EXHIBIT 99.3
AGRIUM INC.
CONSOLIDATED
INTERIM FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED
MARCH 31, 2017
AGRIUM INC.
Condensed Consolidated Interim Statements of Operations
(Unaudited)
| Three months ended | ||||||||||||
| March 31, | ||||||||||||
(millions of U.S. dollars, unless otherwise stated) | Notes | 2017 | 2016 | |||||||||
Sales | 2,720 | 2,725 | ||||||||||
Cost of product sold | 2,162 | 2,171 | ||||||||||
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Gross profit | 558 | 554 | ||||||||||
Expenses | ||||||||||||
Selling | 451 | 414 | ||||||||||
General and administrative | 60 | 55 | ||||||||||
Share-based payments | 5 | 3 | 4 | |||||||||
Earnings from associates and joint ventures | (23 | ) | (5 | ) | ||||||||
Other expenses | 4 | 10 | 11 | |||||||||
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Earnings before finance costs and income taxes | 57 | 75 | ||||||||||
Finance costs related to long-term debt | 47 | 52 | ||||||||||
Other finance costs | 23 | 18 | ||||||||||
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(Loss) earnings before income taxes | (13 | ) | 5 | |||||||||
Income taxes | (3 | ) | 2 | |||||||||
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Net (loss) earnings | (10 | ) | 3 | |||||||||
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Attributable to | ||||||||||||
Equity holders of Agrium | (11 | ) | 2 | |||||||||
Non-controlling interests | 1 | 1 | ||||||||||
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Net (loss) earnings | (10 | ) | 3 | |||||||||
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Earnings per share attributable to equity holders of Agrium | ||||||||||||
Basic and diluted (loss) earnings per share | (0.08 | ) | 0.02 | |||||||||
Weighted average number of shares outstanding for basic and diluted (loss) earnings per share (millions of common shares) | 138 | 138 | ||||||||||
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See accompanying notes.
Basis of preparation and statement of compliance
These condensed consolidated interim financial statements (“interim financial statements”) were approved for issuance by the Audit Committee on May 1, 2017. We prepared these interim financial statements in accordance with International Accounting Standard 34Interim Financial Reporting. These interim financial statements do not include all information and disclosures normally provided in annual financial statements and should be read in conjunction with our audited annual financial statements and related notes contained in our 2016 Annual Report, available atwww.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 2016 Annual Report, except as described in note 7.
1
AGRIUM INC.
Condensed Consolidated Interim Statements of Comprehensive Income
(Unaudited)
| Three months ended | ||||||||||||
| March 31, | ||||||||||||
(millions of U.S. dollars) | Notes | 2017 | 2016 | |||||||||
Net (loss) earnings | (10 | ) | 3 | |||||||||
Other comprehensive income | ||||||||||||
Items that are or may be reclassified to earnings | ||||||||||||
Cash flow hedges | 3 | |||||||||||
Effective portion of changes in fair value | (23 | ) | (23 | ) | ||||||||
Deferred income taxes | 5 | 7 | ||||||||||
Associates and joint ventures | ||||||||||||
Share of comprehensive (loss) income | (29 | ) | 2 | |||||||||
Deferred income taxes | 8 | — | ||||||||||
Foreign currency translation | ||||||||||||
Gains | 65 | 179 | ||||||||||
Reclassifications to earnings | 5 | — | ||||||||||
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| 31 | 165 | |||||||||||
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Items that will never be reclassified to earnings | ||||||||||||
Post-employment benefits | ||||||||||||
Actuarial losses | (3 | ) | — | |||||||||
Deferred income taxes | 1 | — | ||||||||||
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Other comprehensive income | 29 | 165 | ||||||||||
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Comprehensive income | 19 | 168 | ||||||||||
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Attributable to | ||||||||||||
Equity holders of Agrium | 18 | 167 | ||||||||||
Non-controlling interests | 1 | 1 | ||||||||||
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Comprehensive income | 19 | 168 | ||||||||||
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See accompanying notes.
2
AGRIUM INC.
Condensed Consolidated Interim Balance Sheets
(Unaudited)
| March 31, | December 31, | |||||||||||||||
(millions of U.S. dollars) | Notes | 2017 | 2016 | 2016 | ||||||||||||
Assets | ||||||||||||||||
Current assets | ||||||||||||||||
Cash and cash equivalents | 262 | 276 | 412 | |||||||||||||
Accounts receivable | 2,315 | 2,200 | 2,208 | |||||||||||||
Income taxes receivable | 54 | 61 | 33 | |||||||||||||
Inventories | 4,537 | 4,524 | 3,230 | |||||||||||||
Prepaid expenses and deposits | 253 | 254 | 855 | |||||||||||||
Other current assets | 134 | 152 | 123 | |||||||||||||
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| 7,555 | 7,467 | 6,861 | ||||||||||||||
Property, plant and equipment | 6,919 | 6,712 | 6,818 | |||||||||||||
Intangibles | 555 | 645 | 566 | |||||||||||||
Goodwill | 2,110 | 1,988 | 2,095 | |||||||||||||
Investments in associates and joint ventures | 533 | 637 | 541 | |||||||||||||
Other assets | 49 | 54 | 48 | |||||||||||||
Deferred income tax assets | 37 | 52 | 34 | |||||||||||||
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| 17,758 | 17,555 | 16,963 | ||||||||||||||
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Liabilities and shareholders’ equity | ||||||||||||||||
Current liabilities | ||||||||||||||||
Short-term debt | 6 | 678 | 629 | 604 | ||||||||||||
Accounts payable | 5,603 | 5,309 | 4,662 | |||||||||||||
Income taxes payable | — | 1 | 17 | |||||||||||||
Current portion of long-term debt | 6 | 10 | 108 | 110 | ||||||||||||
Current portion of other provisions | 55 | 81 | 59 | |||||||||||||
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| 6,346 | 6,128 | 5,452 | ||||||||||||||
Long-term debt | 6 | 4,401 | 4,415 | 4,398 | ||||||||||||
Post-employment benefits | 129 | 132 | 141 | |||||||||||||
Other provisions | 339 | 337 | 322 | |||||||||||||
Other liabilities | 61 | 76 | 68 | |||||||||||||
Deferred income tax liabilities | 400 | 402 | 408 | |||||||||||||
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| 11,676 | 11,490 | 10,789 | ||||||||||||||
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Shareholders’ equity | ||||||||||||||||
Share capital | 1,768 | 1,759 | 1,766 | |||||||||||||
Retained earnings | 5,503 | 5,414 | 5,634 | |||||||||||||
Accumulated other comprehensive loss | (1,195 | ) | (1,113 | ) | (1,231 | ) | ||||||||||
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Equity holders of Agrium | 6,076 | 6,060 | 6,169 | |||||||||||||
Non-controlling interests | 6 | 5 | 5 | |||||||||||||
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Total equity | 6,082 | 6,065 | 6,174 | |||||||||||||
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| 17,758 | 17,555 | 16,963 | ||||||||||||||
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See accompanying notes.
3
AGRIUM INC.
Condensed Consolidated Interim Statements of Cash Flows
(Unaudited)
| Three months ended | ||||||||||||
| March 31, | ||||||||||||
(millions of U.S. dollars) | Notes | 2017 | 2016 | |||||||||
Operating | ||||||||||||
Net (loss) earnings | (10 | ) | 3 | |||||||||
Adjustments for | ||||||||||||
Depreciation and amortization | 139 | 114 | ||||||||||
Earnings from associates and joint ventures | (23 | ) | (5 | ) | ||||||||
Share-based payments | 3 | 4 | ||||||||||
Unrealized (gain) loss on derivative financial instruments | (5 | ) | 83 | |||||||||
Unrealized foreign exchange gain | — | (124 | ) | |||||||||
Interest income | (13 | ) | (13 | ) | ||||||||
Finance costs | 70 | 70 | ||||||||||
Income taxes | (3 | ) | 2 | |||||||||
Other | (11 | ) | 6 | |||||||||
Interest received | 13 | 14 | ||||||||||
Interest paid | (84 | ) | (89 | ) | ||||||||
Income taxes paid | (39 | ) | (141 | ) | ||||||||
Dividends from associates and joint ventures | 5 | 1 | ||||||||||
Net changes innon-cash working capital | 136 | 418 | ||||||||||
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Cash provided by operating activities | 178 | 343 | ||||||||||
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Investing | ||||||||||||
Business acquisitions, net of cash acquired | (30 | ) | (94 | ) | ||||||||
Capital expenditures | (143 | ) | (174 | ) | ||||||||
Capitalized borrowing costs | (8 | ) | (5 | ) | ||||||||
Purchase of investments | (33 | ) | (23 | ) | ||||||||
Proceeds from sale of investments | 28 | 18 | ||||||||||
Proceeds from sale of property, plant and equipment | 9 | 4 | ||||||||||
Other | (4 | ) | (3 | ) | ||||||||
Net changes innon-cash working capital | (6 | ) | — | |||||||||
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Cash used in investing activities | (187 | ) | (277 | ) | ||||||||
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Financing | ||||||||||||
Short-term debt | 6 | 64 | (204 | ) | ||||||||
Repayment of long-term debt | 6 | (103 | ) | (2 | ) | |||||||
Dividends paid | (121 | ) | (119 | ) | ||||||||
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Cash used in financing activities | (160 | ) | (325 | ) | ||||||||
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Effect of exchange rate changes on cash and cash equivalents | 19 | 20 | ||||||||||
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Decrease in cash and cash equivalents | (150 | ) | (239 | ) | ||||||||
Cash and cash equivalents – beginning of period | 412 | 515 | ||||||||||
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Cash and cash equivalents – end of period | 262 | 276 | ||||||||||
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See accompanying notes.
4
AGRIUM INC.
Condensed Consolidated Interim 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 interests | Total equity | ||||||||||||||||||||||||||||||
December 31, 2015 | 138 | 1,757 | 5,533 | (56 | ) | (17 | ) | (1,214 | ) | (1,287 | ) | 6,003 | 4 | 6,007 | ||||||||||||||||||||||||||
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Net earnings | — | — | 2 | — | — | — | — | 2 | 1 | 3 | ||||||||||||||||||||||||||||||
Other comprehensive income (loss), net of tax | ||||||||||||||||||||||||||||||||||||||||
Other | — | — | — | (16 | ) | 2 | 179 | 165 | 165 | — | 165 | |||||||||||||||||||||||||||||
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Comprehensive income (loss), net of tax | — | — | 2 | (16 | ) | 2 | 179 | 165 | 167 | 1 | 168 | |||||||||||||||||||||||||||||
Dividends ($0.875 per share) | — | — | (121 | ) | — | — | — | — | (121 | ) | — | (121 | ) | |||||||||||||||||||||||||||
Share-based payment transactions | — | 2 | — | — | — | — | — | 2 | — | 2 | ||||||||||||||||||||||||||||||
Reclassification of cash flow hedges, net of tax | — | — | — | 9 | — | — | 9 | 9 | — | 9 | ||||||||||||||||||||||||||||||
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March 31, 2016 | 138 | 1,759 | 5,414 | (63 | ) | (15 | ) | (1,035 | ) | (1,113 | ) | 6,060 | 5 | 6,065 | ||||||||||||||||||||||||||
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December 31, 2016 | 138 | 1,766 | 5,634 | (25 | ) | (51 | ) | (1,155 | ) | (1,231 | ) | 6,169 | 5 | 6,174 | ||||||||||||||||||||||||||
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Net (loss) earnings | — | — | (11 | ) | — | — | — | — | (11 | ) | 1 | (10 | ) | |||||||||||||||||||||||||||
Other comprehensive income (loss), net of tax | ||||||||||||||||||||||||||||||||||||||||
Post-employment benefits | — | — | (2 | ) | — | — | — | — | (2 | ) | — | (2 | ) | |||||||||||||||||||||||||||
Other | — | — | — | (18 | ) | (21 | ) | 70 | 31 | 31 | — | 31 | ||||||||||||||||||||||||||||
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Comprehensive income (loss), net of tax | — | — | (13 | ) | (18 | ) | (21 | ) | 70 | 31 | 18 | 1 | 19 | |||||||||||||||||||||||||||
Dividends ($0.875 per share) | — | — | (120 | ) | — | — | — | — | (120 | ) | — | (120 | ) | |||||||||||||||||||||||||||
Non-controlling interest transactions | — | — | 2 | — | — | (2 | ) | (2 | ) | — | — | — | ||||||||||||||||||||||||||||
Share-based payment transactions | — | 2 | — | — | — | — | — | 2 | — | 2 | ||||||||||||||||||||||||||||||
Reclassification of cash flow hedges, net of tax | — | — | — | 7 | — | — | 7 | 7 | — | 7 | ||||||||||||||||||||||||||||||
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March 31, 2017 | 138 | 1,768 | 5,503 | (36 | ) | (72 | ) | (1,087 | ) | (1,195 | ) | 6,076 | 6 | 6,082 | ||||||||||||||||||||||||||
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See accompanying notes.
5
AGRIUM INC.
Summarized Notes to the Condensed Consolidated Interim Financial Statements
For the three months ended March 31, 2017
(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 as follows: |
| • | 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: Producing blended crop nutrients andEnvironmentally Smart Nitrogen® (ESN) polymer-coated nitrogen crop nutrients, and operating 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.
6
AGRIUM INC.
Summarized Notes to the Condensed Consolidated Interim Financial Statements
For the three months ended March 31, 2017
(millions of U.S. dollars, unless otherwise stated)
(Unaudited)
| 2. | Operating Segments |
Segment information by business unit | Three months ended March 31, | |||||||||||||||||||||||||||||||
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| Retail | Wholesale | Other (a) | Total | Retail | Wholesale | Other (a) | Total | |||||||||||||||||||||||||
Sales - external | 2,227 | 493 | — | 2,720 | 2,278 | 447 | — | 2,725 | ||||||||||||||||||||||||
- inter-segment | 13 | 182 | (195 | ) | — | 12 | 202 | (214 | ) | — | ||||||||||||||||||||||
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Total sales | 2,240 | 675 | (195 | ) | 2,720 | 2,290 | 649 | (214 | ) | 2,725 | ||||||||||||||||||||||
Cost of product sold | 1,806 | 533 | (177 | ) | 2,162 | 1,888 | 496 | (213 | ) | 2,171 | ||||||||||||||||||||||
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Gross profit | 434 | 142 | (18 | ) | 558 | 402 | 153 | (1 | ) | 554 | ||||||||||||||||||||||
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Gross profit (%) | 19 | 21 | 21 | 18 | 24 | 20 | ||||||||||||||||||||||||||
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Expenses | ||||||||||||||||||||||||||||||||
Selling | 448 | 7 | (4 | ) | 451 | 410 | 8 | (4 | ) | 414 | ||||||||||||||||||||||
General and administrative | 25 | 6 | 29 | 60 | 22 | 8 | 25 | 55 | ||||||||||||||||||||||||
Share-based payments | — | — | 3 | 3 | — | — | 4 | 4 | ||||||||||||||||||||||||
Earnings from associates and joint ventures | (6 | ) | (16 | ) | (1 | ) | (23 | ) | (4 | ) | (1 | ) | — | (5 | ) | |||||||||||||||||
Other (income) expenses | (12 | ) | 14 | 8 | 10 | (3 | ) | 19 | (5 | ) | 11 | |||||||||||||||||||||
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(Loss) earnings before finance costs and income taxes | (21 | ) | 131 | (53 | ) | 57 | (23 | ) | 119 | (21 | ) | 75 | ||||||||||||||||||||
Finance costs | — | — | 70 | 70 | — | — | 70 | 70 | ||||||||||||||||||||||||
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(Loss) earnings before income taxes | (21 | ) | 131 | (123 | ) | (13 | ) | (23 | ) | 119 | (91 | ) | 5 | |||||||||||||||||||
Depreciation and amortization | 71 | 64 | 4 | 139 | 67 | 44 | 3 | 114 | ||||||||||||||||||||||||
Finance costs | — | — | 70 | 70 | — | — | 70 | 70 | ||||||||||||||||||||||||
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EBITDA(b) | 50 | 195 | (49 | ) | 196 | 44 | 163 | (18 | ) | 189 | ||||||||||||||||||||||
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| (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. |
7
AGRIUM INC.
Summarized Notes to the Condensed Consolidated Interim Financial Statements
For the three months ended March 31, 2017
(millions of U.S. dollars, unless otherwise stated)
(Unaudited)
Segment information – Retail | Three months ended March 31, | |||||||||||||||||||||||
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| North America | International | Retail (a) | North America | International | Retail | |||||||||||||||||||
Sales - external | 1,758 | 469 | 2,227 | 1,797 | 481 | 2,278 | ||||||||||||||||||
- inter-segment | 13 | — | 13 | 12 | — | 12 | ||||||||||||||||||
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Total sales | 1,771 | 469 | 2,240 | 1,809 | 481 | 2,290 | ||||||||||||||||||
Cost of product sold | 1,451 | 355 | 1,806 | 1,506 | 382 | 1,888 | ||||||||||||||||||
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Gross profit | 320 | 114 | 434 | 303 | 99 | 402 | ||||||||||||||||||
Expenses | ||||||||||||||||||||||||
Selling | 364 | 84 | 448 | 337 | 73 | 410 | ||||||||||||||||||
General and administrative | 18 | 7 | 25 | 15 | 7 | 22 | ||||||||||||||||||
Earnings from associates and joint ventures | (5 | ) | (1 | ) | (6 | ) | (4 | ) | — | (4 | ) | |||||||||||||
Other (income) expenses | (7 | ) | (5 | ) | (12 | ) | 6 | (9 | ) | (3 | ) | |||||||||||||
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(Loss) earnings before income taxes | (50 | ) | 29 | (21 | ) | (51 | ) | 28 | (23 | ) | ||||||||||||||
Depreciation and amortization | 66 | 5 | 71 | 61 | 6 | 67 | ||||||||||||||||||
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EBITDA | 16 | 34 | 50 | 10 | 34 | 44 | ||||||||||||||||||
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| (a) | Included within the Retail business unit is a separate Financial Services operating segment with total sales of$6-million and EBITDA of$8-million. The Financial Services operating segment was introduced inmid-2016. |
8
AGRIUM INC.
Summarized Notes to the Condensed Consolidated Interim Financial Statements
For the three months ended March 31, 2017
(millions of U.S. dollars, unless otherwise stated)
(Unaudited)
Segment information – Wholesale | Three months ended March 31, | |||||||||||||||||||||||||||||||||||||||
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| Nitrogen | Potash | Phosphate | Wholesale Other (a) | Wholesale | Nitrogen | Potash | Phosphate | Wholesale Other (a) | Wholesale | |||||||||||||||||||||||||||||||
Sales - external | 182 | 90 | 90 | 131 | 493 | 173 | 48 | 80 | 146 | 447 | ||||||||||||||||||||||||||||||
- inter-segment | 58 | 42 | 44 | 38 | 182 | 77 | 43 | 50 | 32 | 202 | ||||||||||||||||||||||||||||||
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Total sales | 240 | 132 | 134 | 169 | 675 | 250 | 91 | 130 | 178 | 649 | ||||||||||||||||||||||||||||||
Cost of product sold | 163 | 97 | 127 | 146 | 533 | 155 | 77 | 110 | 154 | 496 | ||||||||||||||||||||||||||||||
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Gross profit | 77 | 35 | 7 | 23 | 142 | 95 | 14 | 20 | 24 | 153 | ||||||||||||||||||||||||||||||
Expenses | ||||||||||||||||||||||||||||||||||||||||
Selling | 3 | 1 | 1 | 2 | 7 | 4 | 2 | 1 | 1 | 8 | ||||||||||||||||||||||||||||||
General and administrative | 2 | 1 | 1 | 2 | 6 | 4 | 2 | 1 | 1 | 8 | ||||||||||||||||||||||||||||||
Earnings from associates and joint ventures | — | — | — | (16 | ) | (16 | ) | — | — | — | (1 | ) | (1 | ) | ||||||||||||||||||||||||||
Other expenses | 9 | 2 | 2 | 1 | 14 | 6 | 6 | 4 | 3 | 19 | ||||||||||||||||||||||||||||||
Earnings before income taxes | 63 | 31 | 3 | 34 | 131 | 81 | 4 | 14 | 20 | 119 | ||||||||||||||||||||||||||||||
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Depreciation and amortization | 16 | 29 | 16 | 3 | 64 | 13 | 20 | 10 | 1 | 44 | ||||||||||||||||||||||||||||||
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EBITDA | 79 | 60 | 19 | 37 | 195 | 94 | 24 | 24 | 21 | 163 | ||||||||||||||||||||||||||||||
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| (a) | Includes ammonium sulfate, ESN and other products |
9
AGRIUM INC.
Summarized Notes to the Condensed Consolidated Interim Financial Statements
For the three months ended March 31, 2017
(millions of U.S. dollars, unless otherwise stated)
(Unaudited)
Gross profit by product line | Three months ended March 31, | |||||||||||||||||||||||
| 2017 | 2016 | |||||||||||||||||||||||
| Sales | Cost of product sold | Gross profit | Sales | Cost of product sold | Gross profit | |||||||||||||||||||
Retail | ||||||||||||||||||||||||
Crop nutrients | 714 | 573 | 141 | 839 | 705 | 134 | ||||||||||||||||||
Crop protection products | 872 | 742 | 130 | 831 | 710 | 121 | ||||||||||||||||||
Seed | 382 | 328 | 54 | 376 | 325 | 51 | ||||||||||||||||||
Merchandise | 134 | 112 | 22 | 117 | 98 | 19 | ||||||||||||||||||
Services and other(a) | 138 | 51 | 87 | 127 | 50 | 77 | ||||||||||||||||||
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| 2,240 | 1,806 | 434 | 2,290 | 1,888 | 402 | |||||||||||||||||||
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Wholesale | ||||||||||||||||||||||||
Nitrogen | 240 | 163 | 77 | 250 | 155 | 95 | ||||||||||||||||||
Potash | 132 | 97 | 35 | 91 | 77 | 14 | ||||||||||||||||||
Phosphate | 134 | 127 | 7 | 130 | 110 | 20 | ||||||||||||||||||
Ammonium sulfate, ESN and other | 169 | 146 | 23 | 178 | 154 | 24 | ||||||||||||||||||
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| 675 | 533 | 142 | 649 | 496 | 153 | |||||||||||||||||||
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Other inter-segment eliminations | (195 | ) | (177 | ) | (18 | ) | (214 | ) | (213 | ) | (1 | ) | ||||||||||||
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Total | 2,720 | 2,162 | 558 | 2,725 | 2,171 | 554 | ||||||||||||||||||
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Wholesale share of joint ventures | ||||||||||||||||||||||||
Nitrogen | 24 | 19 | 5 | 25 | 21 | 4 | ||||||||||||||||||
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Total Wholesale including proportionate share in joint ventures | 699 | 552 | 147 | 674 | 517 | 157 | ||||||||||||||||||
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| (a) | Includes financial services products |
10
AGRIUM INC.
Summarized Notes to the Condensed Consolidated Interim Financial Statements
For the three months ended March 31, 2017
(millions of U.S. dollars, unless otherwise stated)
(Unaudited)
Selected volumes and per tonne information | Three months ended March 31, | |||||||||||||||||||||||||||||||
| 2017 | 2016 | |||||||||||||||||||||||||||||||
| 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 | 1,490 | 409 | 322 | 87 | 1,520 | 450 | 369 | 81 | ||||||||||||||||||||||||
International | 352 | 296 | 265 | 31 | 440 | 354 | 328 | 26 | ||||||||||||||||||||||||
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Total crop nutrients | 1,842 | 388 | 311 | 77 | 1,960 | 428 | 360 | 68 | ||||||||||||||||||||||||
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Wholesale | ||||||||||||||||||||||||||||||||
Nitrogen | ||||||||||||||||||||||||||||||||
North America | ||||||||||||||||||||||||||||||||
Ammonia | 226 | 367 | 230 | 398 | ||||||||||||||||||||||||||||
Urea | 361 | 311 | 319 | 338 | ||||||||||||||||||||||||||||
Other | 185 | 242 | 192 | 265 | ||||||||||||||||||||||||||||
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Total nitrogen | 772 | 311 | 211 | 100 | 741 | 338 | 209 | 129 | ||||||||||||||||||||||||
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Potash | ||||||||||||||||||||||||||||||||
North America | 378 | 248 | 263 | 215 | ||||||||||||||||||||||||||||
International | 258 | 149 | 193 | 177 | ||||||||||||||||||||||||||||
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Total potash | 636 | 208 | 153 | 55 | 456 | 199 | 168 | 31 | ||||||||||||||||||||||||
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Phosphate | 288 | 466 | 440 | 26 | 220 | 589 | 499 | 90 | ||||||||||||||||||||||||
Ammonium sulfate | 88 | 259 | 124 | 135 | 57 | 289 | 113 | 176 | ||||||||||||||||||||||||
ESN and other | 452 | 452 | ||||||||||||||||||||||||||||||
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Total Wholesale | 2,236 | 302 | 239 | 63 | 1,926 | 337 | 258 | 79 | ||||||||||||||||||||||||
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Wholesale share of joint ventures | ||||||||||||||||||||||||||||||||
Nitrogen | 77 | 313 | 252 | 61 | 83 | 296 | 247 | 49 | ||||||||||||||||||||||||
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Total Wholesale including proportionate share in joint ventures | 2,313 | 302 | 239 | 63 | 2,009 | 335 | 257 | 78 | ||||||||||||||||||||||||
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11
AGRIUM INC.
Summarized Notes to the Condensed Consolidated Interim Financial Statements
For the three months ended March 31, 2017
(millions of U.S. dollars, unless otherwise stated)
(Unaudited)
| 3. | Risk Management |
Commodity price risk
Natural gas derivative financial instruments outstanding(notional amounts in millions of MMBtu) | ||||||||||||||||||||||||||||||||
| March 31, | December 31, | |||||||||||||||||||||||||||||||
| 2017 | 2016 | |||||||||||||||||||||||||||||||
| Notional | Maturities | Average contract price (a) | Fair value of assets (liabilities) | Notional | Maturities | Average contract price(a) | Fair value of assets (liabilities) | |||||||||||||||||||||||||
Designated as hedges | ||||||||||||||||||||||||||||||||
AECO swaps | 38 | 2017 – 2019 | 2.37 | (38 | ) | 48 | 2017 – 2018 | 2.90 | (21 | ) | ||||||||||||||||||||||
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| (38 | ) | (21 | ) | |||||||||||||||||||||||||||||
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| (a) | U.S. dollars per MMBtu |
| Fair value of assets (liabilities) | ||||||||||||
Maturities of natural gas derivative contracts | 2017 | 2018 | 2019 | |||||||||
AECO swaps | (14 | ) | (22 | ) | (2 | ) | ||||||
Impact of change in fair value of natural gas derivative financial instruments | March 31, | December 31, | ||||||
| 2017 | 2016 | |||||||
A$10-million impact to other comprehensive income requires movement in gas prices per MMBtu | 0.14 | 0.29 | ||||||
The underlying risk of the derivative contracts is identical to the hedged risk; accordingly we have established a ratio of 1:1 for all natural gas hedges. Due to a strong correlation between AECO future contract prices and our delivered cost, we did not experience any ineffectiveness on our hedges, and accordingly we have recorded the full change in the fair value of natural gas derivative contracts designated as hedges to other comprehensive income.
Currency risk
Foreign exchange derivative financial instruments outstanding(notional amounts in millions of U.S. dollars) | ||||||||||||||||||||||||||||||||
| March 31, | December 31, | |||||||||||||||||||||||||||||||
| 2017 | 2016 | |||||||||||||||||||||||||||||||
Sell/Buy | Notional | Maturities | Average contract price (a) | Fair value of assets (liabilities) | Notional | Maturities | Average contract price(a) | Fair value of assets (liabilities) | ||||||||||||||||||||||||
Forwards | ||||||||||||||||||||||||||||||||
USD/CAD | 48 | 2017 | 1.33 | — | — | — | — | — | ||||||||||||||||||||||||
CAD/USD | 302 | 2017 | 1.31 | 5 | 180 | 2017 | 1.34 | — | ||||||||||||||||||||||||
USD/AUD | 3 | 2017 | 1.34 | — | 14 | 2017 | 1.32 | (1 | ) | |||||||||||||||||||||||
AUD/USD | 90 | 2017 | 1.31 | — | 22 | 2017 | 1.34 | 1 | ||||||||||||||||||||||||
CNY/AUD | 19 | 2017 | 6.81 | — | 23 | 2017 | 7.16 | — | ||||||||||||||||||||||||
Options | ||||||||||||||||||||||||||||||||
USD/CAD – buy USD puts | 55 | 2017 | 1.29 | — | — | — | — | — | ||||||||||||||||||||||||
USD/CAD – sell USD calls(b) | 74 | 2017 | 1.37 | — | — | — | — | — | ||||||||||||||||||||||||
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| 5 | — | |||||||||||||||||||||||||||||||
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| (a) | Foreign currency per U.S. dollar |
12
AGRIUM INC.
Summarized Notes to the Condensed Consolidated Interim Financial Statements
For the three months ended March 31, 2017
(millions of U.S. dollars, unless otherwise stated)
(Unaudited)
| March 31, | December 31, | |||||||||||||||||||||||
| 2017 | 2016 | |||||||||||||||||||||||
| Fair value | Carrying | Fair value | Carrying | |||||||||||||||||||||
| Level 1 | Level 2 | value | Level 1 | Level 2 | value | |||||||||||||||||||
Financial instruments measured at fair value on a recurring basis | ||||||||||||||||||||||||
Cash and cash equivalents | — | 262 | 262 | — | 412 | 412 | ||||||||||||||||||
Accounts receivable – derivatives | — | 6 | 6 | — | 2 | 2 | ||||||||||||||||||
Other current financial assets – marketable securities | 19 | 113 | 132 | 22 | 99 | 121 | ||||||||||||||||||
Othernon-current financial assets – derivatives | — | 3 | 3 | — | — | — | ||||||||||||||||||
Accounts payable – derivatives | — | 16 | 16 | — | 7 | 7 | ||||||||||||||||||
Other financial liabilities – derivatives | — | 26 | 26 | — | 16 | 16 | ||||||||||||||||||
Financial instruments measured at amortized cost | ||||||||||||||||||||||||
Current portion of long-term debt | ||||||||||||||||||||||||
Debentures | — | — | — | — | 101 | 100 | ||||||||||||||||||
Fixed and floating rate debt | — | 10 | 10 | — | 10 | 10 | ||||||||||||||||||
Long-term debt | ||||||||||||||||||||||||
Debentures | — | 4,714 | 4,373 | — | 4,600 | 4,373 | ||||||||||||||||||
Fixed and floating rate debt | — | 28 | 28 | — | 25 | 25 | ||||||||||||||||||
There have been no transfers between Level 1 and Level 2 fair value measurements in the three months ended March 31, 2017 or March 31, 2016. We do not measure any of our financial instruments using Level 3 inputs.
| 4. | Expenses |
| Three months ended | ||||||||
Other expenses | March 31, | |||||||
| 2017 | 2016 | |||||||
Loss on foreign exchange and related derivatives | 6 | 2 | ||||||
Interest income | (13 | ) | (13 | ) | ||||
Environmental remediation and asset retirement obligations | (1 | ) | 2 | |||||
Bad debt expense | 7 | 8 | ||||||
Potash profit and capital tax | 3 | 3 | ||||||
Merger and related costs | 16 | — | ||||||
Other | (8 | ) | 9 | |||||
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| 10 | 11 | |||||||
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| 5. | Share-based Payments |
During the three months ended March 31, 2017, we granted the following share-based compensation awards to officers and employees.
Award type | Number | Grant price | ||||||
Stock options | 444,084 | 103.22 | ||||||
Stock appreciation rights | 79,153 | 103.22 | ||||||
Share units | 270,293 | N/A | ||||||
13
AGRIUM INC.
Summarized Notes to the Condensed Consolidated Interim Financial Statements
For the three months ended March 31, 2017
(millions of U.S. dollars, unless otherwise stated)
(Unaudited)
| 6. | Debt |
| March 31, | December 31, | |||||||||||||||
| 2017 | 2016 | |||||||||||||||
| Maturity | Rate (%) (a) | |||||||||||||||
Short-term debt | ||||||||||||||||
Commercial paper | 2017 | 1.26 | 454 | 306 | ||||||||||||
Credit facilities | 3.78 | 224 | 298 | |||||||||||||
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| 678 | 604 | |||||||||||||||
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| (a) | Weighted average rates at March 31, 2017 |
| Short-term debt | Long-term debt (a) | |||||||
December 31, 2016 | 604 | 4,508 | ||||||
Cash flows reported as financing activities | 64 | (103 | ) | |||||
Non-cash changes | ||||||||
Other adjustments | — | 6 | ||||||
Foreign currency translation | 10 | — | ||||||
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| |||||
March 31, 2017 | 678 | 4,411 | ||||||
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| (a) | Includes current portion |
| 7. | Significant Accounting Policies |
Recent Accounting Pronouncements
Effective January 1, 2017, Agrium adopted the amendments of IAS 7 Statement of Cash Flow which require us to provide disclosures that enable users of financial statements to evaluate changes in liabilities arising from financing activities, including both changes arising from cash flows andnon-cash changes. Refer to note 6 for the reconciliation between the opening and closing balances for liabilities from financing activities.
14