Agrium Inc. AGU has announced the successful commissioning of its new urea facility with the first run of urea production at the Borger Nitrogen Operations facility in Texas. The company is currently ramping up production and expects to reach full operational capacity by the end of the second quarter of 2017.
The new urea facility can produce up to 610,000 tons of urea, of which 100,000 tons will be Diesel Exhaust Fluid (DEF). With this milestone at the Borger facility, Agrium is looking forward to bring high quality urea and DEF products to its existing and new customers in this major agricultural region of the U.S.
Agrium’s shares rose around 2% over the past six months, underperforming the Zacks categorized Fertilizers industry’s 7.4% gain.
Agrium follows a focused strategy to grow through acquisitions and organic development. Agrium has added 76 locations to its network through small and midsized retail acquisitions in 2016.
In a big move, Agrium and Potash Corp. POT have agreed to merge their businesses to create a fertilizer giant with a pro forma enterprise value of $36 billion. The proposed merger would create the world’s largest crop nutrient supplier. The combined company will also be better positioned to serve customers and growers with low-cost, high-value products and services and complementary assets. The integrated company is expected to generate $500 million of annual operating synergies.
Agrium remains focused on managing costs amid a challenging operating environment. The company’s cost-reduction actions delivered around $145 million in savings in 2016 and around $1.5 billion in cash from operating activities in the fourth quarter of 2016. Agrium is also committed to deliver value-added growth while maintaining shareholders value.
The company however, remains exposed to several headwinds. Agrium is reeling under the effects of the depressed prices of crop nutrients such as nitrogen and potash which are expected to continue to weigh on sales and earnings. The crop pricing environment is also expected to remain soft in the near term. The company also faces challenging agriculture market fundamentals.
Agrium Inc. Price and Consensus
Zacks Rank & Stocks to Consider
Agrium currently carries a Zacks Rank #3 (Hold).
Better-ranked companies in the basic material space include The Chemours Company CC, and Kronos Worldwide Inc KRO, both sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Chemours has an expected long-term growth rate of 15.5%.
Kronos Worldwide has an expected long-term growth rate of 5%.
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