. Of this, the domestic market makes up the majority of the company’s Retail segment sales.
For commodity companies such as Agrium, Intrepid Potash (IPI), the Mosaic Company (MOS), and Israel Chemicals (ICL), revenue is a function of shipments and prices. Let’s look at shipments for Agrium’s Retail segment in this part. The Materials Select Sector SPDR ETF (XLB) holds 1.85% of its portfolio in MOS.
Agrium’s (AGU) Retail segment’s shipments declined by 6% to 1.7 million tons from 2 million tons in 4Q14. About 60% of the decline has come from the North American market while the rest came from the international markets.
Year-over-year, shipments in North America have declined to 1.37 million tons from 1.43 million tons. International shipments also declined from 0.37 million tons to 0.33 million tons.
Outlook for retail
Agrium’s Retail business was impacted by wet conditions in North America, which led to a delay in planting, according to the company. However, the company stated that it is expecting an increase in acreage in the US. Coupled with lower application in the fall season, this should lead to a “healthy year when it comes to retail.”
Next, we will look at how the average retail prices for Agrium fared in 4Q15.