Agrium Successful in Expanding Retail Gross Margins in 3Q16



Retail gross margins

Previously in this series, we discussed how Agrium’s (AGU) Retail segment performed in 3Q16 and how its overall realized prices fell 17% YoY (year-over-year), though shipments rose 4% YoY. Remember, shipments and prices are both driven by market forces—something a company has little control over—and so it’s important for us to observe how gross margins for fertilizer companies have fared.

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Gross margins across Retail’s sub-segments

In 3Q16, the Retail segment’s gross margin expanded YoY to 26% from 25% in 3Q15. Despite the fall in fertilizer prices, the segment’s gross margin expanded from 19% in 3Q15 to 24% in 3Q16, though the gross margin in crop protection did not change much YoY at 23%.

By comparison, the service and other sub-segment saw its margin expand from 59% to 63% in 3Q16, while the merchandise sub-segment saw its margin expand from 15% to 17%. Agrium’s seeds business saw its margin contract from 43% to 37% YoY.

Notably, the VanEck Vectors Agribusiness ETF (MOO) invests 7.7% in Monsanto (MON), 3.8% in Agrium (AGU), 4.6% in PotashCorp (POT), and 8.9% in Syngenta (SYT).

Now let’s take a closer look at Agrium’s Wholesale segment.


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