Agrium (AGU) earned about 84% of its revenue (excluding intersegment adjustments) and 73% of its gross profit from its Retail segment in 1Q16. 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), Mosaic (MOS), and Israel Chemicals (ICL), revenue is a function of shipments and prices. Let’s look now at shipments for Agrium’s Retail segment. The Materials Select Sector SPDR ETF (XLB) holds 1.9% of its portfolio in MOS.
Agrium’s Retail segment shipments mostly come from the domestic (North America) market, which accounted for 77% of the total Retail segment shipments. The rest comes from international markets.
Agrium’s (AGU) Retail segment’s shipments increased by 3.8% to 2.0 million tons in 1Q16, from 1.9 million tons in 1Q15. Most of the shipment growth has come from North America, which increased 6%. The international market saw a 3% decline in shipments YoY (year-over-year). During the quarter, the company’s proprietary nutritional products saw a 25% growth in volumes YoY.
Digging more deeply
Year-over-year, shipments in North America have increased to 1.5 million tons from 1.4 million tons. The company’s increased sales of proprietary crop nutrients products and the increase in seed sales boosted shipment volumes during the quarter. This is positive for the company because proprietary products command higher margins over commodity products. International shipments declined from 0.45 million tons to 0.44 million tons during 1Q16.
Next, let’s look at the pricing environment for the Retail segment.