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How Did Agrium Increase Sales in 1Q16?


May. 11 2016, Updated 2:06 p.m. ET


Agrium (AGU) earns revenue from two sources: retail and wholesale. The retail channel accounted for about 84% of Agrium’s revenue in 1Q16. The remainder came from the wholesale channel, excluding intersegment adjustments.

The retail channel is further made up of sales in North America and the international market. The critical North American market accounts for about 80% of retail sales, and the remaining 20% comes from international markets.

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Revenue misses

Agrium (AGU) reported revenues of $2.72 billion for 1Q16, which missed analyst estimates of $2.75 billion—a margin of 1.1%. Year-over-year (or YoY), the company’s revenue declined 5% from $2.8 billion in 1Q15. Most of the decline in overall revenue came from the company’s wholesale segment, which declined 25% YoY to $649 million, from $897 million.

The retail segment’s sales, on the other hand, increased slightly from $2.2 billion in 1Q15 to $2.3 billion in 1Q16. Proprietary products give the company advantage over other fertilizer companies such as PotashCorp (POT), Mosaic (MOS), and Intrepid Potash (IPI) to maintain a stable margin. Sales for the retail segment were boosted by its proprietary and seed products, which we’ll look at in more detail later in this series.

You can consider a diversified portfolio such as the Materials Select Sector SPDR ETF (XLB), which invests 12% of its portfolio in agricultural chemicals.

Next, we’ll look at Agrium’s (AGU) Retail segment shipments.


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