Agrium rebounds to profit, sees more to come

By Roberta Rampton

WINNIPEG, Manitoba (Reuters) - Fertilizer producer and retailer Agrium Inc (AGU.TO: Quote, Profile, Research) returned to profit in the first quarter, the company said on Friday, as record world grain prices spurred demand for crop nutrients, seed and chemicals.

Agrium, the world's third-largest nitrogen producer, reported a profit of $195 million, or $1.23 a share, compared with a loss of $11 million, or 8 cents a share, a year earlier.

"We believe the best is yet to come as we look to the second half of 2008 and into 2009," Chief Executive Mike Wilson told analysts on a conference call.

Wilson said Agrium expects record earnings of $3.15 to $3.45 per diluted share in the first half of 2008, or $1.92 to $2.22 diluted earnings per share in the second quarter.

He said the company would benefit in its second half from recent fertilizer price hikes caused by tight world supplies and soaring demand from farmers trying to boost yields.

"We expect it will take years before we observe global grain inventories recovering to more historic levels," Wilson said.

Agrium's profit beat analysts' average expectations of 49 cents per share, according to Reuters Estimates.

"We're obviously in an extremely heady period for fertilizer here," said Michael Sprung, president at Sprung & Co Investment Counsel.