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What Contributed to Agrium’s 2Q17 Sales Decline?



Agrium’s sales

Agrium (AGU) reported overall sales of $6,319 million for all of its segments combined, a 1.5% decline year-over-year from $6,415 million in 2Q16. The company’s 2Q17 sales also slightly missed analysts’ estimate of $6,321 million during the quarter. Agrium’s sales decline trend has been continuing over the past couple of quarters. However, it appears to be improving in the more recent quarters.

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Sales by segment

Agrium reports sales from two segments: retail and wholesale. The retail segment sales for 2Q17 stood at $5,707 million, a 1.5% decline year-over-year from $5,791 million in 2Q16. The wholesale segment’s sales also fell year-over-year by 3.9% to $848 million from $882 million a year ago in 2Q16.

The retail segment

The retail segment contributed ~90% towards the company’s 2Q17 sales, while the remaining portion came from its wholesale segment. Thus, most of Agrium’s sales decline came from its retail segment.

Under the retail segment, the company has five subsegments: crop nutrient, crop protection, seeds, merchandise, and service and others. The crop nutrient and the crop protection subsegment contributed more than 70% towards the company’s retail sales during the quarter, and both subsegments experienced sales declines during the quarter. The crop nutrient segment sales fell 9% while the crop protection segment sales fell by just 1% year-over-year.

The company sells to its customers through a huge retail network in the US. With the company set to merge with PotashCorp (POT) by the end of the third quarter, PotashCorp will have large exposure to the retail distribution network in its portfolio. In contrast, peers (MOO) such as Mosaic (MOS) and CF Industries will not have any retail exposure.

In the next part, we’ll discuss shipment volumes.


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