Agrium (AGU), one of the major agricultural fertilizer retailers, reported 3Q16 adjusted EPS (earnings per share) of -$0.11 on November 3, 2016, missing the analyst estimate of EPS of $0.12. These earnings have fallen YoY (year-over-year) from $0.79 per share in 3Q15. Its share price closed ~1% lower at $90.3 the end of the trading day on November 3, 2016.
YTD (year-to-date), Agrium has returned 1%, which is better than PotashCorp’s (POT) YTD returns of -5.8%, Mosaic’s (MOS) -12.5%, and CF Industries’ (CF) -44.6%. By comparison, the broader portfolio of the Materials Select Sector SPDR ETF (XLB) has returned 6.5%, and the S&P 500 (SPY) benchmark index has returned 2.2% YTD.
From what we have observed so far, fertilizer companies have had a rough 3Q16. The fertilizer pricing environment has not improved and is taking longer than expected for the situation to turn around. Companies have announced cost-cutting measures, and some have even entered in mergers and acquisition transactions. Agrium recently announced a merger of equals with PotashCorp. This merger is expected to complete by next year.
In this earnings analysis series, we’ll explore Agrium’s key performance metrics in 3Q16. We’ll also discuss the key drivers of the company’s quarterly performance and look at the management’s outlook and guidance for upcoming quarters.
Let’s start with Agrium’s sales in 3Q16.