Agrium takes $100m charge on phosphate assets

18 December 2006 18:02  [Source: ICIS news]

TORONTO (ICIS news)--Canadian fertilizer major Agrium said on Monday it would take a $100m (€76m) charge in the fourth quarter to account for impairments to its phosphate fertilizer assets.

Calgary-based Agrium cited quality issues at its Kapuskasing, Ontario phosphate rock mine and expectations of lower phosphate fertilizer prices on the back of new capacities in 2011, as well as the strong Canadian dollar.

The company said that longer-term it may look for alternative sources of phosphate rock for its Redwater, Alberta phosphate fertilizer facility.

Agrium also said that it expects second-half 2006 earnings per shares (EPS) to come in at the lower end of its previously announced guidance of 20 to 25 cents as wet weather in the eastern US corn belt region and early snowfall in Western Canada affected second-half sales.

The company added that it has deferred a planned maintenance shutdown at its joint-venture Profertil fertilizer plant in Argentina to the first quarter of 2007, from the fourth quarter of 2006.

Analysts at JPMorgan said Agrium’s Kapuskasing rock mine recently encountered ore quality problems, including unexpectedly high iron content.

The ore problems triggered an impairment review of its Canadian phosphate operations' carrying cost, resulting in a reduction in the ore reserve life from 2019 to 2013 and the $100m after-tax cut in the phosphate assets’ carrying value.

JPMorgan said it expects Agrium’s EPS to come in at 20 cents for the fourth quarter of 2006, and at $1.85 for 2007, it said.

Agrium's shares were priced at $29.84, down 1.2%, in early Monday afternoon trading in New York.

($1 = 0.76)

By: Stefan Baumgarten
+1 713 525 2653

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