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Agrium Inc. (AGU)
Market: CDN Consolidated
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Sep 1, 2014, 3:27 AM EDT
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Agrium Reports Fourth Quarter; Retail Delivers Record Results

CALGARY, ALBERTA--(Marketwired - Feb. 20, 2014) -

ALL AMOUNTS ARE STATED IN U.S.$

Agrium Inc. (TSX:AGU)(NYSE:AGU) announced today consolidated net earnings ("net earnings") from continuing operations of $110-million ($0.74 diluted earnings per share) for the fourth quarter of 2013, compared with net earnings from continuing operations of $358-million in the fourth quarter of 2012 ($2.37 diluted earnings per share). Net earnings were $99-million ($0.66 diluted earnings per share) for the fourth quarter of 2013, compared to net earnings of $354-million ($2.34 diluted earnings per share) in the fourth quarter of 2012.

Our net earnings from continuing operations, excluding the fourth quarter guidance exclusions mentioned below, were $126-million ($0.87 diluted earnings per share).1 This excludes a purchase gain of $257-million related to the acquisition of the Viterra Inc. Agri-product assets ("Viterra acquisition") ($1.35 diluted earnings per share) and a fourth quarter pre-tax loss for the acquired Viterra operations of $27-million ($0.14 diluted earnings per share, includes $8-million of integration costs). The Viterra acquisition results were excluded from the original fourth quarter guidance provided in November 2013. Also excluded were $6-million of Corporate legal and other costs ($0.03 diluted earnings per share) incurred in the period related to the Viterra acquisition and a goodwill impairment of $220-million ($1.16 in diluted earnings per share) for the Landmark acquisition due to synergy delays and reduced expectations for sales, gross margins and long-term growth. Share-based payment expenses in the fourth quarter were $28-million ($0.15 diluted earnings per share).

Discontinued operations reported a net loss of $11-million ($0.08 diluted loss per share) for the fourth quarter and included a $75-million ($0.52 diluted earnings per share) insurance recovery for the resolution of a long-standing litigation case pertaining to soybean shipments and a $60-million post-tax write-down ($0.42 diluted earnings per share), primarily of goodwill, as a result of the previously announced strategic review of the Agrium Advanced Technologies business unit ("AAT").1

On an annual basis, 2013 net earnings from continuing operations were $1.08-billion ($7.31 diluted earnings per share), down from net earnings from continuing operations of $1.52-billion ($9.67 diluted earnings per share) in 2012. 2013 net earnings were $1.06-billion ($7.20 diluted earnings per share), compared to $1.50-billion ($9.55 diluted earnings per share) in 2012.

"Agrium's Retail results were excellent this quarter, particularly considering the decline in nutrient prices that occurred and the compressed fall application season in the U.S.," commented Chuck Magro, Agrium's President & CEO. "Retail achieved record fourth quarter results due to increased margins across almost all shelves. Our Wholesale business unit, which has more direct exposure to volatility in nutrient markets, saw their results impacted by lower global prices across all nutrients. Global nitrogen and phosphate markets have firmed significantly in early 2014 in response to what we expect will be a strong spring season," continued Mr. Magro.

"In a quarter where price instability and a compressed application window were a challenge, we delivered record results for Retail, which helped generate $1.2-billion in cash flow from operations for the quarter. This is one illustration of the benefits of our integrated strategy and why we remain confident in our ability to generate strong results over the coming years and deliver on our long-term targets," added Mr. Magro.

1 The $0.87 EPS = $0.74 EPS (net earnings from continuing operations) + $1.16 EPS (Landmark goodwill impairment) + $0.15 EPS (share based payments) + 0.17 EPS (Viterra operations) - $1.35 EPS (Viterra purchase gain). Fourth quarter effective tax rate of 24 percent from continuing operations was used for adjusted diluted earnings per share calculations.

All dollar amounts refer to United States ("U.S.") dollars except where otherwise stated. Certain financial measures in this press release are not prescribed by International Financial Reporting Standards ("IFRS"), and are defined in the Additional IFRS and Non-IFRS Financial Measures section of this press release.

The segmented financial reporting included in this press release differs from our 2012 annual financial statements due to changes in segmented reporting adopted in our 2013 annual financial statements. Comparative figures for AAT in this press release have not been restated to reflect changes in segmented financial reporting.

2013 Fourth Quarter Operating Results

CONSOLIDATED NET EARNINGS

We have restated 2012 comparative figures as a result of adopting IFRS 11 Joint Arrangements whereby the classification and accounting of our investment in Profertil S.A. and other joint arrangements previously accounted for using the proportionate consolidation method are accounted for using the equity method.

Management has commenced with a divestment process for components of the AAT business unit that were not transitioned to Wholesale. We have classified these net assets as held for sale and have classified the related results of operations (including comparative 2012 results) as discontinued. See pages 6 and 8 of this press release for further details.

Agrium's 2013 fourth quarter net earnings from continuing operations were $110-million, or $0.74 diluted earnings per share from continuing operations, compared to net earnings from continuing operations of $358-million, or $2.36 diluted earnings per share from continuing operations, for the same quarter of 2012.

Financial Overview          
   
    Three months ended December 31,  
(millions of U.S. dollars, except per share amounts and where noted)   2013   2012   Change   % Change  
Sales   2,867   3,093   (226 ) (7 )
Gross profit   740   974   (234 ) (24 )
Expenses   557   445   112   25  
Earnings from continuing operations before finance costs and income taxes ("EBIT")   183   529   (346 ) (65 )
Net earnings from continuing operations   110   358   (248 ) (69 )
Net loss from discontinued operations   (11 ) (4 ) (7 ) 175  
Net earnings   99   354   (255 ) (72 )
Diluted earnings per share from continuing operations   0.74   2.36   (1.62 ) (69 )
Diluted loss per share from discontinued operations   (0.08 ) (0.02 ) (0.06 ) 300  
Diluted earnings per share   0.66   2.34   (1.68 ) (72 )
Effective tax rate (%)   24   27   N/A   (3 )
                   

Sales

Sales decreased by $226-million to $2.9-billion for the fourth quarter of 2013. Factors that affected our performance during the fourth quarter of 2013 compared to the fourth quarter of 2012 include the following:

  • Wholesale sales decreased by 24 percent to $963-million due to lower realized sales prices across all product lines and lower nitrogen volumes; and
  • Retail sales increased by 6 percent to $2.1-billion largely due to Viterra which accounted for $276-million in sales during the current quarter. Crop nutrient sales decreased as colder weather impacted North American sales.

Gross Profit

Our gross profit for the fourth quarter of 2013 was $740-million, a decrease of $234-million compared to the fourth quarter of 2012. The main drivers of this variance consisted of:

  • Wholesale's gross profit decreased by $283-million to $170-million for the fourth quarter of 2013, compared to the fourth quarter of 2012 primarily as a result of weaker realized sales prices across all product lines and lower urea sales volumes due to outages at our Redwater and Carseland nitrogen facilities; and
  • Retail's gross profit increased by $77-million to $586-million for the fourth quarter of 2013, compared to the fourth quarter of 2012 due to the inclusion of results from Viterra coupled with favorable nutrient cost positions and higher seed rebates from suppliers.

Expenses

Expenses increased by $112-million for the fourth quarter of 2013 compared to the fourth quarter of 2012. This difference is primarily a result of the following items:

  • A $220-million goodwill impairment was recorded in Retail - Australia as a result of reduced expectations for sales, gross margins and long-term growth in Retail - Australia;
  • An increase in Retail selling expenses of $73-million driven by increased costs associated with Viterra and other recent acquisitions (see section "Retail" for further discussion); and
  • A $46-million unfavorable change in share-based payments, with a $28-million share-based payments expense in the current quarter compared to a $18-million share-based payments recovery in the same period last year (see section "Other" for further discussion).

    The above increases were partially offset by a $257-million purchase gain reported in the fourth quarter of 2013. This represents the difference between the fair value of acquired net assets and the purchase price.
     

The following table is a summary of our other expenses (income) for the fourth quarters of 2013 and 2012, respectively.

     
  Three months ended December 31,  
(millions of U.S. dollars) 2013   2012  
Realized loss (gain) on derivative financial instruments 1   (2 )
Unrealized gain on derivative financial instruments (1 ) -  
Interest income (25 ) (26 )
Foreign exchange loss 16   9  
Environmental remediation and asset retirement obligations 2   2  
Bad debt recovery (11 ) (8 )
Potash profit and capital tax 6   3  
Other 8   2  
  (4 ) (20 )
         

Effective Tax Rate

The effective tax rate on continuing operations was 24 percent for the fourth quarter compared to 27 percent for the same period last year due to permanent differences between tax and accounting on the Viterra purchase gain and the Retail - Australia goodwill impairment.

BUSINESS SEGMENT PERFORMANCE

Retail

Retail reported record fourth quarter sales of $2.1-billion up from $2.0-billion reported in the same quarter last year. Gross profit was $586-million in the fourth quarter of 2013, a 15 percent increase from last year's fourth quarter of $509-million. Retail reported EBITDA of $195-million, up $71-million from the fourth quarter of last year. Included in this quarter's results is a $257-million purchase gain for the Viterra acquisition, a $220-million goodwill impairment for the Landmark business in Australia, and results from the recently acquired Viterra business (fourth quarter EBITDA loss of $12-million), which included $8-million of integration costs. Excluding all Viterra-related items and the Landmark impairment, EBITDA would have been $170-million, the highest fourth quarter Retail EBITDA in our history. These excellent results were achieved due to increased margins for nutrients, seed and services and other product lines, which more than offset the headwinds of lower crop nutrient sales volumes (excluding Viterra volumes), lower nutrient prices and the compressed fall application season. On a full year basis, and excluding the items listed above for the fourth quarter, EBITDA reached $961-million in 2013, surpassing last year's record $951-million.

Total crop nutrient sales were $1.1-billion this quarter, on par with the fourth quarter of 2012. Incremental sales from the Viterra business were offset by lower nutrient sales volumes in the U.S. in the fourth quarter, due to the shortened fall application season. Gross profit for crop nutrients was $178-million this quarter, an increase of $23-million compared to the $155-million reported in the fourth quarter of 2012. Excluding the results from Viterra in the current quarter, gross profit increased by $4-million in 2013. Total crop nutrient margins as a percentage of sales were 17 percent in the fourth quarter of 2013, higher than the 14 percent reported in the same quarter last year. Although nutrient prices declined during the second half of 2013, increased prescription blend and proprietary nutrient sales resulted in higher dollar per tonne margins than 2012.

Crop protection sales were $511-million in the fourth quarter of 2013, compared to $491-million in sales in the same period last year. The increase was driven primarily by incremental sales from Viterra and higher sales of glyphosates in the quarter. Gross profit was $205-million this quarter, compared to $203-million reported in the fourth quarter of 2012. Crop protection margins as a percentage of sales were 40 percent this quarter. The 1 percent decline in margins in the fourth quarter of 2013 relative to the same period last year was due to a higher product mix of wholesale volumes, which traditionally represent lower margins than retail sales.

Seed sales were $95-million in the fourth quarter of 2013, down from the $105-million reported in the fourth quarter of last year. The reduction in North American seed sales was due to the late fall season, which particularly impacted wheat seed sales. Gross profit was $60-million this quarter, up from the $43-million reported last year. Seed margins as a percentage of sales were 63 percent in the fourth quarter of 2013, significantly higher than the 41 percent reported in the fourth quarter of 2012. The increase in gross profit and margins in the fourth quarter of 2013 is related to higher annual seed volume, which resulted in higher rebates for seed from suppliers this quarter. The continued sales growth in our proprietary Dyna-Gro branded seed versus national brand sales mix also supported higher average seed margins both in the quarter and on an annual basis. Our proprietary product line of seeds once again demonstrated solid growth in sales and gross profit for both the fourth quarter and the 2013 year, relative to the same periods last year. Proprietary seed accounted for approximately 18 percent of our total seed sales and approximately 26 percent of our seed gross profit for calendar year 2013.

Sales of merchandise in the fourth quarter of 2013 were $228-million, compared to $132-million in the same period last year. Gross profit for this product line was $30-million this quarter, compared to $21-million reported in the fourth quarter of 2012. The increase is related to incremental earnings from Viterra and additional sales volumes of animal health and other livestock-related products in Australia.

Services and other sales were $216-million this quarter, compared to the $151-million reported in the fourth quarter of 2012. Gross profit was $113-million in the fourth quarter of 2013, compared to $87-million for the same period last year. The increases in the current quarter relate to incremental gross profit from the purchased Viterra locations and increased Australian livestock sales commissions.

Selling expenses as a percentage of sales was 24 percent in the fourth quarter of 2013 which is up marginally from the 22 percent reported in the same period last year. Retail selling expenses were $504-million for the fourth quarter, compared to $431-million in the same period last year. The majority of the variance was due to increased costs associated with Viterra operating in a traditionally slower sales period than other Retail geographies. On a full-year basis, selling expenses as a percentage of sales remained similar to 2012 at approximately 15 percent.

In the fourth quarter of 2013, we recorded the Viterra acquisition within Retail. This resulted in a $257-million purchase gain, representing the difference between the fair value of acquired net assets and the purchase price. During the quarter, we also recorded goodwill impairment in Retail - Australia of $220-million due to synergy delays and reduced expectations for sales, gross margins and long-term growth.

Wholesale

Wholesale's 2013 fourth quarter sales were $963-million, down $310-million from the same quarter last year. Gross profit was $170-million this quarter, compared to $453-million in the fourth quarter of 2012. Wholesale reported EBITDA of $210-million in the fourth quarter of 2013, down from the $495-million reported in the same period last year. Wholesale's Adjusted EBITDA2 was $234-million this quarter, compared to $516-million reported in the same period last year. Wholesale's results this quarter were principally impacted by significantly lower global crop nutrient prices.

2 Adjusted EBITDA is defined as earnings (loss) before finance costs, income taxes, depreciation and amortization and before finance costs, income taxes, depreciation and amortization of joint ventures.

Nitrogen gross profit in the fourth quarter of 2013 was $129-million, compared to $293-million in the same quarter last year. Nitrogen sales volumes were 907,000 tonnes in the fourth quarter of 2013, down 59,000 tonnes from the same period last year. The lower sales volumes were primarily due to reduced product availability resulting from plant outages in the fourth quarter, accompanied by a shorter fall application season in the U.S. Realized sales prices for all nitrogen products were lower than the fourth quarter of 2012, with urea realized sales prices down 27 percent, or $148 per tonne year-over-year. Nitrogen cost of product sold was $314 per tonne this quarter, compared to $257 per tonne reported in the fourth quarter of 2012. The increase was due to higher North American gas prices and costs associated with outages at our Carseland and Redwater nitrogen facilities in the quarter. These outages lowered production by approximately 130,000 tonnes of nitrogen products and impacted per tonne costs, as fixed costs were spread across lower sales volumes. Our average nitrogen gross margins were $144 per tonne this quarter, compared to $304 per tonne in the same period last year.

Agrium's average natural gas cost included in cost of product sold was $3.51/MMBtu this quarter ($3.39/MMBtu including the impact of realized gains on natural gas derivatives), compared to $3.26/MMBtu for the same period in 2012 ($3.35/MMBtu including the impact of realized losses on natural gas derivatives). Hedging gains or losses are included in other expenses and not cost of product sold, thus are not part of the calculation of gross profit. The U.S. benchmark (NYMEX) natural gas price for the fourth quarter of 2013 was $3.63/MMBtu, compared to $3.36/MMBtu in the same quarter last year. The AECO (Alberta) basis differential was a $0.62/MMBtu discount to NYMEX in the fourth quarter of 2013, an increase from the $0.28/MMBtu discount in the fourth quarter of 2012.

Potash gross profit for the fourth quarter of 2013 was $39-million, compared to $79-million reported in the same quarter last year. The year-over-year decline was principally due to lower realized international and North American sales prices. Prices came under pressure due to weaker demand from India, delayed negotiations for second half Chinese supply contracts and uncertainty created by the breakup of the Belarusian Potash Company. International sales volumes were 89,000 tonnes this quarter, in line with 86,000 tonnes reported in the fourth quarter of last year. North American sales volumes this quarter were 255,000 tonnes, also consistent with the volumes achieved for the same period last year. Potash cost of product sold was $201 per tonne this quarter, compared to $216 per tonne reported in the fourth quarter of 2012. The decrease was due to a higher proportion of sales shipped directly to end customers compared to last year, which lowered the average freight cost. Gross margin was $112 per tonne in the fourth quarter of 2013, compared to the $233 per tonne in the same quarter of 2012. In the second half of 2014, Agrium will take an extended 14 week turnaround at our Vanscoy potash mine to tie in the one million tonne expansion project.

Phosphate gross profit was a loss of $4-million in the fourth quarter of 2013, compared to a $47-million profit in the same quarter last year. The decrease was primarily a result of lower realized sales prices derived from weak international market conditions in the fourth quarter. Phosphate sales volumes this quarter were 285,000 tonnes, slightly higher than the 279,000 tonnes sold in the fourth quarter of 2012. Realized phosphate sales prices were $560 per tonne this quarter, a $162 per tonne decrease from the same quarter last year. Phosphate cost of product sold was $576 per tonne in the fourth quarter of 2013, a $20 per tonne increase from the same period last year. The increase was due to higher costs at both of our phosphate facilities, partially due to higher ammonia costs resulting from higher natural gas costs. The increase in costs at the Redwater facility was largely due to higher rock input costs associated with the transition to imported rock, after economic reserves of this input from our Kapuskasing, Ontario mine were depleted in the second quarter of 2013. Gross margin was a loss of $16 per tonne in the fourth quarter of 2013, compared to a positive margin of $166 per tonne in the same period in 2012.

Gross profit from ammonium sulfate and other products was $12-million this quarter, a reduction of $14-million from the same period last year. This was due to lower realized sales prices and lower customer sales resulting from limited customer storage available this quarter. Product purchased for resale gross profit was a loss of $6-million this quarter, compared to a profit of $8-million in the fourth quarter of 2012 as a result of lower North American demand and lower global sales prices for nutrients.

Advanced Technologies

After conducting a strategic review of AAT in 2013, a decision was made in December 2013 to transition the Agriculture business of AAT back into our Wholesale business unit. The Agriculture business includes Environmentally Smart Nitrogen ("ESN") and Micronutrient products. Management has commenced with a divestment process for the Turf and Ornamental and Direct Solutions businesses. These businesses have been reported within discontinued operations. As a result, in 2013 we moved to two core strategic business units, Retail and Wholesale. The results reported for AAT in this press release represent only the Agriculture business that will be reported within Wholesale in the 2014 results; consequently these results are not directly comparable to years prior to 2012 as restated in this press release.

AAT reported a quarterly gross profit of $2-million in the fourth quarter of 2013, a decrease of $21-million from the $23-million reported in the same period last year. EBITDA was $3-million in the fourth quarter, a $15-million decrease from the same period last year. The lower year-over-year results were primarily due to lower than forecasted sales resulting from the later than expected fall application window and weak urea markets that impacted ESN margins.

Other

EBITDA for our Other non-operating business unit for the fourth quarter of 2013 was a loss of $94-million, compared to a loss of $2-million for the fourth quarter of 2012. The unfavorable change was primarily driven by:

  • A $46-million unfavorable change in share-based payments, where there was a $28-million expense in the fourth quarter of 2013 compared to an $18-million recovery in the fourth quarter of 2012. This was largely caused by an appreciation of our share price during the fourth quarter of 2013 compared to a depreciation of our share price during the fourth quarter of 2012;
  • A $7-million increase in gross profit elimination for the three months ended December 31, 2013 compared to the three months ended December 31, 2012 which reflected more inter-segment inventory held in our Retail business unit not yet sold to external customers;
  • A $6-million unfavorable change on foreign exchange losses; and
  • $6-million in Viterra acquisition costs.

OUTSTANDING SHARE DATA

The number of Agrium's outstanding shares at January 31, 2014 was approximately 144 million. At January 31, 2014, the number of shares issuable pursuant to stock options outstanding (issuable assuming full exercise, where each option granted can be exercised for one common share) was approximately nil.

SELECTED QUARTERLY INFORMATION  
                                 
(millions of U.S. dollars, except per share amounts)   2013
Q4
  2013
Q3
  2013
Q2
2013
Q1
  2012
Q4
  2012
Q3
  2012
Q2
  2012
Q1
 
Sales   2,867   2,796   6,908 3,156   3,093   2,768   6,669   3,494  
Gross profit   740   629   1,699 705   974   730   1,831   773  
Net earnings from continuing operations   110   80   744 146   358   140   859   159  
Net (loss) earnings from discontinued operations   (11 ) (4 ) 3 (5 ) (4 ) (11 ) 1   (4 )
Net earnings   99   76   747 141   354   129   860   155  
Earnings per share from continuing operations attributable to equity holders of Agrium:                                
  Basic   0.74   0.54   5.00 0.98   2.37   0.87   5.44   0.99  
  Diluted   0.74   0.54   5.00 0.98   2.36   0.87   5.43   0.99  
(Loss) earnings per share from discontinued operations attributable to equity holders of Agrium:                                
  Basic   (0.08 ) (0.02 ) 0.02 (0.04 ) (0.03 ) (0.07 ) -   (0.02 )
  Diluted   (0.08 ) (0.02 ) 0.02 (0.04 ) (0.02 ) (0.07 ) 0.01   (0.02 )
Earnings per share attributable to equity holders of Agrium:                                
  Basic   0.66   0.52   5.02 0.94   2.34   0.80   5.44   0.97  
  Diluted   0.66   0.52   5.02 0.94   2.34   0.80   5.44   0.97  
                                 

The agricultural products business is seasonal in nature. Consequently, comparisons made on a year-over-year basis are more appropriate than quarter-over-quarter comparisons. Crop input sales are primarily concentrated in the spring and fall crop input application seasons, which are in the second quarter and fourth quarter. Crop nutrient inventories are normally accumulated leading up to each application season. Our cash collections generally occur after the application season is complete.

BUSINESS ACQUISITION

We completed the acquisition of 100 percent of certain Retail Canadian and Australian agri-products assets of Viterra from Glencore International plc ("Glencore") on October 1, 2013. The acquired assets form part of our Retail business unit and include over 200 farm centers in Canada as well as distribution assets in Australia. Benefits of the acquisition include expansion of geographical coverage for the sale of crop inputs in Canada and Australia, acquisition of a significant customer base and talented workforce and synergies between Agrium and Viterra, including cost savings opportunities. We have recorded a purchase gain of $257-million representing the difference between the fair value of acquired net assets and the purchase price.

DISCONTINUED OPERATIONS

Following the settlement of litigation in December 2013, we received $75-million in the fourth quarter of 2013 for an insurance claim relating to a division of AWB Limited ("AWB"), that we acquired in 2010 and sold in 2011. We had not previously accrued a receivable for this claim because of the uncertainty of the outcome of the litigation. We incurred an additional $22-million of legal fees and additional settlements related to the sold division of AWB.

In December 2013, Agrium's Board of Directors approved the transition of parts of the AAT business unit, consisting of our ESN and Micronutrients operations to our Wholesale business unit. Management has commenced with a divestment process for components of the AAT business unit that we did not transition to Wholesale. We consider that a sale by December 2014 is highly probable. We have classified assets of the operations not transferred to Wholesale as held for sale, and have classified related results of operations as discontinued. Additionally, we recorded the assets held for sale at fair value less costs to sell which resulted in a $60-million post-tax write-down within discontinued operations primarily related to goodwill.

NORMAL COURSE ISSUER BID

On May 14, 2013, the Toronto Stock Exchange ("TSX") accepted Agrium's notice of intention to make a normal course issuer bid ("NCIB") whereby Agrium may purchase up to 7,472,587 common shares on the TSX and New York Stock Exchange during the period from May 21, 2013 to May 20, 2014 with a daily purchase limit of 133,301 common shares on the TSX. During the period from May 21, 2013 to December 31, 2013, we purchased approximately 5.8 million shares at an average share price of $86 for total consideration of approximately $498-million under our NCIB.

ADDITIONAL IFRS AND NON-IFRS FINANCIAL MEASURES

Certain financial measures in this press release are not prescribed by IFRS. We consider these financial measures discussed herein to provide useful information to both management and investors in measuring our financial performance and financial condition.

In general, an additional IFRS financial measure is a measure relevant to understanding a company's financial performance that is not a minimum measure mandated by IFRS. A non-IFRS financial measure generally either excludes or includes amounts that are not excluded or included in the most directly comparable measure calculated and presented in accordance with IFRS. Refer to the following tables for further discussion of how they are calculated and their usefulness to users including management. Non-IFRS financial measures are not recognized measures under IFRS and our method of calculation may not be directly comparable to that of other companies. These non-IFRS measures should not be considered as a substitute for, or superior to, measures of financial performance prepared in accordance with IFRS.

The following table outlines our additional IFRS financial measures, their definitions and how management assesses each measure. As the measures set out below are presented in our consolidated financial statements included in this press release, they are classified as additional IFRS financial measures where they reflect consolidated Agrium, and are classified as non-IFRS financial measures where they do not reflect consolidated Agrium, including references to EBITDA when presented on an operating segment basis.

Additional IFRS financial measures   Definition   Management's assessment
EBIT   Earnings (loss) from continuing operations before finance costs and income taxes.   EBIT provides a supplemental measure used by management to: (1) evaluate the effectiveness of our businesses; (2) evaluate our ability to service debt; and (3) determine resource allocations. We believe EBIT is useful to investors, securities analysts and management, as the measure allows for an evaluation of segment performance exclusive of capital structure and income taxes, both of which are not a direct result of the efficiency of each business and are generally accounted for and evaluated on a consolidated basis.
Consolidated ROOCE
(Consolidated return on operating capital employed)
  Last 12 months' EBIT less income taxes at a tax rate of 27 percent (2012 - 28 percent) divided by rolling four quarter average operating capital employed. Operating capital employed includes non-cash working capital, property, plant and equipment, investments in associates and joint ventures, and other assets.   Consolidated ROOCE provides a measure of our operating performance and the efficiency of our capital allocation process over the long term. We believe this metric is useful in measuring and maximizing shareholder value in a growing company.
Consolidated ROCE
(Consolidated return on capital employed)
  Last 12 months' EBIT less income taxes at a tax rate of 27 percent (2012 - 28 percent) divided by rolling four quarter average capital employed. Capital employed includes operating capital employed, intangibles and goodwill.   Refer to ROOCE.
The following table outlines our non-IFRS financial measures, their definitions and usefulness, and how management assesses each measure.
 
Non-IFRS financial measures   Definition   Management's assessment
EBITDA   Earnings (loss) from continuing operations before finance costs, income taxes, depreciation and amortization.   Refer to EBIT. This measure is also used by investors and securities analysts as a valuation metric and as an alternative to cash provided by operating activities.
Adjusted EBITDA   Earnings (loss) from continuing operations before finance costs, income taxes, depreciation and amortization and before finance costs, income taxes, depreciation and amortization of joint ventures.   Refer to EBIT and EBITDA. Management believes that this metric provides useful comparative information on our profitability, as Adjusted EBITDA adds back finance costs, income taxes, depreciation and amortization of joint ventures.
EBITDA to sales   EBITDA divided by sales.   Metric is used to measure operating performance earnings and cash flow we generate from each dollar of sales. We believe this metric is useful in providing a basis to evaluate operating profitability that is comparable from period to period.
Retail - North America and Retail measures: return on operating capital employed; return on capital employed; average non-cash working capital to sales; and operating coverage ratio.   These measures when calculated using information from our Retail segment are considered non-IFRS financial measures as the specific Retail components are not separately presented in our consolidated financial statements or notes to the consolidated financial statements.

See definitions for ROOCE and ROCE in the preceding Additional IFRS Financial Measures table.
  Metrics are used by management to evaluate our Retail business. We believe these metrics are also useful to investors and securities analysts in evaluating operating performance of our Retail business.
Comparable store sales   Represents the increase or decrease in current period Retail store sales compared to the prior period.

We include a location in the comparable store base once it is in operation or owned for over 12 months. If we close a store, we retain the sales of the closed location in the comparable store base if the closed location is in close geographical proximity to an existing location, unless we plan to exit the market area or are unable to economically or logistically serve it. We do not make adjustments for temporary closures, expansions or renovations of stores.
  Metric is commonly used in the retail and distribution industry. We believe this metric is useful in highlighting the performance of our existing stores by measuring the change in sales for such stores for a period over the comparable period of equivalent length.
Normalized comparable store sales   Comparable store sales normalized by using published nitrogen, phosphate and potash ("NPK") benchmark prices and adjusting current year prices to reflect pricing from the previous year based on our percent of NPK utilization by product.   Refer to comparable store sales. This metric removes fluctuations created by changes in commodity prices.
 
 
RECONCILIATIONS OF ADDITIONAL IFRS AND NON-IFRS FINANCIAL MEASURES
   
Return on operating capital employed and return on capital employed  
   
    Rolling four quarters ended December 31, 2013     Rolling four quarters ended December 31, 2012  
   
    Retail -             Retail -          
(millions of U.S. dollars, except as noted)   North America   Retail   Consolidated Agrium     North America   Retail   Consolidated Agrium  
EBIT less income taxes                            
  EBIT   940   748   1,630     719   757   2,216  
  Income taxes at a tax rate of 27 percent (2012 - 28 percent)   254   202   440     201   212   620  
    686   546   1,190     518   545   1,596  
  Average operating capital employed                            
    Average non-cash working capital   1,715   2,337   2,698     1,642   2,276   2,539  
    Average property, plant and equipment   726   852   4,244     593   708   3,029  
    Average investments in associates and joint ventures   33   79   631     17   81   601  
    Average other assets   5   15   104     5   19   44  
    2,479   3,283   7,677     2,257   3,084   6,213  
Return on operating capital employed (ROOCE) (%)   28 % 17 % 15 %   23 % 18 % 26 %
  Average capital employed                            
    Average operating capital employed   2,479   3,283   7,677     2,257   3,084   6,213  
    Average intangibles   547   622   660     499   593   650  
    Average goodwill   1,791   2,125   2,206     1,790   2,209   2,305  
    4,817   6,030   10,543     4,546   5,886   9,168  
Return on capital employed (ROCE) (%)   14 % 9 % 11 %   11 % 9 % 17 %
                       
Adjusted EBITDA and EBITDA to EBIT                
                                               
    Three months ended   Three months ended
    December 31, 2013   December 31, 2012
(millions of U.S. dollars)   Retail   Wholesale   AAT (1)     Other     Consolidated   Retail   Wholesale   AAT (1)   Other     Consolidated
Adjusted EBITDA   195   234   3     (94)     338   124   516   18   (2)     656
Equity accounted joint ventures:                                              
  Finance costs and income taxes   -   19   -     -     19   -   17   -   -     17
  Depreciation and amortization   -   5   -     -     5   -   4   -   -     4
EBITDA   195   210   3     (94 )   314   124   495   18   (2 )   635
Depreciation and amortization   72   50   4     5     131   49   48   3   6     106
EBIT   123   160   (1 )   (99 )   183   75   447   15   (8 )   529
                                               
(1) Represents ESN and Micronutrients operations. See section "Discontinued Operations" above.
   
   
Retail comparable store sales and Retail normalized comparable store sales  
           
    Twelve months ended December 31,  
(millions of U.S. dollars, except as noted)   2013   2012  
Retail sales from the current period comparable store base   11,234   11,182  
Prior year Retail sales   11,479   10,315  
Comparable store sales (%)   (2.1 %) 8.4 %
Current year sales normalized for NPK benchmark prices   12,000   11,147  
Normalized comparable store sales (%)   4.5 % 8.1 %

OUTLOOK, KEY RISKS AND UNCERTAINTIES

Global grain and oilseed producers experienced an outstanding year of productivity in 2013. According to the United States Department of Agriculture ("USDA"), global grain and oilseed acreage and yields set new records, combining for record production. In the U.S., corn production set a new record and in Western Canada, wheat and canola production set new records and overall crop production was 27 percent above the previous record set in 2008. Record crop production was the result of favorable weather combined with strong market incentives to increase production.

Record crop production has resulted in significantly lower prices for most crops; however, prices remain high relative to other periods with record production. The combination of current crop prices and record U.S. net farm income in 2013 provide a strong incentive to plant historically high acreage again in 2014. Lower and more stable crop prices have resulted in robust grain demand growth, with the USDA projecting that global grain demand growth will be over 4 percent in 2013/14, which would be the highest annual growth since 1978/79 and over 1.5 percentage points above any year in the past decade, which was a period of very strong demand growth.

At current crop prices, North American spring crop area in 2014 is expected to be near 2013 levels, which is expected to support crop input demand and growers continuing to seek the top seed genetics available. Analysts expect that corn acreage will decline, but that the decline will mostly be offset by increased area of soybeans in the U.S. and canola in Western Canada. Crop nutrient shipments are expected to be strong in the first half of 2014, in part due to a shorter fall application season in 2013 due to weather.

The global urea market started to strengthen in early 2014, driven by strong demand in markets such as North America and Europe and supply constraints from some major export regions. Analysts project that a large volume of urea will need to be imported between now and the beginning of the application season due to the delayed demand at the beginning of the 2013/14 fertilizer year. U.S. offshore urea import levels in the first half of 2014 will likely need to meet or exceed record levels achieved in 2013. The relatively poor fall ammonia season is expected to result in increased demand for urea and UAN applications through the spring season. Stronger global urea prices may result in additional Chinese urea exports in the first half of 2014 due to the change in their export tariff this year but there has been limited response in terms of additional exports so far this year. North American nitrogen demand is projected to decline about 2 percent to 4 percent in 2013/14 due primarily to reduced corn acreage, while global nitrogen demand is projected to increase by 1.5 percent to 2 percent in 2014 from 2013 levels.

The global potash market was characterized by significant supply and demand uncertainty in 2013, but enters 2014 with more clarity and stability. The Chinese supply agreements with major suppliers reached in January 2014 has provided additional certainty to the market and pent up demand by other importing regions is expected to result in improved global import demand in the first half of 2014. Brazil imported record potash volumes of over 8 million tonnes in 2013 and import demand from Brazil is expected to remain strong in 2014. North American potash demand is projected to be relatively flat, to down 2 percent, from 2012/13 levels in 2013/14. We expect global potash shipments to increase from 54 million tonnes in 2013 to between 56 million and 58 million tonnes in 2014.

Phosphate prices have increased significantly since the end of November 2013, driven by strong demand, particularly in North and South America. The impact of stronger global demand has been amplified by turnarounds and unplanned shut-downs by some major producers. Global phosphate production costs have increased as global sulfur prices have more than doubled, driven by strong Chinese demand. Indian DAP imports are expected to improve in 2014 from depressed 2013 levels, but the timing and scale of imports continues to be a source of uncertainty to the phosphate market. North American phosphate demand in 2013/14 is projected to be flat to down 2 percent from 2012/13 levels, while global demand in 2014 is projected to increase by 2 to 4 percent from 2013 levels.

Forward-Looking Statements

Certain statements and other information included in this press release constitute "forward-looking information" 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 press 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: future crop and crop input volumes, demand, margins, prices and sales; business and financial prospects; dividends and other plans, strategies, objectives and expectations, including with respect to future operations of Agrium and proposed acquisitions and divestitures and the growth and stability of our earnings. These forward-looking statements are subject to a number of risks and uncertainties, many of which are beyond our control, which could cause actual results to differ materially from such 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 in this press release. 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 key assumptions that have been made in connection with the forward-looking statements include Agrium's ability to successfully integrate and realize the anticipated benefits of its already completed and future acquisitions, including the recently completed acquisition of certain Retail Agri-products assets of Viterra.

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 economic, market and business conditions, weather conditions including impacts from regional flooding and/or drought conditions; crop prices; the supply and demand and price levels for our major products; 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, as well as counterparty and sovereign risk; 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 United States. There is a risk that the Egyptian Misr Fertilizer Production Company nitrogen facility in Egypt may not be allowed to proceed with the completion of the two new facilities. Additionally, there are risks associated with Agrium's acquisition of AWB, including litigation risk resulting from AWB having been named in litigation commenced by the Iraqi Government relating to the United Nations Oil-For-Food Programme. There are risks associated with our acquisition of certain Retail Agri-products assets of Viterra, including: timing and costs of the associated integration of the retained Viterra Retail Agri-products assets, the size and timing of expected synergies could be less favorable than anticipated; disruption from the acquisition making it more difficult to maintain relationships with customers, employees and suppliers; our efforts to integrate Viterra's Retail Agri-products assets into our existing business could result in the disruption of our ongoing business 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 United States. Furthermore, the potential divestiture of the Turf and Ornamental and Direct Solutions businesses and any potential financial gains or losses resulting from the completion of the strategic review process may differ materially from those in the forward-looking statements.

Agrium disclaims any intention or obligation to update or revise any forward-looking statements in this press release 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 Retail supplier of agricultural products and services in North America, South America and Australia and a leading global Wholesale producer and marketer of all three major agricultural nutrients and the premier supplier of specialty fertilizers in North America. Agrium's strategy is to provide the crop inputs and services needed to feed a growing world. We focus on maximizing shareholder returns by driving continuous improvements to our base businesses, pursuing value-added growth opportunities across the crop input value chain and returning capital to shareholders.

A WEBSITE SIMULCAST of the 2013 4th Quarter Conference Call will be available in a listen-only mode beginning Friday, February 21st, 2014 at 7:30 a.m. MST (9:30 a.m. EST). Please visit the following website: www.agrium.com.

AGRIUM INC.  
Consolidated Statements of Operations  
(Millions of U.S. dollars, except per share amounts)  
(Unaudited)  
                 
  Three months ended   Twelve months ended  
  December 31,   December 31,  
  2013   2012 (1)   2013   2012 (1)  
                 
Sales 2,867   3,093   15,727   16,024  
Cost of product sold 2,127   2,119   11,954   11,716  
Gross profit 740   974   3,773   4,308  
Expenses                
  Selling 511   438   1,876   1,697  
  General and administrative 116   49   329   428  
  Earnings from associates and joint ventures (29 ) (22 ) (68 ) (91 )
  Purchase gain (257 ) -   (257 ) -  
  Goodwill impairment 220   -   220   -  
  Other (income) expenses (4 ) (20 ) 43   58  
Earnings before finance costs and income taxes 183   529   1,630   2,216  
  Finance costs related to long-term debt 21   22   90   89  
  Other finance costs 18   15   66   41  
Earnings before income taxes 144   492   1,474   2,086  
  Income taxes 34   134   394   570  
Net earnings from continuing operations 110   358   1,080   1,516  
Net loss from discontinued operations (11 ) (4 ) (17 ) (18 )
Net earnings 99   354   1,063   1,498  
Attributable to:                
  Equity holders of Agrium 96   354   1,062   1,494  
  Non-controlling interest 3   -   1   4  
Net earnings 99   354   1,063   1,498  
                 
Earnings per share attributable to equity holders of Agrium                
  Basic earnings per share from continuing operations 0.74   2.37   7.31   9.67  
  Basic loss per share from discontinued operations (0.08 ) (0.03 ) (0.11 ) (0.11 )
  Basic earnings per share 0.66   2.34   7.20   9.56  
  Diluted earnings per share from continuing operations 0.74   2.36   7.31   9.67  
  Diluted loss per share from discontinued operations (0.08 ) (0.02 ) (0.11 ) (0.12 )
  Diluted earnings per share 0.66   2.34   7.20   9.55  
                 
(1) Restated for the application of IFRS 11 Joint Arrangements requiring equity accounting for joint ventures and reclassifications resulting from discontinued operations.
   
   
AGRIUM INC.  
Consolidated Statements of Comprehensive Income  
(Millions of U.S. dollars)  
(Unaudited)  
                         
    Three months ended     Twelve months ended  
    December 31,     December 31,  
    2013     2012     2013     2012  
                         
Net earnings   99     354     1,063     1,498  
  Other comprehensive (loss) income                        
    Items that are or may be reclassified to earnings                        
      Available for sale financial instruments                        
        (Losses) gains   (4 )   1     (8 )   1  
      Foreign currency translation differences                        
        (Losses) gains   (171 )   (33 )   (340 )   64  
        Reclassifications to earnings   -     (1 )   -     (1 )
      Associates and joint ventures loss   (5 )   (2 )   (4 )   (3 )
    (180 )   (35 )   (352 )   61  
    Items that will never be reclassified to earnings                        
      Post-employment benefits                        
        Actuarial (losses) gains   (3 )   15     45     (7 )
        Deferred income taxes   1     (4 )   (14 )   2  
    (2 )   11     31     (5 )
  Other comprehensive (loss) income   (182 )   (24 )   (321 )   56  
Comprehensive (loss) income   (83 )   330     742     1,554  
Attributable to:                        
  Equity holders of Agrium   (84 )   331     743     1,550  
  Non-controlling interest   1     (1 )   (1 )   4  
Comprehensive (loss) income   (83 )   330     742     1,554  
                         
   
AGRIUM INC.  
Consolidated Statements of Cash Flows  
(Millions of U.S. dollars)  
(Unaudited)  
                         
                         
    Three months ended     Twelve months ended  
    December 31,     December 31,  
    2013     2012 (1)     2013     2012 (1)  
                         
Operating                        
  Net earnings from continuing operations   110     358     1,080     1,516  
  Adjustments for                        
    Depreciation and amortization   131     106     472     413  
    Earnings from associates and joint ventures   (29 )   (22 )   (68 )   (91 )
    Purchase gain   (257 )   -     (257 )   -  
    Goodwill impairment   220     -     220     -  
    Share-based payments   28     (18 )   (7 )   108  
    Unrealized gain on derivative financial instruments   (1 )   -     (15 )   (17 )
    Unrealized foreign exchange (gain) loss   (2 )   10     -     2  
    Interest income   (25 )   (26 )   (76 )   (91 )
    Finance costs   39     37     156     130  
    Income taxes   34     134     394     570  
    Other   5     (1 )   30     77  
  Interest received   26     26     77     91  
  Interest paid   (24 )   (10 )   (140 )   (108 )
  Income taxes paid   (71 )   (54 )   (663 )   (405 )
  Dividends from associates and joint ventures   1     10     28     13  
  Net changes in non-cash working capital   1,036     409     536     (138 )
Cash provided by operating activities   1,221     959     1,767     2,070  
Investing                        
  Acquisitions, net of cash acquired   (8 )   (136 )   (64 )   (213 )
  Acquisition of Viterra Inc.   328     (1,801 )   1,260     (1,801 )
  Capital expenditures   (548 )   (402 )   (1,755 )   (1,225 )
  Capitalized borrowing costs   (21 )   (9 )   (61 )   (26 )
  Investments in associates and joint ventures   -     -     -     (10 )
  Purchase of investments   (23 )   (7 )   (171 )   (14 )
  Proceeds from disposal of investments   17     -     82     -  
  Other   53     (8 )   -     (56 )
  Net changes in non-cash working capital   (25 )   (17 )   28     43  
Cash used in investing activities   (227 )   (2,380 )   (681 )   (3,302 )
Financing                        
    Short-term debt   (20 )   703     (511 )   1,098  
    Long-term debt issued   -     500     1,010     521  
    Transaction costs on long-term debt   -     (4 )   (14 )   (5 )
    Repayment of long-term debt   (2 )   (5 )   (522 )   (12 )
    Dividends paid   (110 )   -     (334 )   (115 )
    Shares issued   -     -     2     7  
    Shares repurchased   (265 )   (913 )   (498 )   (913 )
Cash (used in) provided by financing activities   (397 )   281     (867 )   581  
Effect of exchange rate changes on cash and cash equivalents   (2 )   (13 )   (24 )   37  
Increase (decrease) in cash and cash equivalents from continuing operations   595     (1,153 )   195     (614 )
Cash and cash equivalents used in discontinued                        
operations   (49 )   (1 )   (52 )   (15 )
Cash and cash equivalents - beginning of period   255     1,812     658     1,287  
Cash and cash equivalents - end of period   801     658     801     658  
                         
(1) Restated for the application of IFRS 11 Joint Arrangements requiring equity accounting for joint ventures and reclassifications resulting from discontinued operations.
 
 
AGRIUM INC.
Consolidated Balance Sheets
(Millions of U.S. dollars)
(Unaudited)
       
  December 31,
  2013   2012 (1)
Assets      
  Current assets      
    Cash and cash equivalents 801   658
    Accounts receivable 2,105   2,224
    Income taxes receivable 78   32
    Inventories 3,413   3,094
    Advance on acquisition of Viterra Inc. -   1,792
    Prepaid expenses and deposits 805   740
    Other current assets 104   -
    Assets held for sale 202   -
  7,508   8,540
  Property, plant and equipment 4,960   3,484
  Intangibles 738   636
  Goodwill 1,958   2,349
  Investments in associates and joint ventures 639   627
  Other assets 99   99
  Deferred income tax assets 75   70
  15,977   15,805
Liabilities and shareholders' equity      
  Current liabilities      
    Short-term debt 764   1,314
    Accounts payable 3,985   3,479
    Income taxes payable 2   137
    Current portion of long-term debt 58   518
    Current portion of other provisions 112   108
    Liabilities held for sale 44   -
  4,965   5,556
  Long-term debt 3,066   2,069
  Post-employment benefits 135   184
  Other provisions 426   413
  Other liabilities 59   79
  Deferred income tax liabilities 530   584
  9,181   8,885
  Shareholders' equity      
    Share capital 1,820   1,890
    Retained earnings 5,253   4,955
    Accumulated other comprehensive (loss) income (279 ) 71
    Equity holders of Agrium 6,794   6,916
    Non-controlling interest 2   4
    Total equity 6,796   6,920
  15,977   15,805
       
(1) Restated for the application of IFRS 11 Joint Arrangements requiring equity accounting for joint ventures.
   
   
AGRIUM INC.  
Consolidated Statements of Shareholders' Equity  
(Millions of U.S. dollars, except share data)  
(Unaudited)  
                                         
             Other comprehensive income             
  Millions of common shares   Share capital   Retained earnings   Available for sale financial instruments   Foreign currency translation   Comprehensive loss of associates and joint ventures   Total   Equity holders of Agrium   Non-controlling interest   Total equity  
December 31, 2011 158   1,994   4,420   (1 ) 11   -   10   6,424   4   6,428  
  Net earnings -   -   1,494   -   -   -   -   1,494   4   1,498  
  Other comprehensive income (loss), net of tax                                        
    Post-employment benefits -   -   (5 ) -   -   -   -   (5 ) -   (5 )
    Other -   -   -   1   63   (3 ) 61   61   -   61  
  Comprehensive income (loss), net of tax -   -   1,489   1   63   (3 ) 61   1,550   4   1,554  
  Dividends -   -   (154 ) -   -   -   -   (154 ) -   (154 )
  Non-controlling interest transactions -   -   -   -   -   -   -   -   (4 ) (4 )
  Shares repurchased (9 ) (113 ) (800 ) -   -   -   -   (913 ) -   (913 )
  Share-based payment transactions -   9   -   -   -   -   -   9   -   9  
December 31, 2012 149   1,890   4,955   -   74   (3 ) 71   6,916   4   6,920  
  Net earnings -   -   1,062   -   -   -   -   1,062   1   1,063  
  Other comprehensive income (loss), net of tax                                        
    Post-employment benefits -   -   31   -   -   -   -   31   -   31  
    Other -   -   -   (8 ) (338 ) (4 ) (350 ) (350 ) (2 ) (352 )
  Comprehensive income (loss), net of tax -   -   1,093   (8 ) (338 ) (4 ) (350 ) 743   (1 ) 742  
  Dividends -   -   (367 ) -   -   -   -   (367 ) -   (367 )
  Non-controlling interest transactions -   -   (2 ) -   -   -   -   (2 ) (1 ) (3 )
  Shares repurchased (5 ) (72 ) (426 ) -   -   -   -   (498 ) -   (498 )
  Share-based payment transactions -   2   -   -   -   -   -   2   -   2  
December 31, 2013 144   1,820   5,253   (8 ) (264 ) (7 ) (279 ) 6,794   2   6,796  
   
AGRIUM INC.  
Supplemental Information 1a  
Results by Segment  
(Millions of U.S. dollars)  
(Unaudited)  
                                 
      Three months ended December 31,  
      2013  
                  Advanced              
      Retail     Wholesale     Technologies(1)     Other     Total  
Sales - external   2,099     711     57     -     2,867  
  - inter-segment   3     252     10     (265 )   -  
Total sales   2,102     963     67     (265 )   2,867  
Cost of product sold   1,516     793     65     (247 )   2,127  
Gross profit   586     170     2     (18 )   740  
Gross profit (%)   28     18     3           26  
Selling   504     11     1     (5 )   511  
General and administrative   31     15     3     67     116  
Earnings from associates and joint ventures   (2 )   (27 )   -     -     (29 )
Purchase gain   (257 )   -     -     -     (257 )
Goodwill impairment   220     -     -     -     220  
Other (income) expenses   (33 )   11     (1 )   19     (4 )
EBIT (2)    123     160     (1 )   (99 )   183  
EBITDA (3)    195     210     3     (94 )   314  
Adjusted EBITDA (3)   195     234     3     (94 )   338  
                                 
      Three months ended December 31,  
            2012 (4)        
                  Advanced              
      Retail     Wholesale     Technologies(1)     Other     Total  
Sales - external   1,971     1,058     64     -     3,093  
  - inter-segment   4     215     13     (232 )   -  
Total sales   1,975     1,273     77     (232 )   3,093  
Cost of product sold   1,466     820     54     (221 )   2,119  
Gross profit   509     453     23     (11 )   974  
Gross profit (%)   26     36     30           31  
Selling   431     11     1     (5 )   438  
General and administrative   33     10     6     -     49  
Earnings from associates and joint ventures   (2 )   (20 )   -     -     (22 )
Other (income) expenses   (28 )   5     1     2     (20 )
EBIT (2)    75     447     15     (8 )   529  
EBITDA (3)    124     495     18     (2 )   635  
Adjusted EBITDA (3)   124     516     18     (2 )   656  
(1) Reflects the results of Environmentally Smart Nitrogen ("ESN") and Micronutrients businesses only. These results will be reflected in the Wholesale segment in subsequent disclosures.
(2) Earnings (loss) from continuing operations before finance costs and income taxes.
(3) Certain measures presented in this table are not recognized measures under IFRS. Refer to Supplemental Information 6.
(4) Restated for the application of IFRS 11 Joint Arrangements requiring equity accounting for joint ventures and reclassifications resulting from discontinued operations.
   
   
AGRIUM INC.  
Supplemental Information 1b  
Results by Segment  
(Millions of U.S. dollars)  
(Unaudited)  
                             
      Twelve months ended December 31,  
      2013  
              Advanced              
      Retail   Wholesale   Technologies (1)     Other     Total  
Sales - external   11,896   3,612   219     -     15,727  
  - inter-segment   17   727   44     (788 )   -  
Total sales   11,913   4,339   263     (788 )   15,727  
Cost of product sold   9,298   3,232   228     (804 )   11,954  
Gross profit   2,615   1,107   35     16     3,773  
Gross profit (%)   22   26   13           24  
Selling   1,847   39   4     (14 )   1,876  
General and administrative   116   65   16     132     329  
(Earnings) loss from associates and joint ventures   (9 ) (61 ) 1     1     (68 )
Purchase gain   (257 ) -   -     -     (257 )
Goodwill impairment   220   -   -     -     220  
Other (income) expenses   (50 ) 33   -     60     43  
EBIT (2)    748   1,031   14     (163 )   1,630  
EBITDA (3)    986   1,232   30     (146 )   2,102  
Adjusted EBITDA (3)   986   1,286   30     (146 )   2,156  
                             
      Twelve months ended December 31,  
              2012 (4)              
              Advanced              
      Retail   Wholesale   Technologies (1)     Other     Total  
Sales - external   11,457   4,368   199     -     16,024  
  - inter-segment   22   690   65     (777 )   -  
Total sales   11,479   5,058   264     (777 )   16,024  
Cost of product sold   9,001   3,308   197     (790 )   11,716  
Gross profit   2,478   1,750   67     13     4,308  
Gross profit (%)   22   35   25           27  
Selling   1,669   38   3     (13 )   1,697  
General and administrative   122   42   19     245     428  
Earnings from associates and joint ventures   (9 ) (80 ) (2 )   -     (91 )
Other (income) expenses   (61 ) 57   2     60     58  
EBIT (2)    757   1,693   45     (279 )   2,216  
EBITDA (3)    951   1,883   58     (263 )   2,629  
Adjusted EBITDA (3)   951   1,940   58     (263 )   2,686  
(1) Reflects the results of ESN and Micronutrients businesses only. These results will be reflected in the Wholesale segment in subsequent disclosures.
(2) Earnings (loss) from continuing operations before finance costs and income taxes.
(3) Certain measures presented in this table are not recognized measures under IFRS. Refer to Supplemental Information 6.
(4) Restated for the application of IFRS 11 Joint Arrangements requiring equity accounting for joint ventures and reclassifications resulting from discontinued operations.
 
 
AGRIUM INC.
Supplemental Information 2
Product Lines
(Millions of U.S. dollars)
(Unaudited)
                                               
  Three months ended December 31,   Twelve months ended December 31,
  2013     2012 (4)     2013     2012 (4)  
      Cost of           Cost of           Cost of           Cost of    
      product   Gross       product   Gross       product   Gross       product   Gross
  Sales   sold (1)   profit   Sales   sold (1)   profit   Sales   sold (1)   profit   Sales   sold (1)   profit
                                               
Retail (2)                                              
  Crop nutrients 1,052   874   178   1,096   941   155   4,993   4,154   839   5,124   4,303   821
  Crop protection products 511   306   205   491   288   203   4,204   3,217   987   3,924   2,996   928
  Seed 95   35   60   105   62   43   1,258   984   274   1,189   949   240
  Merchandise 228   198   30   132   111   21   612   518   94   524   431   93
  Services and other 216   103   113   151   64   87   846   425   421   718   322   396
  2,102   1,516   586   1,975   1,466   509   11,913   9,298   2,615   11,479   9,001   2,478
Wholesale                                              
  Nitrogen 415   286   129   544   251   293   1,724   1,052   672   2,012   937   1,075
  Potash 107   68   39   153   74   79   564   294   270   618   276   342
  Phosphate 159   163   (4 ) 201   154   47   654   587   67   797   598   199
  Product purchased for resale 240   246   (6 ) 310   302   8   1,131   1,122   9   1,347   1,316   31
  Ammonium sulfate and other 42   30   12   65   39   26   266   177   89   284   181   103
  963   793   170   1,273   820   453   4,339   3,232   1,107   5,058   3,308   1,750
Advanced Technologies (3) 67   65   2   77   54   23   263   228   35   264   197   67
Other inter-segment eliminations (265 ) (247 ) (18 ) (232 ) (221 ) (11 ) (788 ) (804 ) 16   (777 ) (790 ) 13
Total 2,867   2,127   740   3,093   2,119   974   15,727   11,954   3,773   16,024   11,716   4,308
                                               
                                               
Wholesale equity accounted joint ventures:                                              
  Nitrogen 72   49   23   79   46   33   234   173   61   286   166   120
  Product purchased for resale 35   32   3   34   30   4   119   111   8   108   98   10
  107   81   26   113   76   37   353   284   69   394   264   130
                                               
Total Wholesale including equity accounted joint ventures 1,070   874   196   1,386   896   490   4,692   3,516   1,176   5,452   3,572   1,880
(1) Includes depreciation and amortization.
(2) International Retail sales were $559-million (2012 - $519-million) and gross profit was $125-million (2012 - $109-million) for the three months ended December 31. International Retail sales were $2,584-million (2012 - $2,482-million) and gross profit was $461-million (2012 - $456-million) for the twelve months ended December 31.
(3) Reflects the results of ESN and Micronutrients businesses only. These results will be reflected in the Wholesale segment in subsequent disclosures.
(4) Restated for the application of IFRS 11 Joint Arrangements requiring equity accounting for joint ventures and reclassifications resulting from discontinued operations.
 
 
AGRIUM INC.
Supplemental Information 3a
Selected Volumes and Sales Prices
(Unaudited)
                   
  Three months ended December 31,
  2013   2012 (1)
      Cost of         Cost of  
  Sales Selling product     Sales Selling product  
  tonnes price sold Margin   tonnes price sold Margin
  (000's) ($/tonne) ($/tonne) ($/tonne)   (000's) ($/tonne) ($/tonne) ($/tonne)
Retail                  
  Crop nutrients                  
    North America 1,590 548       1,355 669    
  International 364 500       327 578    
  Total crop nutrients 1,954 539 447 92   1,682 651 560 91
Wholesale                  
  Nitrogen                  
    North America                  
      Ammonia 383 561       328 677    
      Urea 337 410       431 558    
      Other 187 331       207 383    
  Total nitrogen 907 458 314 144   966 561 257 304
                   
  Potash                  
    North America 255 353       255 491    
    International 89 199       86 326    
  Total potash 344 313 201 112   341 449 216 233
                   
  Phosphate 285 560 576 (16 ) 279 722 556 166
  Product purchased for resale 648 370 379 (9 ) 646 481 468 13
  Ammonium sulfate 81 303 182 121   83 432 172 260
  Other 43         62      
                   
Total Wholesale 2,308 417 343 74   2,377 536 345 191
                   
Wholesale equity accounted joint ventures:                  
  Nitrogen                  
    International 180 400 272 128   157 502 279 223
  Product purchased for resale 86 407 372 35   79 429 379 50
  266 402 304 98   236 480 324 156
Total Wholesale including equity accounted joint ventures 2,574 416 340 76   2,613 530 342 188
(1) Restated for the application of IFRS 11 Joint Arrangements requiring equity accounting for joint ventures.
 
 
AGRIUM INC.
Supplemental Information 3b
Selected Volumes and Sales Prices
(Unaudited)
                   
    Twelve months ended December 31,
    2013     2012 (1)  
        Cost of       Cost of  
    Sales Selling product   Sales Selling product  
    tonnes price sold Margin tonnes price sold Margin
    (000's) ($/tonne) ($/tonne) ($/tonne) (000's) ($/tonne) ($/tonne) ($/tonne)
Retail                  
  Crop nutrients                  
    North America   6,812 591     6,622 634    
    International   1,806 535     1,535 605    
  Total crop nutrients   8,618 579 482 97 8,157 628 527 101
Wholesale                  
  Nitrogen                  
    North America                  
      Ammonia   1,219 627     1,188 627    
      Urea   1,270 490     1,511 581    
      Other   903 374     1,030 377    
  Total nitrogen   3,392 508 310 198 3,729 539 251 288
                   
  Potash                  
    North America   877 421     819 534    
    International   654 298     473 383    
  Total potash   1,531 369 193 176 1,292 479 214 265
                   
  Phosphate   1,026 638 573 65 1,095 728 547 181
  Product purchased for resale   2,687 421 418 3 2,930 460 449 11
  Ammonium sulfate   328 383 191 192 327 423 203 220
  Other   285       292      
                   
Total Wholesale   9,249 469 349 120 9,665 523 342 181
                   
Wholesale equity accounted joint ventures:                  
  Nitrogen                  
      International   540 433 320 113 556 514 298 216
  Product purchased for resale   304 392 365 27 264 411 373 38
    844 418 336 82 820 481 322 159
Total Wholesale including equity accounted joint ventures   10,093 465 348 117 10,485 520 341 179
(1) Restated for the application of IFRS 11 Joint Arrangements requiring equity accounting for joint ventures.
 
 
AGRIUM INC.
Supplemental Information 4
Depreciation and Amortization
(Millions of U.S. dollars)
(Unaudited)
                                 
    Three months ended December 31,
    2013           2012 (2)    
                                 
                                 
    Cost of product sold   Selling   General and administrative   Total   Cost of product sold   Selling   General and administrative   Total
                                 
Retail   1   68   3   72   3   44   2   49
Wholesale                                
  Nitrogen   25               15            
  Potash   11               11            
  Phosphate   12               21            
  Ammonium sulfate and other   2               1            
    50   -   -   50   48   -   -   48
Advanced Technologies (1)   3   -   1   4   3   -   -   3
Other   -   -   5   5   -   -   6   6
Total   54   68   9   131   54   44   8   106
                                 
    Twelve months ended December 31,
    2013           2012 (2 )  
    Cost of       General       Cost of       General    
    product       and       product       and    
    sold   Selling   administrative   Total   sold   Selling   administrative   Total
                                 
Retail   5   222   11   238   7   169   18   194
Wholesale                                
  Nitrogen   77               61            
  Potash   50               41            
  Phosphate   53               77            
  Product purchased for resale   1               1            
  Ammonium sulfate and other   6               5            
    187   -   14   201   185   -   5   190
Advanced Technologies (1)   13   -   3   16   10   -   3   13
Other   -   -   17   17   -   -   16   16
Total   205   222   45   472   202   169   42   413
(1) Reflects the results of ESN and Micronutrients businesses only. These results will be reflected in the Wholesale segment in subsequent disclosures.
(2) Restated for the application of IFRS 11 Joint Arrangements requiring equity accounting for joint ventures and reclassifications resulting from discontinued operations.
   
   
AGRIUM INC.  
Supplemental Information 5 (1)  
Selected Financial Measures  
(Millions of U.S. dollars, unless stated otherwise)  
(Unaudited)  
                   
  Rolling four quarters ended December 31,  
  2013   2012  
  Retail     Consolidated Agrium   Retail   Consolidated Agrium (2)  
Return on operating capital employed (%) (3a) 17     15   18   26  
Return on capital employed (%) (3b) 9     11   9   17  
Average non-cash working capital to sales (%) 20     17   20   16  
Operating coverage ratio (%) (3c) 71     57   69   49  
EBITDA to sales (%) (3d) 8     13   8   16  
                   
                   
  December 31,  
  2013   2012  
  Retail     Consolidated Agrium   Retail   Consolidated Agrium (2 )
Non-cash working capital 2,083     2,302   2,067   2,366  
                   
                   
  Twelve months ended December 31,  
  2013         2012      
  Retail         Retail      
Comparable store sales (%) (2 )       8      
Normalized comparable store sales (%) 5         8      
                   
                   
North America measures Rolling four quarters ended December 31,  
  2013         2012      
  Retail         Retail      
Return on operating capital employed (%) (3a) 28         23      
Return on capital employed (%) (3b) 14         11      
EBITDA to sales (%) (3d) 12         10      
(1) Certain measures presented in this table are not recognized measures under IFRS. Refer to Supplemental Information 6. 
(2) Restated for the application of IFRS 11 Joint Arrangements requiring equity accounting for joint ventures and reclassifications resulting from discontinued operations. 
(3) Adjusted 2013 amounts removing the impact of the purchase gain and goodwill impairment. 
  (a) Retail 16%, Retail - North America 20%, Consolidated Agrium 15%.
  (b) Retail 9%, Retail - North America 10%, Consolidated Agrium 11%.
  (c) Retail 73%, Consolidated Agrium 58%.
  (d) Retail 8%, Retail - North America 9%, Consolidated Agrium 13%.
 
 
AGRIUM INC.
Supplemental Information 6 (1)
Accompanying Notes to Supplemental Information
         
IFRS Financial Measure   Definition
Average non-cash working capital to sales (2)   Rolling four quarter average non-cash working capital divided by sales.
Operating coverage ratio (2)   Gross profit less earnings (loss) from continuing operations before finance costs and income taxes, divided by gross profit.
Non-cash working capital (2)   Current assets less current liabilities, excluding cash and cash equivalents, advance on acquisition of Viterra Inc., other current assets, short-term debt, current portion of long-term debt and current assets and liabilities held for sale.
    Definition   Usefulness of Additional or Non-IFRS Financial Measure
Additional IFRS Financial Measure (As defined in Canadian Securities Administrators' Staff Notice 52-306 (Revised))    
EBIT   Earnings (loss) from continuing operations before finance costs and income taxes   Used to measure operating performance exclusive of capital structure and income taxes
Return on operating capital employed (2)   Last 12 months' EBIT less income taxes at a tax rate of 27 percent (2012 - 28 percent) divided by rolling four quarter average operating capital employed. Operating capital employed includes non-cash working capital, property, plant and equipment, investments in associates and joint ventures and other assets.   Used to measure operating performance and efficiency of our capital allocation process.
Return on capital employed (2)   Last 12 months' EBIT less income taxes at a tax rate of 27 percent (2012 - 28 percent) divided by rolling four quarter average capital employed. Capital employed includes operating capital employed, intangibles and goodwill.   Used to measure operating performance and efficiency of our capital allocation process.
Non-IFRS Financial Measure    
EBITDA   Earnings (loss) from continuing operations before finance costs, income taxes, depreciation and amortization.   Refer to EBIT. Also used as a valuation metric and as an alternative to cash provided by operating activities.
Adjusted EBITDA   Earnings (loss) from continuing operations before finance costs, income taxes, depreciation and amortization and before finance costs, income taxes, depreciation and amortization of joint ventures.   Refer to EBIT and EBITDA. Provides useful information on our profitability by adding back finance costs, income taxes, depreciation and amortization of joint ventures.
EBITDA to sales   Earnings (loss) from continuing operations before finance costs, income taxes, depreciation and amortization divided by sales.   Used to measure operating performance earnings and cash flow we generate from each dollar of sales.
Comparable store sales   We include a location in the comparable store base once it is in operation or owned for over 12 months. If we close a store, we retain the sales of the closed location in the comparable store base if the closed location is in close geographical proximity to an existing location, unless we plan to exit the market area or are unable to economically or logistically serve it. We do not make adjustments for temporary closures, expansions or renovations of stores.   Used to measure the performance of our existing stores by measuring the change in sales for such stores over the comparable period
Normalized comparable store sales   Comparable store sales normalized by using published nitrogen, phosphate and potash ("NPK") benchmark prices and adjusting current year prices to reflect pricing from the previous year based on our percent of NPK utilization by product.   Used to measure the performance of our existing stores by measuring the change in sales for such stores over the comparable period
(1) Our definitions and our method of calculation for these measures may not be directly comparable to similar measures presented by other companies.
(2) These measures are IFRS measures or additional IFRS measures when calculated using information included in our consolidated financial statements. They are classified as non-IFRS measures when calculated using information from our Retail segment because the specific components are not included in our financial statements or notes.

Agrium Inc.
Investor/Media Relations:
Richard Downey
Vice President, Investor & Corporate Relations
(403) 225-7357

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

Agrium Inc.
Louis Brown
Analyst, Investor Relations
(403) 225-7761
www.agrium.com

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