SOURCE: Agrium Inc.

Agrium Inc.

February 09, 2017 18:06 ET

Agrium Reports In-Line Fourth Quarter Results: Foresees Solid Spring Season

February 9, 2017 - ALL AMOUNTS ARE STATED IN U.S.$

CALGARY, AB--(Marketwired - February 09, 2017) - Agrium Inc. (TSX: AGU) (NYSE: AGU) announced today its 2016 fourth quarter results, with a net earnings to equity holders of Agrium of $67-million ($0.49 diluted earnings per share) compared to net earnings of $201-million ($1.45 diluted earnings per share) in the fourth quarter of 2015. The reduction in net earnings was driven primarily by lower year-over-year nutrient pricing. On an annual basis, 2016 earnings to equity holders of Agrium were $592-million ($4.29 diluted earnings per share) compared to $988-million ($6.98 diluted earnings per share) in 2015.

Highlights:

  • Fourth quarter guidance relevant earnings were $94-million or $0.68 diluted earnings per share1 which is in-line with our guidance. Retail reported record EBITDA2,3 for the fourth quarter, supported by strong crop protection product sales and record International earnings, as Australian operations delivered a 29 percent increase in annual EBITDA in 2016.
  • Cash provided by operating activities was $1.5-billion in the fourth quarter.
  • Wholesale achieved record production for nitrogen this year and successfully completed construction of the 610,000 tonne urea plant at its nitrogen facility in Borger, Texas, within the previously disclosed revised timeline and cost parameters. Commissioning is underway and production is expected to commence in the first quarter of 2017.
  • Agrium had a record year for retail small to mid-sized acquisitions, with over $500-million of expected annual sales.
  • Agrium's commitment to Operational Excellence continued to deliver results this quarter, and on an annual basis we delivered approximately $145-million of EBITDA cash cost savings across the company. Supporting this was $66-million in fixed cost savings in Wholesale, while Retail's cash operating coverage ratio3 improved to 61 percent on an annual basis.
  • Agrium has announced our 2017 annual guidance range of $4.50 to $6.00 diluted earnings per share (see page 3 for guidance assumptions and further details).

"Agrium continued to deliver solid results across our business this quarter, supported by record fourth quarter results in our Retail business and strong wholesale operating performance. We delivered on our promise of value-added growth in 2016 by successfully bringing our Borger expansion to completion and growing retail at a record pace through acquisitions," commented Chuck Magro, Agrium's President and CEO. "We have been encouraged by the recent firming in global nutrient markets and we anticipate solid demand for crop inputs in the coming spring application season," added Mr. Magro.

1
Effective tax rate of 25.5 percent for the fourth quarter and 27.3 percent for the year ended 2016 were used for the adjusted net earnings, guidance relevant earnings and per share calculations. These are non-IFRS measures which represent net earnings adjusted for certain income (expenses) that are considered to be non-operational in nature. We believe these measures provide meaningful comparison to the earnings of other companies and our guidance by eliminating share-based payments expense (recovery), gains (losses) on foreign exchange and related gains (losses) on non-qualifying derivative hedges and significant non-operating, non-recurring items. Our guidance is forward-looking information. We present guidance relevant earnings per share to provide an update to this previously disclosed forward-looking information. These should not be considered as a substitute for, or superior to, measures of financial performance prepared in accordance with IFRS and may not be directly comparable to similar measures presented by other companies.
2
Earnings (loss) from operations before finance costs, income taxes, depreciation and amortization.
3
This is a non-IFRS measure. Refer to section "Non-IFRS Measures".

ADJUSTED NET EARNINGS AND GUIDANCE RELEVANT EARNINGS RECONCILIATIONS

    Three months ended  Twelve months ended  
    December 31, 2016  December 31, 2016  
(millions of U.S. dollars, except per share amounts)

Expense
 Net earnings
 
(loss) impact
(post-tax)
 

Per share (a)
 

Expense
 Net earnings
impact
(post-tax)
 

Per share (a)
 
     67  0.49     596  4.29  
Adjustments:                   
  Share-based payments 33  25  0.18  55  40  0.29  
  Foreign exchange loss net of non-qualifying derivatives 3  2  0.01  13  9  0.06  
  Merger and related costs 14  10  0.07  31  23  0.17  
  Egyptian pound devaluation impact on MOPCO equity investment (35 )(26 )(0.19 )(35 )(25 )(0.18 )
  IT outsourcing costs 7  5  0.04  14  10  0.07  
Adjusted net earnings(b)    83  0.60     653  4.70  
Additional items not included in earnings guidance:                   
  Investment impairment 15  11  0.08  15  11  0.08  
  Non-operational legal costs -  -  -  18  13  0.09  
  Guidance relevant earnings(b)    94  0.68     677  4.87  
(a)Diluted per share information attributable to equity holders of Agrium
(b)Effective tax rate of 25.5 percent for the fourth quarter and 27.3 percent for the year ended was used for the adjusted net earnings, guidance relevant earnings, and per share calculations.

MARKET OUTLOOK

Agricultural and Crop Input Fundamentals

  • Crop prices are similar to or higher than where they were a year ago, despite record global crop production in 2016/17.
  • Strong global demand for grains and oilseeds has helped to partly offset the impact from record grain production. The United States Department of Agriculture ("USDA") projects that combined global grain and oilseed demand will grow by over 3 percent in 2016/17. Over the past four years, global demand has grown at an annual rate of 2.8 percent, which is the highest four year growth rate in the past thirty five years.
  • We expect growers will continue to be cautious when making crop input decisions in 2017, despite improved margins partly associated with lower crop input prices. North American crop input prepay levels are higher than the same time last year, partly due to strong anticipated spring nutrient purchases in Canada due to the shortened fall ammonia season in 2016.
  • We expect U.S. corn acreage to be between 90 million to 92 million acres in 2017, down from 94 million acres in 2016. We anticipate the decline in corn acreage to result in a 1 to 3 percent decline in 2016/17 U.S. crop nutrient demand, as well as lower expenditures on seed. However, total crop protection expenditures are expected to be relatively stable in 2017.

Nitrogen

  • Global nitrogen prices rallied in late 2016 and early 2017, with benchmark urea and ammonia prices up between $80 and over $100 per tonne from second half 2016 lows. The rise in nitrogen prices was primarily in response to reduction in supply and export availability from China and Eastern Europe, largely due to low global prices earlier in the year.
  • Chinese coal prices increased by between 40 and 140 percent between the low and high of 2016, depending on the type of coal. The increase in costs and relatively low global urea prices resulted in Chinese urea exports in the fourth quarter declining by more than 65 percent year-over-year, while annual exports declined from 13.8 million tonnes in 2015 to 8.9 million tonnes in 2016. We anticipate exports will decline further in 2017 to between six and eight million tonnes, despite the recent removal of the Chinese urea export tax in late 2016.
  • U.S. offshore imports of urea were down more than one million tonnes in the second half of 2016 compared to 2015 levels, which was more than double the estimated increase in domestic production during the same time period. The shortfall in supply has lent further support to urea prices in early 2017.

Potash

  • Strong potash demand supported global potash prices in the second half of 2016 and into the first half of 2017 as most potash buyers had relatively low inventories by the end of 2016. We expect that global potash shipments will be between 60 to 62 million tonnes in 2017, up from 59 million tonnes in 2016.
  • Analysts expect new potash capacity to begin ramping up in the first half of 2017, which would increase available supply in the second half of 2017, however much will depend on the rate at which new supplies become available relative to the rate of international demand growth.

Phosphate

  • The phosphate market was relatively weak by the end of 2016, in part due to strong exports from China late in the year; however, exportable supplies from China have tightened in early 2017 and both global and North American prices have recently increased as a result.
  • Increased raw material costs are also supportive of phosphate prices, particularly the rise in the price of ammonia.

2017 ANNUAL GUIDANCE

Based on our assumptions set out under the heading "Market Outlook", Agrium expects to achieve annual diluted earnings per share of $4.50 to $6.00 in 2017. We have maintained a range width encompassing approximately $300-million of EBITDA variability to reflect the risk and opportunity associated with crop nutrient prices and demand for crop inputs at this time of year. We are assuming a normal spring and fall application season, recognizing there is always a risk that inclement weather could affect the timing and duration of each season. Our earnings per share guidance assumes some recovery from current nitrogen prices during the key application seasons.

Based on these and other assumptions regarding prices and demand for crop nutrients set out under the heading "Market Outlook", we expect Retail EBITDA to be $1.125-billion to $1.225-billion, and Retail nutrient sales volumes to range between 10.2 million to 10.6 million tonnes in 2017.

Based on our expected increase in utilization rate for our nitrogen assets, we anticipate nitrogen production to total 3.6 to 3.8 million tonnes. Agrium continues its hedging program for gas requirements in 2017 and is monitoring the market to mitigate any upward pressure on prices through near-term hedging. Our earnings per share guidance assumes NYMEX gas prices will be between $3.05 and $3.85 per MMBtu in 2017.

Agrium's expectation for potash production in 2017 assumes the full ramp-up of production following the expansion project at our Vanscoy mine. We expect to produce between 2.4 and 2.8 million tonnes of potash in 2017.

Total capital expenditures are expected to be in the range of $650-million to $750-million, of which approximately $500-million to $550-million is expected to be sustaining capital expenditures.

Agrium's annual effective tax rate for 2017 is expected to range between 27 to 29 percent.

This guidance and updated additional measures and related assumptions are summarized in the table below. Guidance excludes the impact of share-based payments expense (recovery), gains (losses) on foreign exchange and non-qualifying derivative hedges, and merger related costs. Volumetric and earnings estimates assume normal seasonal growing and harvest patterns in the geographies where Agrium operates.

2017 ANNUAL GUIDANCE RANGE AND ASSUMPTIONS

  Annual  
  Low  High  
Diluted EPS (in U.S. dollars) $4.50  $6.00  
Guidance assumptions:       
Wholesale:       
 Production tonnes:       
  Nitrogen (millions) 3.6  3.8  
  Potash (millions) 2.4  2.8  
Retail:       
 EBITDA (millions of U.S. dollars) $1,125  $1,225  
 Crop nutrient sales tonnes (millions) 10.2  10.6  
Other:       
 Tax rate 29 %27 %
 Sustaining capital expenditures (millions of U.S. dollars) $500  $550  
 Total capital expenditures (millions of U.S. dollars) $650  $750  

February 9, 2017

All comparisons of results for the fourth quarter of 2016 (three months ended December 31, 2016) and for the twelve months ended December 31, 2016 are against results for the fourth quarter of 2015 (three months ended December 31, 2015) and twelve months ended December 31, 2015. All dollar amounts refer to United States (U.S.) dollars except where otherwise stated. This news release should be read in conjunction with our audited annual financial statements and related notes, prepared in accordance with IFRS, contained in our 2015 Annual Report, available at www.agrium.com.

The financial measures cash operating coverage ratio, cash selling and general and administrative expenses, cash cost of product manufactured, and EBITDA used in this news release are not prescribed by, and do not have any standardized meaning under International Financial Reporting Standards (IFRS). Our method of calculation may not be directly comparable to that of other companies. We consider these non-IFRS financial measures to provide useful information to both management and investors in measuring our financial performance and financial condition. These non-IFRS financial measures should not be considered as a substitute for, or superior to, measures of financial performance prepared in accordance with IFRS. Please refer to the section entitled "Non-IFRS Financial Measures" for further details, including a reconciliation of such measures to their most directly comparable measure calculated in accordance with IFRS.

2016 Fourth Quarter Operating Results

CONSOLIDATED NET EARNINGS

Financial Overview             
   
  Three months ended December 31,  
(millions of U.S. dollars, except per share amounts and where noted) 2016  2015  Change  % Change  
Sales 2,280  2,407  (127 )(5 )
Gross profit 748  900  (152 )(17 )
Expenses 586  576  10  2  
Earnings before finance costs and income taxes (EBIT) 162  324  (162 )(50 )
Net earnings 67  200  (133 )(67 )
Diluted earnings per share 0.49  1.45  (0.96 )(66 )
Effective tax rate (%) 25  20  N/A  N/A  
Sales and Gross Profit  
             
    Three months ended December 31,  
(millions of U.S. dollars) 2016  2015  Change  
Sales          
  Retail 1,828  1,765  63  
  Wholesale 657  888  (231 )
  Other (205 )(246 )41  
    2,280  2,407  (127 )
             
Gross profit          
  Retail 623  599  24  
  Wholesale 134  320  (186 )
  Other (9 )(19 )10  
    748  900  (152 )
  • Retail's sales and gross profit increased in the fourth quarter of 2016 primarily as a result of higher crop protection product sales due to higher demand for herbicides and glyphosate in the U.S. Corn Belt and favorable weather conditions in Australia.
  • Wholesale's sales and gross profit decreased in the fourth quarter compared to the same period last year due to lower market prices for all nutrients.

Expenses

  • General and administrative expenses decreased by $9-million (12 percent) as a result of organization-wide cost control measures.
  • Earnings from associates and joint ventures increased as a result of the devaluation of the Egyptian pound that led to a $35-million foreign exchange gain in MOPCO, net of tax.
  • Our share price increased during the current quarter leading to higher share-based payments expense of $18-million.
  • Other expenses increased during the quarter primarily due to the following:
    • Merger and related costs of $14-million
    • Impairment loss of $15-million related to an international investment
    • Information Technology outsourcing costs of $7-million

For further breakdown on Other expenses, see table below:

Other expenses breakdown       
  Three months ended
December 31,
 
(millions of U.S. dollars) 2016  2015  
Loss (gain) on foreign exchange and related derivatives 3  (5 )
Interest income (17 )(16 )
Gain on sale of assets -  (17 )
Asset impairment 15  19  
Environmental remediation and asset retirement obligations 1  1  
Bad debt expense 3  4  
Potash profit and capital tax 2  3  
Merger and related costs 14  -  
Outsourcing costs 7  -  
Other 15  38  
  43  27  

Depreciation and Amortization

Depreciation and amortization breakdown

    Three months ended December 31,  
  2016  2015  
(millions of U.S. dollars) Cost of
product
sold
 

Selling
  General
and
administrative
 

Total
 Cost of
product
sold
 

Selling
  General
and
administrative
 

Total
 
Retail 1   66   1   68  1   64   1   66  
Wholesale                               
  Nitrogen 22   -   1   23  18   -   -   18  
  Potash 26   -   -   26  28   -   -   28  
  Phosphate 15   -   -   15  14   -   -   14  
  Wholesale Other (a) 3   -   -   3  4   -   1   5  
    66   -   1   67  64   -   1   65  
Other -   -   6   6  -   -   4   4  
Total 67   66   8   141  65   64   6   135  
(a)
This includes product purchased for resale, ammonium sulfate, Environmentally Smart Nitrogen® (ESN) and other products.

Effective Tax Rate

  • The effective tax rate of 25 percent for the fourth quarter of 2016 was higher than the tax rate of 20 percent for the same period in 2015 due to a decrease in the recognition of previously unrecognized tax assets in Canada.

BUSINESS SEGMENT PERFORMANCE

Retail            
             
  Three months ended December 31,  
(millions of U.S. dollars, except where noted) 2016   2015   Change  
Sales 1,828   1,765   63  
Cost of product sold 1,205   1,166   39  
Gross profit 623   599   24  
EBIT 134   133   1  
EBITDA 202   199   3  
Selling and general and administrative expenses 502   491   11  
  • Retail reported record fourth quarter gross profit and EBITDA1, supported by robust demand for crop protection products and application services in the U.S and Australia. On an annual basis, Retail, and specifically Australia, reported record EBITDA while U.S. operations reported a record EBITDA to sales margin of 10.4 percent supported by higher margin proprietary product sales and cost savings.
  • Total Retail selling and general and administrative expenses were up $11-million from the fourth quarter of last year. However, total cash expenses were down by $12-million after adjusting for costs associated with the retail locations acquired in 2016. Our cash operating coverage ratio also improved due to our continued focus on Operational Excellence, moving down to 61 percent on a rolling four quarter basis from 62 percent for the same period last year.
  • Regionally, U.S. EBITDA was up slightly this quarter, while our Canadian operations reported weaker results due to an early winter, which shortened the fall application season. Australia reported a $20-million increase in EBITDA primarily due to strong crop protection product sales and accompanying application services. Our South American Retail operations reported slightly higher gross profit but lower EBITDA this quarter.
1Net earnings (loss) before finance costs, income taxes, depreciation and amortization, and net earnings (loss) from discontinued operations.
Retail sales and gross profit by product line
  Three months ended December 31,
  Sales  Gross profit  Gross profit (%)  
(millions of U.S. dollars, except where noted) 2016   2015   Change  2016   2015   Change  2016   2015  
Crop nutrients 779   843   (64 )147   154   (7 )19   18  
Crop protection products 620   541   79  296   268   28  48   50  
Seed 101   75   26  43   54   (11 )43   72  
Merchandise 167   156   11  27   27   -  16   17  
Services and other 161   150   11  110   96   14  68   64  

Crop nutrients

  • Total crop nutrient sales were 8 percent lower this quarter compared to the same period last year, due to significantly lower prices across all nutrients, partly offset by higher crop nutrient volumes.
  • The increase in crop nutrient volumes was due primarily to a 26 percent increase in U.S. sales tonnes this quarter, partly offset by a slight decline in nutrient volumes in Canada due to some fall weather challenges.
  • Total crop nutrient gross profit was 5 percent lower this quarter due to lower selling prices and margins. North American nutrient per tonne margins were down $19 this quarter due to weaker nutrient prices, but margins as a percentage of sales rose to 19 percent this quarter compared to 18 percent in the fourth quarter of 2015.

Crop protection products

  • Total crop protection product sales were up 15 percent this quarter due to strong demand in Australia, an open window in the U.S. for fall applications and some catch up in demand for crop protection products resulting from the reduced sales of these products experienced during the third quarter.
  • Gross profit in the fourth quarter was up 10 percent over last year due to strong volumes and an increase in proprietary product sales. Crop protection product margins as a percentage of sales were down slightly this quarter as a result of a higher sales mix to wholesalers and selling higher volumes of lower margin products such as glyphosate, which is used for post-harvest burndown.
  • Proprietary crop protection product sales as a percentage of total crop protection product sales reached 18 percent this quarter, up two percentage points over the same period last year. On an annual basis, proprietary crop protection sales grew 11 percent in 2016 and represented 24 percent of total crop protection product sales this year.

Seed

  • Total seed sales were 35 percent higher this period compared to last year due to increased sales of product to wholesalers in the U.S and higher demand in Australia. Gross profit declined by 20 percent, partly related to the higher sales mix to wholesalers which traditionally represents lower margins. As a result, total seed margins as a percentage of sales was 43 percent this quarter - a 29 percent decrease from the fourth quarter of 2015. On an annual basis, however, seed margins were 20 percent the same as in 2015.

Merchandise

  • Merchandise sales increased 7 percent, while gross profit remained in line with the same period last year. The increase in sales was primarily due to stronger results in Australia and increased merchandise sales in the U.S. due to some of the recent retail acquisitions.

Services and other

  • Sales for services and other was up 7 percent this quarter, while gross profit was 15 percent higher. The increase in sales and profit was related to higher crop nutrient and crop protection product applications in the U.S. and Australia this quarter.
Wholesale          
           
  Three months ended December 31,  
(millions of U.S. dollars, except where noted) 2016  2015  Change  
Sales 657  888  (231 )
Sales volumes (tonnes 000's) 2,273  2,292  (19 )
Cost of product sold 523  568  (45 )
Gross profit 134  320  (186 )
EBIT 149  287  (138 )
EBITDA 216  352  (136 )
Expenses (including earnings from associates and joint ventures) (15 )33  (48 )
Earnings from associates and joint ventures (34 )(2 )(32 )
  • Wholesale earnings this quarter were primarily impacted by lower global fertilizer prices across all nutrients compared to the same period last year. This was partly offset by lower fixed costs related to ongoing Operational Excellence initiatives.
Wholesale NPK product information  
  Three months ended December 31,  
  Nitrogen  Potash  Phosphate  
  2016   2015   Change  2016   2015   Change  2016   2015   Change  
Gross profit (U.S. dollar millions) 85   186   (101 )21   63   (42 )8   37   (29 )
Sales volumes (tonnes 000's) 954   912   42  590   656   (66 )303   325   (22 )
Selling price ($/tonne) 298   403   (105 )179   267   (88 )475   610   (135 )
Cost of product sold ($/tonne) 209   199   10  143   171   (28 )449   495   (46 )
Gross margin ($/tonne) 89   204   (115 )36   96   (60 )26   115   (89 )

Nitrogen

  • Nitrogen gross profit was down 54 percent compared to the same period last year primarily due to significantly lower global nitrogen prices.
  • Sales volumes were slightly higher than the same period last year due to strong demand for urea and nitrogen solutions. Ammonia sales volumes were 11 percent lower than the same period last year as a result of the early winter weather in Western Canada and the Northern Plains of the U.S. this year.
  • Realized selling prices per tonne were down 26 percent compared to the same period last year due to lower global benchmark nitrogen prices.
  • Cost of product sold per tonne increased by 5 percent compared to the same period last year partly due to higher natural gas input costs. Partially offsetting this were higher utilization rates and lower fixed costs at our facilities. Average nitrogen margins were $89 per tonne this quarter, while ammonia and urea margins averaged approximately $100 per tonne.
         
Natural gas prices: North American indices and North American Agrium prices
  Three months ended
December 31,
 
(U.S. dollars per MMBtu) 2016   2015  
Overall gas cost excluding realized derivative impact 2.52   2.15  
Realized derivative impact 0.07   0.31  
Overall gas cost 2.59   2.46  
Average NYMEX 2.99   2.28  
Average AECO 2.12   2.00  

Potash

  • Potash gross profit declined by 67 percent compared to the same period last year due to lower global potash prices.
  • Sales volumes were 10 percent lower in the current period primarily due to lower opening inventory levels this year.
  • Realized selling prices have declined over the past year with selling prices down 33 percent internationally and 25 percent for North American markets compared to the same period last year.
  • Our cost of product sold per tonne was 16 percent lower than the same period last year due to a product mix with higher proportion of sales to offshore markets, where freight is excluded from cost of product sold. A weaker Canadian dollar and fixed cost savings also contributed to reduced costs this quarter. Cash cost of product manufactured on an annual basis also declined by 18 percent to $79 per tonne compared to 2015 due to higher production volumes and lower fixed costs.

Phosphate

  • Phosphate gross profit was 78 percent lower than the same period last year due to continuing pressure on phosphate benchmark prices. Lower sales volumes also contributed to the decline in gross profit but were more than offset by lower cost of product sold per tonne.
  • Sales volumes were 7 percent lower than the same period last year due to an early winter in Western Canada this quarter and a shorter window for fall applications of phosphate.
  • Cost of product sold per tonne was down 9 percent compared to the same period last year due to lower input costs and the lower Canadian dollar benefiting the Redwater phosphate facility.
Wholesale Other            
             
Wholesale Other: gross profit breakdown  
  Three months ended December 31,  
(millions of U.S. dollars) 2016   2015   Change  
Ammonium sulfate 11   16   (5 )
ESN 8   15   (7 )
Product purchased for resale -   1   (1 )
Other 1   2   (1 )
  20   34   (14 )
  • Gross profit from Wholesale Other was lower than the same period last year primarily due to overall lower realized nutrient prices. This was partly offset by higher sales volumes of ESN and ammonium sulfate this quarter.

Expenses

  • Wholesale expenses decreased by $48-million in the current quarter due to higher equity earnings of $32-million from our investments, primarily as a result of the Egyptian pound devaluation leading to a foreign exchange gain; a 16 percent reduction in selling, general and administrative expenses as a result of our on-going Operational Excellence initiatives; and a $19-million goodwill impairment on our Europe purchased for resale business included in the same period last year. This was partially offset by a $17-million gain on the sale of the West Sacramento nitrogen upgrading facility recognized in the same period last year.

Other

EBITDA for our Other non-operating business unit for the fourth quarter of 2016 had a net expense of $115-million, compared to a net expense of $92-million for the fourth quarter of 2015. The variance was primarily due to:

  • Merger and related costs of $14-million
  • An increase of $18-million in share-based payments expense as a result of an increase in our share price
  • Impairment loss of $15-million on an international investment
  • Partially offset by a $10-million decrease in gross profit elimination as a result of lower intersegment inventory held at the end of the fourth quarter of 2016
Capital Spending and Expenditures (a)        
    Three months ended  Twelve months ended  
    December 31,  December 31,  
(millions of U.S. dollars) 2016  2015  2016  2015  
Retail             
  Sustaining 23  38  111  141  
  Investing 21  12  50  37  
    44  50  161  178  
  Acquisitions (b) 26  42  342  127  
  70  92  503  305  
Wholesale             
  Sustaining 38  189  244  388  
  Investing 90  26  312  604  
    128  215  556  992  
Other             
  Sustaining 1  9  4  12  
  Investing -  4  3  6  
    1  13  7  18  
Total             
  Sustaining 62  236  359  541  
  Investing 111  42  365  647  
    173  278  724  1,188  
  Acquisitions (b) 26  42  342  127  
  199  320  1,066  1,315  
(a)This excludes capitalized borrowing costs.
(b)This represents business acquisitions and includes acquired working capital; property, plant and equipment; intangibles; goodwill; and investments in associates and joint ventures.
  • Our total capital expenditures decreased in the fourth quarter and twelve months of 2016 compared to the same periods last year due to the ramp-up of our Vanscoy potash facility in 2015 combined with decreased spending on the Borger project in 2016.
  • We completed the acquisitions of 16 farm centers located in the provinces of Alberta and Saskatchewan from Andrukow Group Solutions Inc. and 18 farm centers located across the northern U.S. Corn Belt region from Cargill AgHorizons (U.S.) in 2016.

SHARE REPURCHASES

Pursuant to the agreement dated September 11, 2016 with PotashCorp, under which the companies will combine in a merger of equals, we are restricted from purchasing our outstanding shares prior to completion of the proposed plan of arrangement. No shares were repurchased under the Normal Course Issuer Bid in 2016 or the period from January 1, 2017 to February 18, 2017. During 2015, we purchased for cancellation 5,574,331 shares at an average share price of $100.25.

OUTSTANDING SHARE DATA

Agrium had 138,176,000 outstanding shares at February 3, 2017. At February 3, 2017, the number of shares issuable pursuant to stock options outstanding (issuable assuming full conversion, where each option granted can be exercised for one common share) was approximately 937,528.

SELECTED QUARTERLY INFORMATION
                                  
(millions of U.S. dollars, except per share amounts) 2016
Q4
  2016
Q3
 2016
Q2
  2016
Q1
  2015
Q4
  2015
Q3
  2015
Q2
  2015
Q1
 
Sales 2,280   2,245  6,415   2,725   2,407   2,524   6,992   2,872  
Gross profit 748   568  1,525   554   900   696   1,708   584  
Net earnings (loss) 67   (39 )565   3   200   99   675   14  
Earnings (loss) per share attributable to equity holders of Agrium:                               
  Basic and diluted 0.49   (0.29 )4.08   0.02   1.45   0.72   4.71   0.08  
Dividends declared 121   120  122   121   121   120   125   112  
Dividends declared per share 0.875   0.875  0.875   0.875   0.875   0.875   0.875   0.780  

The agricultural products business is seasonal. Consequently, year-over-year comparisons are more appropriate than quarter-over-quarter comparisons. Crop input sales are primarily concentrated in the spring and fall crop input application seasons. Crop nutrient inventories are normally accumulated leading up to each application season. Our cash collections from accounts receivables generally occur after the application season is complete, and our customer prepayments are concentrated in December and January.

NON-IFRS FINANCIAL MEASURES

Financial measures that are not specified, defined or determined under IFRS are non-IFRS measures unless they are presented in our Consolidated Financial Statements. The following table outlines our non-IFRS financial measures, their definitions and why management uses the measures.


Non-IFRS financial measure
 
Definition
 Why we use the measure and why it is useful to investors
Cash operating coverage ratio
 Cash operating coverage ratio represents gross profit excluding depreciation and amortization less EBITDA, divided by gross profit excluding depreciation and amortization.
 Assists management and investors in understanding the costs and underlying economics of our operations and in assessing our operating performance and our ability to generate free cash flow from our business units and overall as a company.
Cash selling and general and administrative expenses Selected financial measures excluding depreciation and amortization.
  
EBITDA  Net earnings (loss) before finance costs, income taxes, depreciation and amortization, and net earnings (loss) from discontinued operations. 
 EBITDA is frequently used by investors and analysts for valuation purposes when multiplied by a factor to estimate the enterprise value of a company. EBITDA is also used in determining annual incentive compensation for certain management employees and in calculating certain of our debt covenants.
Cash cost of product manufactured (COPM)  All fixed and variable costs are accumulated in cash COPM excluding depreciation and amortization expense and direct freight.  Enables investors to better understand the performance of our manufactured operations compared to other crop nutrient producers.
When cash COPM costs are divided by the production tonnes for the period, the result is actual cash COPM per tonne, which is compared to the standard cash COPM per tonne - a calculation of fixed and variable costs for a standard or typical period of production. The standard cash COPM per tonne is multiplied by the production tonnes for the period, and the resulting dollar amount is transferred to inventory. Any remaining costs are recorded directly to cost of product sold as production volume or cost efficiency variances.

Direct freight is a transportation cost to move the product from an Agrium location to the point of sale.

There is no directly comparable IFRS measure for cash COPM.
Retail cash operating coverage ratio      
  Rolling four quarters ended December 31,  
(millions of U.S. dollars, except as noted) 2016   2015  
Gross profit 2,786   2,728  
Depreciation and amortization in cost of product sold 6   6  
Gross profit excluding depreciation and amortization 2,792   2,734  
EBITDA 1,091   1,033  
Operating expenses excluding depreciation and amortization 1,701   1,701  
Cash operating coverage ratio (%) 61   62  
Cash selling and general and administrative expenses  
  Three months ended December 31,  
(millions of U.S. dollars) 2016   2015   2016   2015   2016   2015  
  Retail Wholesale Consolidated
Selling 476   462   9   7   480   465  
Depreciation and amortization in selling expense 66   64   -   -   66   64  
Cash selling 410   398   9   7   414   401  
General and administrative 26   29   7   12   65   74  
Depreciation and amortization in general and administrative 1   1   1   1   8   6  
Cash general and administrative 25   28   6   11   57   68  
  Three months ended December 31,  
Consolidated and business unit EBITDA        
(millions of U.S. dollars) Retail  Wholesale  Other  Consolidated  
2016             
Net earnings          67  
Finance costs related to long-term debt          51  
Other finance costs          21  
Income taxes          23  
EBIT 134  149  (121 )162  
Depreciation and amortization 68  67  6  141  
EBITDA 202  216  (115 )303  
2015             
Net earnings          200  
Finance costs related to long-term debt          53  
Other finance costs          20  
Income taxes          51  
EBIT 133  287  (96 )324  
Depreciation and amortization 66  65  4  135  
EBITDA 199  352  (92 )459  

FORWARD-LOOKING STATEMENTS

Certain statements and other information included in this document constitute "forward-looking information" and/or "financial outlook" within the meaning of applicable Canadian securities legislation or constitute "forward-looking statements" within the meaning of applicable U.S. securities legislation (collectively, the "forward-looking statements"). All statements in this news release other than those relating to historical information or current conditions are forward-looking statements, including, but not limited to, statements as to management's expectations with respect to: 2017 annual guidance, including expectations regarding our diluted earnings per share and Retail EBITDA; capital spending expectations for 2017; expectations regarding performance of our business segments in 2017; expectations regarding completion of previously announced expansion projects (including timing and volumes of production associated therewith) and acquisitions; our market outlook for 2017, including nitrogen, potash and phosphate outlook and including anticipated supply and demand for our products and services, expected market and industry conditions with respect to crop nutrient application rates, planted acres, crop mix, prices and the impact of currency fluctuations and import and export volumes; and the proposed merger with PotashCorp, including timing of completion thereof. These forward-looking statements are subject to a number of assumptions, risks and uncertainties, many of which are beyond our control, which could cause actual results to differ materially from such forward-looking statements. As such, undue reliance should not be placed on these forward-looking statements.

All of the forward-looking statements are qualified by the assumptions that are stated or inherent in such forward-looking statements, including the assumptions referred to below and elsewhere in this document. Although Agrium believes that these assumptions are reasonable, this list is not exhaustive of the factors that may affect any of the forward-looking statements and the reader should not place an undue reliance on these assumptions and such forward-looking statements. The additional key assumptions that have been made include, among other things, assumptions with respect to Agrium's ability to successfully integrate and realize the anticipated benefits of its already completed and future acquisitions and that we will be able to implement our standards, controls, procedures and policies at any acquired businesses to realize the expected synergies; that future business, regulatory and industry conditions will be within the parameters expected by Agrium, including with respect to prices, margins, product availability and supplier agreements; the completion of our expansion projects on schedule, as planned and on budget; assumptions with respect to global economic conditions and the accuracy of our market outlook expectations for 2017 and in the future; the adequacy of our cash generated from operations and our ability to access our credit facilities or capital markets for additional sources of financing; our ability to identify suitable candidates for acquisitions and negotiate acceptable terms; our ability to maintain our investment grade rating and achieve our performance targets; the receipt, on time, of all necessary permits, utilities and project approvals with respect to our expansion projects and that we will have the resources necessary to meet the projects' approach; the receipt, on a timely basis, of regulatory approvals in respect of the proposed merger with PotashCorp and satisfaction of other closing conditions relating thereto. Also refer to the discussion under the heading "Key Assumptions and Risks in Respect of Forward-Looking Statements" in our 2015 annual MD&A and under the heading "Market Outlook" herein, with respect to further material assumptions associated with our forward-looking statements.

Events or circumstances that could cause actual results to differ materially from those in the forward-looking statements include, but are not limited to: general global economic, market and business conditions; weather conditions, including impacts from regional flooding and/or drought conditions; crop planted acreage, yield and prices; the supply and demand and price levels for our major products may vary from what we currently anticipate; governmental and regulatory requirements and actions by governmental authorities, including changes in government policy, government ownership requirements, changes in environmental, tax and other laws or regulations and the interpretation thereof, and political risks, including civil unrest, actions by armed groups or conflict, regional natural gas supply restrictions, as well as counterparty and sovereign risk; delays in completion of turnarounds at our major facilities; gas supply interruptions at the Egyptian Misr Fertilizers Production Company S.A.E. nitrogen facility expansion in Egypt; the risk of additional capital expenditure cost escalation or delays in respect of our expansion projects; the risks that are inherent in the nature of the proposed merger with PotashCorp, including the failure to obtain required regulatory approvals and failure to satisfy all other closing conditions in accordance with the terms of the proposed merger with PotashCorp, in a timely manner or at all; and other risk factors detailed from time to time in Agrium reports filed with the Canadian securities regulators and the Securities and Exchange Commission in the U.S. including those disclosed under the heading "Risk Factors" in our Annual Information Form for the year ended December 31, 2015 and under the headings "Enterprise Risk Management" and "Key Assumptions and Risks in respect of Forward-Looking Statements" in our 2015 annual MD&A.

The purpose of our expected diluted earnings per share and Retail EBITDA guidance range is to assist readers in understanding our expected and targeted financial results, and this information may not be appropriate for other purposes.

Agrium disclaims any intention or obligation to update or revise any forward-looking statements in this document as a result of new information or future events, except as may be required under applicable U.S. federal securities laws or applicable Canadian securities legislation.

OTHER

Agrium Inc. is a major global producer and distributor of agricultural products, services and solutions. Agrium produces nitrogen, potash and phosphate fertilizers, with a combined wholesale nutrient capacity of over nine million tonnes and with significant competitive advantages across our product lines. We supply key products and services directly to growers, including crop nutrients, crop protection, seed, as well as agronomic and application services, thereby helping growers to meet the ever growing global demand for food and fiber. Agrium retail-distribution has an unmatched network of over 1,400 facilities and over 3,800 crop consultants who provide advice and products to our grower customers to help them increase their yields and returns on hundreds of different crops. With a focus on sustainability, the company strives to improve the communities in which it operates through safety, education, environmental improvement and new technologies such as the development of precision agriculture and controlled-release nutrient products. Agrium is focused on driving operational excellence across our businesses, pursuing value-enhancing growth opportunities and returning capital to shareholders. For more information visit: www.agrium.com.

A WEBSITE SIMULCAST of the 2016 4th Quarter Conference Call will be available in a listen-only mode beginning Friday, February 10, 2017 at 8:00 a.m. MT (10:00 a.m. ET). Please visit the following website: www.agrium.com.

AGRIUM INC.  
Consolidated Statements of Operations  
(Unaudited)  
                
    Three months ended  Twelve months ended  
    December 31,  December 31,  
(millions of U.S. dollars, unless otherwise stated) 2016  2015  2016  2015  
          
Sales 2,280  2,407  13,665  14,795  
Cost of product sold 1,532  1,507  10,270  10,907  
Gross profit 748  900  3,395  3,888  
Expenses             
  Selling 480  465  1,914  1,921  
  General and administrative 65  74  242  268  
  Share-based payments 33  15  55  51  
  (Earnings) loss from associates and joint ventures (35 )(5 )(66 )4  
  Other expenses 43  27  152  28  
Earnings before finance costs and income taxes 162  324  1,098  1,616  
  Finance costs related to long-term debt 51  53  204  181  
  Other finance costs 21  20  74  71  
Earnings before income taxes 90  251  820  1,364  
  Income taxes 23  51  224  376  
Net earnings 67  200  596  988  
Attributable to             
  Equity holders of Agrium 67  201  592  988  
  Non-controlling interest -  (1 )4  -  
Net earnings 67  200  596  988  
                
Earnings per share attributable to equity holders of Agrium             
  Basic and diluted earnings per share 0.49  1.45  4.29  6.98  
  Weighted average number of shares outstanding for basic and diluted earnings per share (millions of common shares) 138  138  138  142  
See accompanying notes.             

Basis of preparation and statement of compliance

These consolidated interim financial statements ("interim financial statements") were prepared in accordance with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board and were approved for issuance by the Audit Committee on February 9, 2017. These interim financial statements do not include all information and disclosures normally provided in annual or quarterly financial statements and should be read in conjunction with our audited annual financial statements and related notes, prepared in accordance with IFRS, contained in our 2015 Annual Report, available at www.agrium.com.

The accounting policies applied in these interim financial statements are the same as those applied in our audited annual financial statements in our 2015 Annual Report.

AGRIUM INC.  
Consolidated Statements of Comprehensive Income  
(Unaudited)  
                      
          Three months ended  Twelve months ended  
          December 31,  December 31,  
(millions of U.S. dollars) 2016  2015  2016  2015  
                      
Net earnings 67  200  596  988  
  Other comprehensive (loss) income             
    Items that are or may be reclassified to earnings             
      Cash flow hedges             
        Effective portion of changes in fair value 19  (15 )7  (45 )
        Deferred income taxes (5 )4  (1 )12  
      Share of comprehensive (loss) income of associates and joint ventures (36 )1  (34 )(6 )
      Foreign currency translation             
        (Losses) gains (94 )(85 )59  (617 )
        Reclassifications to earnings -  7  -  8  
          (116 )(88 )31  (648 )
    Items that will never be reclassified to earnings             
      Post-employment benefits             
        Actuarial gains (losses) 15  14  (10 )14  
        Deferred income taxes (4 )(5 )3  (4 )
          11  9  (7 )10  
  Other comprehensive (loss) income (105 )(79 )24  (638 )
Comprehensive (loss) income (38 )121  620  350  
Attributable to             
  Equity holders of Agrium (38 )124  616  350  
  Non-controlling interest -  (3 )4  -  
Comprehensive (loss) income (38 )121  620  350  
See accompanying notes.             
AGRIUM INC.  
Consolidated Balance Sheets  
(Unaudited)  
              
        December 31,  
(millions of U.S. dollars) 2016  2015  
Assets       
  Current assets       
    Cash and cash equivalents 412  515  
    Accounts receivable 2,208  2,053  
    Income taxes receivable 33  4  
    Inventories 3,230  3,314  
    Prepaid expenses and deposits 855  688  
    Other current assets 123  144  
      6,861  6,718  
  Property, plant and equipment 6,818  6,333  
  Intangibles 566  632  
  Goodwill 2,095  1,980  
  Investments in associates and joint ventures 541  607  
  Other assets 48  54  
  Deferred income tax assets 34  53  
    16,963  16,377  
Liabilities and shareholders' equity       
  Current liabilities       
    Short-term debt 604  835  
    Accounts payable 4,662  3,919  
    Income taxes payable 17  82  
    Current portion of long-term debt 110  8  
    Current portion of other provisions 59  85  
    5,452  4,929  
  Long-term debt 4,398  4,513  
  Post-employment benefits 141  124  
  Other provisions 322  336  
  Other liabilities 68  85  
  Deferred income tax liabilities 408  383  
    10,789  10,370  
  Shareholders' equity       
    Share capital 1,766  1,757  
    Retained earnings 5,634  5,533  
    Accumulated other comprehensive loss (1,231 )(1,287 )
    Equity holders of Agrium 6,169  6,003  
    Non-controlling interest 5  4  
    Total equity 6,174  6,007  
    16,963  16,377  
See accompanying notes.       
AGRIUM INC.  
Consolidated Statements of Cash Flows  
(Unaudited)  
                  
      Three months ended  Twelve months ended  
      December 31,  December 31,  
(millions of U.S. dollars) 2016  2015  2016  2015  
                  
Operating             
  Net earnings 67  200  596  988  
  Adjustments for             
    Depreciation and amortization 141  135  532  480  
    (Earnings) loss from associates and joint ventures (35 )(5 )(66 )4  
    Share-based payments 33  15  55  51  
    Unrealized (gain) loss on derivative financial instruments -  (28 )36  (21 )
    Unrealized foreign exchange loss (gain) 1  (12 )(19 )(35 )
    Interest income (17 )(16 )(66 )(68 )
    Finance costs 72  73  278  252  
    Income taxes 23  51  224  376  
    Other 26  2  23  (20 )
  Interest received 16  16  66  70  
  Interest paid (49 )(51 )(272 )(212 )
  Income taxes paid (14 )(30 )(291 )(111 )
  Dividends from associates and joint ventures 68  -  116  2  
  Net changes in non-cash working capital 1,130  743  455  (93 )
Cash provided by operating activities 1,462  1,093  1,667  1,663  
Investing             
  Business acquisitions, net of cash acquired (26 )(42 )(342 )(127 )
  Capital expenditures (173 )(278 )(724 )(1,188 )
  Capitalized borrowing costs (6 )(8 )(24 )(45 )
  Purchase of investments (16 )(18 )(77 )(128 )
  Proceeds from sale of investments 19  18  97  83  
  Proceeds from sale of property, plant and equipment 2  27  16  104  
  Other 51  (11 )33  (4 )
  Net changes in non-cash working capital 10  (9 )5  (198 )
Cash used in investing activities (139 )(321 )(1,016 )(1,503 )
Financing             
  Short-term debt (1,092 )(932 )(188 )(514 )
  Long-term debt issued -  -  -  1,000  
  Transaction costs on long-term debt -  -  -  (14 )
  Repayment of long-term debt (1 )(2 )(17 )(19 )
  Dividends paid (120 )(123 )(482 )(468 )
  Shares issued -  -  -  1  
  Shares repurchased -  -  -  (559 )
Cash used in financing activities (1,213 )(1,057 )(687 )(573 )
Effect of exchange rate changes on cash and cash equivalents (9 )47  (67 )80  
Increase (decrease) in cash and cash equivalents 101  (238 )(103 )(333 )
Cash and cash equivalents - beginning of period 311  753  515  848  
Cash and cash equivalents - end of period 412  515  412  515  
See accompanying notes.             
AGRIUM INC.  
Consolidated Statements of Shareholders' Equity  
(Unaudited)  
               Other comprehensive income (loss)           
(millions of U.S. dollars, except per share data) Millions
of
common
shares
 

Share
capital
 

Retained
earnings
 
Cash
flow
hedges
 Comprehensive
loss of
associates and
joint ventures
 
Foreign
currency
translation
 


Total
 
Equity
holders of
Agrium
 
Non-
controlling
interest
 

Total
equity
 
December 31, 2014 144  1,821  5,502  (27 )(11 )(605 )(643 )6,680  7  6,687  
  Net earnings -  -  988  -  -  -  -  988  -  988  
  Other comprehensive income (loss), net of tax                               
    Post-employment benefits -  -  10  -  -  -  -  10  -  10  
    Other -  -  -  (33 )(6 )(609 )(648 )(648 )-  (648 )
  Comprehensive income (loss), net of tax -  -  998  (33 )(6 )(609 )(648 )350  -  350  
  Dividends ($3.405 per share) -  -  (478 )-  -  -  -  (478 )-  (478 )
  Non-controlling interest transactions -  -  -  -  -  -  -  -  (3 )(3 )
  Shares repurchased (6 )(70 )(489 )-  -  -  -  (559 )-  (559 )
  Share-based payment transactions -  6  -  -  -  -  -  6  -  6  
  Reclassification of cash flow hedges, net of tax -  -  -  4  -  -  4  4  -  4  
December 31, 2015 138  1,757  5,533  (56 )(17 )(1,214 )(1,287 )6,003  4  6,007  
  Net earnings -  -  592  -  -  -  -  592  4  596  
  Other comprehensive income (loss), net of tax                               
    Post-employment benefits -  -  (7 )-  -  -  -  (7 )-  (7 )
    Other -  -  -  6  (34 )59  31  31  -  31  
  Comprehensive income (loss), net of tax -  -  585  6  (34 )59  31  616  4  620  
  Dividends ($3.5 per share) -  -  (484 )-  -  -  -  (484 )-  (484 )
  Non-controlling interest transactions -  -  -  -  -  -  -  -  (3 )(3 )
  Share-based payment transactions -  9  -  -  -  -  -  9  -  9  
  Reclassification of cash flow hedges, net of tax -  -  -  25  -  -  25  25  -  25  
December 31, 2016 138  1,766  5,634  (25 )(51 )(1,155 )(1,231 )6,169  5  6,174  
See accompanying notes.  

AGRIUM INC.
Summarized Notes to the Consolidated Financial Statements
For the three and twelve months ended December 31, 2016
(millions of U.S. dollars, unless otherwise stated)
(Unaudited)

1. Corporate Management

Corporate information

Agrium Inc. ("Agrium") is incorporated under the laws of Canada with common shares listed under the symbol "AGU" on the New York Stock Exchange (NYSE) and the Toronto Stock Exchange (TSX). Our Corporate head office is located at 13131 Lake Fraser Drive S.E., Calgary, Canada. We conduct our operations globally from our Wholesale head office in Calgary and our Retail head office in Loveland, Colorado, United States. In these financial statements, "we", "us", "our" and "Agrium" mean Agrium Inc., its subsidiaries and joint arrangements.

We categorize our operating segments within the Retail and Wholesale business units as follows:

  • Retail: Distributes crop nutrients, crop protection products, seed and merchandise and provides financial and other services directly to growers through a network of farm centers in two geographical segments:
    • North America: including the United States and Canada
    • International: including Australia and South America
  • Wholesale: Produces, markets and distributes crop nutrients and industrial products through the following businesses:
    • Nitrogen: Manufacturing in Alberta and Texas
    • Potash: Mining and processing in Saskatchewan
    • Phosphate: Production facilities in Alberta and production and mining facilities in Idaho
    • Wholesale Other: Purchasing and reselling crop nutrient products from other suppliers to customers primarily in Europe; producing blended crop nutrients and Environmentally Smart Nitrogen® (ESN) polymer-coated nitrogen crop nutrients; and operations of joint ventures and associates

Additional information on our operating segments is included in note 2.

Seasonality in our business results from increased demand for our products during planting seasons. Sales are generally higher in spring and fall.

2. Operating Segments

Segment information by business unit Three months ended December 31,  
      2016   2015  
      Retail  Wholesale  Other (a)  Total   Retail  Wholesale  Other (a)  Total  
Sales - external 1,816  464  -  2,280   1,758  649  -  2,407  
    - inter-segment 12  193  (205 )-   7  239  (246 )-  
Total sales 1,828  657  (205 )2,280   1,765  888  (246 )2,407  
Cost of product sold 1,205  523  (196 )1,532   1,166  568  (227 )1,507  
Gross profit 623  134  (9 )748   599  320  (19 )900  
Gross profit (%) 34  20     33   34  36     37  
Expenses                          
  Selling 476  9  (5 )480   462  7  (4 )465  
  General and administrative 26  7  32  65   29  12  33  74  
  Share-based payments -  -  33  33   -  -  15  15  
  Earnings from associates and joint ventures (1 )(34 )-  (35 ) (2 )(2 )(1 )(5 )
  Other (income) expenses (12 )3  52  43   (23 )16  34  27  
Earnings (loss) before finance costs and income taxes 134  149  (121 )162   133  287  (96 )324  
  Finance costs -  -  72  72   -  -  73  73  
Earnings (loss) before income taxes 134  149  (193 )90   133  287  (169 )251  
  Depreciation and amortization 68  67  6  141   66  65  4  135  
  Finance costs -  -  72  72   -  -  73  73  
EBITDA (b) 202  216  (115 )303   199  352  (92 )459  
(a)Includes inter-segment eliminations.
(b)EBITDA is net earnings (loss) before finance costs, income taxes, depreciation and amortization, and net earnings (loss) from discontinued operations.
Segment information by business unit Twelve months ended December 31,
      2016  2015  
      Retail  Wholesale  Other (a)  Total  Retail  Wholesale  Other (a)  Total  
Sales - external 11,723  1,942  -  13,665  12,168  2,627  -  14,795  
    - inter-segment 43  764  (807 )-  31  975  (1,006 )-  
Total sales 11,766  2,706  (807 )13,665  12,199  3,602  (1,006 )14,795  
Cost of product sold 8,980  2,134  (844 )10,270  9,471  2,421  (985 )10,907  
Gross profit 2,786  572  37  3,395  2,728  1,181  (21 )3,888  
Gross profit (%) 24  21     25  22  33     26  
Expenses                         
  Selling 1,899  32  (17 )1,914  1,902  36  (17 )1,921  
  General and administrative 102  30  110  242  112  39  117  268  
  Share-based payments -  -  55  55  -  -  51  51  
  (Earnings) loss from associates and joint ventures (6 )(61 )1  (66 )(5 )10  (1 )4  
  Other (income) expenses (26 )62  116  152  (60 )23  65  28  
Earnings (loss) before finance costs and income taxes 817  509  (228 )1,098  779  1,073  (236 )1,616  
  Finance costs -  -  278  278  -  -  252  252  
Earnings (loss) before income taxes 817  509  (506 )820  779  1,073  (488 )1,364  
  Depreciation and amortization 274  242  16  532  254  211  15  480  
  Finance costs -  -  278  278  -  -  252  252  
EBITDA 1,091  751  (212 )1,630  1,033  1,284  (221 )2,096  
(a)
Includes inter-segment eliminations.
Segment information - Retail Three months ended December 31,  
      2016  2015  
      North America   International  Retail (a)  North America  International  Retail  
Sales - external 1,332  484  1,816  1,333  425  1,758  
    - inter-segment 12  -  12  7  -  7  
Total sales 1,344  484  1,828  1,340  425  1,765  
Cost of product sold 860  345  1,205  853  313  1,166  
Gross profit 484  139  623  487  112  599  
Expenses                   
  Selling 376  100  476  375  87  462  
  General and administrative 18  8  26  22  7  29  
  Earnings from associates and joint ventures -  (1 )(1 )(1 )(1 )(2 )
  Other income (5 )(7 )(12 )(17 )(6 )(23 )
Earnings before income taxes 95  39  134  108  25  133  
  Depreciation and amortization 60  8  68  61  5  66  
EBITDA 155  47  202  169  30  199  
(a)Included within the Retail business unit is a separate Financial Services operating segment with total sales of $7-million and EBITDA of $6-million.
Segment information - Retail Twelve months ended December 31,  
      2016  2015  
      North America  International  Retail (a)  North America  International  Retail  
Sales - external 9,565  2,158  11,723  10,093  2,075  12,168  
    - inter-segment 43  -  43  31  -  31  
Total sales 9,608  2,158  11,766  10,124  2,075  12,199  
Cost of product sold 7,306  1,674  8,980  7,826  1,645  9,471  
Gross profit 2,302  484  2,786  2,298  430  2,728  
Expenses                   
  Selling 1,555  344  1,899  1,571  331  1,902  
  General and administrative 72  30  102  79  33  112  
  Earnings from associates and joint ventures (4 )(2 )(6 )(3 )(2 )(5 )
  Other expenses (income) 3  (29 )(26 )(35 )(25 )(60 )
Earnings before income taxes 676  141  817  686  93  779  
  Depreciation and amortization 249  25  274  229  25  254  
EBITDA 925  166  1,091  915  118  1,033  
(a)
Included within the Retail business unit is a separate Financial Services operating segment with total sales of $16-million and EBITDA of $15-million.
Segment information - Wholesale Three months ended December 31,  
      2016  2015  
      Nitrogen  Potash  Phosphate  Wholesale
 
Other (a)
 Wholesale  Nitrogen  Potash  Phosphate  Wholesale Other (a)  Wholesale  
Sales - external 218  74  82  90  464  270  137  127  115  649  
    - inter-segment 67  31  62  33  193  97  38  72  32  239  
Total sales 285  105  144  123  657  367  175  199  147  888  
Cost of product sold 200  84  136  103  523  181  112  162  113  568  
Gross profit 85  21  8  20  134  186  63  37  34  320  
Expenses                               
  Selling 4  2  1  2  9  3  1  1  2  7  
  General and administrative 4  2  1  -  7  5  2  1  4  12  
  Earnings from associates and joint ventures -  -  -  (34 )(34 )-  -  -  (2 )(2 )
  Other expenses (income) 1  4  -  (2 )3  (12 )7  1  20  16  
Earnings before income taxes 76  13  6  54  149  190  53  34  10  287  
  Depreciation and amortization 23  26  15  3  67  18  28  14  5  65  
EBITDA 99  39  21  57  216  208  81  48  15  352  
(a)Includes product purchased for resale, ammonium sulfate, ESN and other products.
Segment information - Wholesale Twelve months ended December 31,  
      2016  2015  
      Nitrogen  Potash  Phosphate  Wholesale
 
Other (a)
 Wholesale  Nitrogen  Potash  Phosphate  Wholesale Other (a)  Wholesale  
Sales - external 860  280  356  446  1,942  1,129  364  471  663  2,627  
    - inter-segment 284  139  211  130  764  401  151  270  153  975  
Total sales 1,144  419  567  576  2,706  1,530  515  741  816  3,602  
Cost of product sold 757  367  523  487  2,134  801  335  599  686  2,421  
Gross profit 387  52  44  89  572  729  180  142  130  1,181  
Expenses                               
  Selling 14  7  3  8  32  15  5  4  12  36  
  General and administrative 13  7  3  7  30  15  7  5  12  39  
  (Earnings) loss from associates and joint ventures -  -  -  (61 )(61 )-  -  -  10  10  
  Other expenses (income) 31  28  7  (4 )62  -  25  17  (19 )23  
Earnings before income taxes 329  10  31  139  509  699  143  116  115  1,073  
  Depreciation and amortization 75  99  55  13  242  72  71  51  17  211  
EBITDA 404  109  86  152  751  771  214  167  132  1,284  
(a)Includes product purchased for resale, ammonium sulfate, ESN and other products.
Gross profit by product line Three months ended December 31,  Twelve months ended December 31,  
    2016  2015  2016  2015  
    Sales  Cost of
product
 
sold
 Gross
profit
 Sales  Cost of
product
sold
 Gross profit  Sales  Cost of
product
 
sold
 Gross
profit
 Sales  Cost of
product
sold
 Gross profit  
Retail                                     
  Crop nutrients 779  632  147  843  689  154  4,310  3,478  832  4,944  4,097  847  
  Crop protection products 620  324  296  541  273  268  4,684  3,570  1,114  4,543  3,476  1,067  
  Seed 101  58  43  75  21  54  1,462  1,165  297  1,425  1,141  284  
  Merchandise 167  140  27  156  129  27  621  518  103  638  539  99  
  Services and other (a) 161  51  110  150  54  96  689  249  440  649  218  431  
    1,828  1,205  623  1,765  1,166  599  11,766  8,980  2,786  12,199  9,471  2,728  
Wholesale                                     
  Nitrogen 285  200  85  367  181  186  1,144  757  387  1,530  801  729  
  Potash 105  84  21  175  112  63  419  367  52  515  335  180  
  Phosphate 144  136  8  199  162  37  567  523  44  741  599  142  
  Product purchased for resale 37  37  -  53  52  1  215  211  4  398  387  11  
  Ammonium sulfate, ESN and other 86  66  20  94  61  33  361  276  85  418  299  119  
    657  523  134  888  568  320  2,706  2,134  572  3,602  2,421  1,181  
Other inter-segment eliminations (205 )(196 )(9 )(246 )(227 )(19 )(807 )(844 )37  (1,006 )(985 )(21 )
Total 2,280  1,532  748  2,407  1,507  900  13,665  10,270  3,395  14,795  10,907  3,888  
                                        
Wholesale share of joint ventures                                    
  Nitrogen 65  53  12  71  59  12  196  164  32  194  178  16  
  Product purchased for resale -  -  -  -  -  -  -  -  -  38  37  1  
    65  53  12  71  59  12  196  164  32  232  215  17  
Total Wholesale including proportionate share in joint ventures
722
 
576
 
146
 
959
 
627
 
332
 
2,902
 
2,298
 
604
 
3,834
 
2,636
 
1,198
 
(a)Includes financial services products.
Selected volumes and per tonne information Three months ended December 31,
        2016  2015  
        Sales
 
tonnes
(000's)
 Selling
 
price
($/tonne)
 Cost of
 
product
 
sold
($/tonne)
 Margin
($/tonne)
 Sales tonnes
(000's)
 Selling
price
($/tonne)
 Cost of
product
sold
($/tonne)
 Margin
($/tonne)
 
Retail                         
  Crop nutrients                         
    North America 1,593  395  317  78  1,375  513  416  97  
    International 395  381  321  60  327  424  364  60  
  Total crop nutrients 1,988  392  318  74  1,702  496  406  90  
                                
Wholesale                         
  Nitrogen                         
    North America                         
      Ammonia 334  371        374  499        
      Urea 439  274        386  356        
      Other 181  222        152  283        
  Total nitrogen 954  298  209  89  912  403  199  204  
                                
  Potash                         
    North America 286  211        503  281        
    International 304  148        153  220        
  Total potash 590  179  143  36  656  267  171  96  
                                
  Phosphate 303  475  449  26  325  610  495  115  
  Product purchased for resale 149  243  248  (5 )148  362  356  6  
  Ammonium sulfate 99  240  130  110  96  293  125  168  
  ESN and other 178           155           
Total Wholesale 2,273  289  230  59  2,292  387  248  139  
                                
Wholesale share of joint ventures                         
  Nitrogen 222  293  235  58  198  359  295  64  
  Product purchased for resale -  -  -  -  -  -  -  -  
    222  293  235  58  198  359  295  64  
Total Wholesale including proportionate share in joint ventures
2,495
 
289
 
230
 
59
 
2,490
 
385
 
251
 
134
 
Selected volumes and per tonne information Twelve months ended December 31,
        2016  2015  
        Sales
 
tonnes
(000's)
 Selling
 
price
($/tonne)
 Cost of
 
product
 
sold
($/tonne)
 
Margin
($/tonne)
 Sales
 tonnes
(000's)
 Selling
 price
($/tonne)
 Cost of
 product
 sold
($/tonne)
 Margin
($/tonne)
 
Retail                         
  Crop nutrients                         
    North America 8,003  446  351  95  7,731  537  436  101  
    International 1,956  379  341  38  1,843  431  393  38  
  Total crop nutrients 9,959  433  349  84  9,574  516  427  89  
                                
Wholesale                         
  Nitrogen                         
    North America                         
      Ammonia 1,165  402        1,209  530        
      Urea 1,620  294        1,583  395        
      Other 817  244        864  305        
  Total nitrogen 3,602  318  211  107  3,656  418  219  199  
                                
  Potash                         
    North America 1,187  217        1,133  330        
    International 1,052  154        601  235        
  Total potash 2,239  187  164  23  1,734  297  193  104  
                                
  Phosphate 1,106  512  472  40  1,166  635  513  122  
  Product purchased for resale 745  288  283  5  1,089  366  356  10  
  Ammonium sulfate 341  268  122  146  336  330  140  190  
  ESN and other 694           656           
Total Wholesale 8,727  310  245  65  8,637  417  280  137  
                                
Wholesale share of joint ventures                         
  Nitrogen 669  293  245  48  506  384  352  32  
  Product purchased for resale -  -  -  -  117  321  309  12  
    669  293  245  48  623  372  343  29  
Total Wholesale including proportionate share in joint ventures
9,396
 
309
 
245
 
64
 
9,260
 
414
 
285
 
129
 

Contact Information

  • FOR FURTHER INFORMATION:
    Investor/Media Relations:
    Richard Downey, Vice President, Investor & Corporate Relations
    (403) 225-7357

    Todd Coakwell, Director, Investor Relations
    (403) 225-7437

    Louis Brown, Analyst, Investor Relations
    (403) 225-7761

    Contact us at: www.agrium.com