2011 jan mike wilson cibc presentation
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7/26/2019 2011 Jan Mike Wilson CIBC Presentation
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Growing Across theValue Chain
January 2011
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7/26/2019 2011 Jan Mike Wilson CIBC Presentation
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STRENGTH THROUGH GROWTHAND DIVERSITY2
Certain statements and other information included in this presentation constitute forward looking informationwithin the meaning of applicable Canadian securities legislation or constitute forward-looking statementswithin the meaning of applicable U.S. securities legislation (collectively, the forward-looking statements). All
statements in this presentation, other than those relating to historical information or current condition, areforward-looking statements, including, but not limited to, estimates, forecasts and statements as tomanagements expectations with respect to, among other things, business and financial prospects, financialmultiples and accretion estimates, future trends, plans, strategies, objectives and expectations, including withrespect to future operations following the proposed acquisition of AWB. These forward-looking statements aresubject to a number of risks and uncertainties, many of which are beyond our control, which could causeactual results to differ materially from such forward-looking statements.
Events or circumstances that could cause actual results to differ materially from those in the forward-lookingstatements, include, but are not limited to, the expected combination benefits and synergies and costs
savings from the Agrium/AWB transaction not being fully realized or not being realized within the expectedtime frame, disruptions from the proposed transaction with AWB making it more difficult to maintainrelationships with customers, employees and suppliers, any other recent or proposed business acquisitionsnot being integrated successfully or such integration being more difficult, time-consuming or costly thanexpected, general business and economic conditions, interest rates, exchange rates and tax rates, weatherconditions, crop prices, the supply, demand and price level for our major products, gas prices and gasavailability, operating rates and production costs, domestic fertilizer consumption and any changes ingovernment policy in key agriculture markets, including the application of price controls and tariffs onfertilizers and the availability of subsidies or changes in their amounts, changes in development plans,construction progress, political risks, including civil unrest, actions by armed groups or conflict, governmentaland regulatory requirements and actions by governmental authorities, including changes in government
policy, changes in environmental, tax and other laws or regulations and the interpretation thereof and otherrisk factors detailed from time to time in Agrium reports filed with the Securities and Exchange Commission(the SEC) or Canadian provincial securities regulators.
Agrium disclaims any intention or obligation to update or revise any forward-looking statements in thispresentation 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.
Forward-Looking Statements
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7/26/2019 2011 Jan Mike Wilson CIBC Presentation
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STRENGTH THROUGH GROWTHAND DIVERSITY3
Agriums Growth Across the Value Chain
Industrial Customers
Specialty (Turf,Home & Garden)
Growers
15%
Retail Customers
End Use Customers
77%
Distribution and StorageBusiness Units and Acquisitions
8% sales to AGU Retail
Agrium Wholesale:$3-billion sales*
Royster, ConAgra, ADM retail, and UAPOver $3 billion invested
Agrium Retail:$6-billion sales*
2.5 million tonnestorage capacity
0.11 million tonnestorage capacity
Hanfeng, Pursell, NuGro, ESN
Over $280 million invested
Agrium AdvancedTechnologies:
$0.3-billion sales*
Purchase for Resale
2.3 million tonnestorage capacity
Potash expansion, CMF, Egyptian NitrogenOver $400 million invested
13% sales to AGU Retail
*2009 Net Sales
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STRENGTH THROUGH GROWTHAND DIVERSITY44
Strength Through Growth and Diversity
Through a great team effort over the past 5 years, we delivered on our
promise of diverse growth and remained true to our vision Over past 5 years: over 10 acquisitions (over $5-billion invested), other
growth initiatives (potash expansion, Egypt, ESN) and investment intechnology
Retail growth
Wholesalegrowth
AAT growth
2004 2005 2006 2007 2008 2009 2010
Potash Expansion
IOL
CMF
EgyptianNitrogen
Argentina/Chile
Royster-Clark
PursellNu-Gro
Hanfeng
ADM
UAP
ESN CapacityExpansion
Carseland ESN
Revenue
US, Canadian, &
Argentina RetailAcquisitions/tuck-ins
ESN Capacity Expansion
AWB Acquisition
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STRENGTH THROUGH GROWTHAND DIVERSITY5
Strategic acquisitions and other expansion/growth
initiatives across the agricultural value chain Acquisitions, capacity expansions, & optimizing base business
Reach $1-Billion Retail EBITDA by 2015 through: Acquisitions, market share expansion
Broaden private label product offering and penetration Continued growth in seed business
Potash & Nitrogen Wholesale Expansions Brownfield, >40% increase in capacity by 2013/2014
Triple size of Egyptian Nitrogen facility by 2012
Reach $100-million AAT EBITDA by 2015 ESN growth
Global expansion of controlled release products
Agriums 5-year Growth Objectives
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STRENGTH THROUGH GROWTHAND DIVERSITY66Source: USDA, Doane Advisory Services, Agrium
Cash Margins Improve Significantly
Corn and Wheat margins are >3Xs historic 5 yr average
0
100
200
300
400
500
600
700
CashMargin(USD/acre)
U.S. Crop Cash Margins
Corn Soybeans Wheat Cotton
$2.37/bu
$5.78/bu
$13.44/bu
$6.14/bu
$7.95/bu
$3.25/bu$0.50/lb
$1.34/lb
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STRENGTH THROUGH GROWTHAND DIVERSITY7
Largest North American AgriculturalRetailer Well balanced portfolio of seed, fertilizer, crop protection products, and application
services Q1-Q3 2010 EBITDA is $445-million (FY 2009: $266-million; FY 2008: $560-
million)
Over 900 North American retail branches today
21%
Crop NutrientsCropProtection
Seed, Services, & Other
43%
2007 - 2009 Average Agrium
Retail Gross Profit
36%
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STRENGTH THROUGH GROWTHAND DIVERSITY8
Leader in environmentally friendly specialty products, broad mix of
products marketed to: Turf, Ornamental, Greenhouse, High Value SpecialtyCrops, Lawn and Garden
New ESN plant at New Madrid, MO (120,000 tons) started operations in Q22010, brings total capacity to 360,000 tons from 3 plant locations
Equity position (19.5%) in Hanfeng (HF.TO), a leading producer of value-
added fertilizer in China
Totaltons
sold
0
100
200
300
400
500
600
700
800
2007 2008 2009 2010 2011 2012 2013 2014
Carseland Sylacauga New Madrid 2nd Potential IMC Site
ESN is Agriumspatented controlled-
release product formajor crops
ESN Growth
Advanced Technologies
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STRENGTH THROUGH GROWTHAND DIVERSITY9
Potash (K)
Nitrogen (N)
Phosphate (P)
Purchase forResale (PFR)
- Over 2.0 mmt of low cost productioncapacity
- Diverse global/NA customer base
- Over 5.0 mmt production capacity
- Natural gas and in-market advantages
- Diversified global production assets
- Over 1.0 mmt production capacity
- Two integrated facilities with in-marketand cost advantages
- Optimizes our extensive distributionand marketing capabilities
- CMF acquisition enhances annualPFR volumes by 2.5 mmt
Wholesale Advantages
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STRENGTH THROUGH GROWTHAND DIVERSITY1010
Positive Factors for Spring 2011
1) All crop prices and grower crop budgets are wellabove historical averages
2) North American fertilizer inventories continue to bebelow 5-year averages
3) Grower sentiment and demand remains strong
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STRENGTH THROUGH GROWTHAND DIVERSITY11
Strong grower sentiment, crop prices & cashmargins remain well above historical averages
North American fertilizer inventories remain below5-year averages
Agrium will continue to grow across the valuechain, leveraging our diversity, financial strengthand strong team
2011 will demonstrate increased demand andimproved grower sentiment
Agrium provides the best opportunity to benefitfrom the positive agricultural outlook
Summary
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Agrium Inc.13131 Lake Fraser Drive SECalgary, Alberta, Canada T2J 7E8Telephone (403) 225-7000
Agrium U.S. Inc.4582 South Ulster Street, Suite1700Denver, Colorado, U.S. 80237Telephone (303) 804-4400
NYSE and TSX: AGUwww.agrium.com
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STRENGTH THROUGH GROWTHAND DIVERSITY
5 Ag Retail companies with sales >$1bln, combined they have 1,690 outlets
22 Ag Retail companies with sales $1bln-$100mn, these 22 companies haveabout 1,020 retail outlets 27 Ag Retail companies with sales $100mn-$50mn, these 27 companies
have total sales of $1.8bln.
U.S. Ag Retail Market Segmentation
Source: 2009 CropLife 100 Survey
5
22
27
25
17
338
4612
6 5
0
50
100
150
200
250
300
350
400
0
5
10
15
20
25
30
Over $1,000 $100-$1,000 $50-$100 $25-$50 $15-$25
Average#ofRetailOutlets
#ofCompetitors
Annual Revenue (millions)
# of Companies Average # of Retail Outlets
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STRENGTH THROUGH GROWTHAND DIVERSITY14
Fertilizer Use Rebounds
Unprecedented decline in USA demand for all 3 nutrients, followed by
a rebound in 2009/10 Consumption remains below 2007 levels
-50%
-40%
-30%
-20%
-10%
0%
10%
20%
30%
40%
1989
/90
1990
/91
1991
/92
1992
/93
1993
/94
1994
/95
1995
/96
1996
/97
1997
/98
1998
/99
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/00
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/01
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/02
2002
/03
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/04
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/05
2005
/06
2006
/07
2007
/08
2008
/09
2009
/10
ch
angeinUSAnutrien
tdemand
Nitrogen Phosphate Potash
Source: IFA, Agrium
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STRENGTH THROUGH GROWTHAND DIVERSITY
Argentina6%
Australia12%
Canada14%
EU-2718%
FSU13%
United States27%
ROW10%
Argentina3%
Australia11%
Canada14%
EU-2716%
FSU28%
United States
18%
ROW10%
15
U.S. Wheat Continues Strong Export Pace
2009/10 2010/11
Russian wheat exports are projected to drop from 18.6 milliontonnes to 4.0 million tonnes
Market share shifts to the U.S. positive influence on prices
Export sales of U.S.
Wheat quality concerns have reduced Canadian and Australian exportprojections
Source: USDA
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STRENGTH THROUGH GROWTHAND DIVERSITY16Source: USDA, Fertecon, and British Sulphur Based on Annual Averages
Step Change in Corn and FertilizerPrices Fertilizer cost as a percent of corn revenue relatively flat to
1997(currently 14%) Nitrogen (NH3) is $0.41/bu ($0.16/bu in 1997), DAP is $0.27/bu
($0.11/bu in 1997) and K is $0.13/bu ($0.07)
0.0
1.0
2.0
3.0
4.0
5.0
6.0
7.0
Index
(2000=1)
NOLA Urea CF DAP Midwest Potash U.S. Corn
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STRENGTH THROUGH GROWTHAND DIVERSITY
0
200
400
600
800
1,000
1,200
USD/
tonne
Black Sea NOLA PNW
1717
Benchmark Prices: Urea
Source: Blue, Johnson & Associates, Green Markets
$518/t
$407/t
$384/t
Black Sea Urea (per tonne)
Avg. Dec 2010 376$Avg. Dec 2009 263$
Avg. Dec 2003-2007 230$
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STRENGTH THROUGH GROWTHAND DIVERSITY
0
200
400
600
800
1,000
1,200
1,400
Dec-06 Jun-07 Dec-07 Jun-08 Dec-08 Jun-09 Dec-09 Jun-10 Dec-10
USD/tonne
Central Florida PNW
1818
Benchmark Prices: Phosphate
Source: Blue, Johnson & Associates, Green Markets
$708/t
$612/t
Avg. Dec 2010 612$
Avg. Dec 2009 348$
Avg. Dec 2003-2007 278$
Central Florida MAP (per tonne)
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STRENGTH THROUGH GROWTHAND DIVERSITY
0
200
400
600
800
1000
1200
USD/tonne
Saskatchewan Midwest
1919
Benchmark Prices: Potash
Source: Green Markets, Blue, Johnson & Associates, Agrium
$559/t
$526/t
Avg. Dec 2010 559$
Avg. Dec 2009 491$
Avg. Dec 2003-2007 223$
Midwest Potash (per tonne)
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STRENGTH THROUGH GROWTHAND DIVERSITY20
Source: Fertecon, IFA, Agrium
Note: Excludes Chinese capacity additions and demand
(million
tonnesofnitrogen)
-5
-4
-3
-2
-1
1
2
3
4
5
2006 2007 2008 2009 2010 2011 2012 2013 2014
Other Iran Oman Egypt
Algeria Pakistan Qatar Russia
Demand Growth
Rebound in nitrogen demand in 2010 Nitrogen capacity ex China is 107 million tonnes
Nitrogen Medium TermSupply and Demand Outlook
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STRENGTH THROUGH GROWTHAND DIVERSITY21Sources: British Sulphur, IFA, Agrium
(milliontonneso
fP205)
-3
-2
-1
0
1
2
3
4
2007 2008 2009 2010 2011 2012 2013 2014
Other North Africa China Saudi Arabia
Limited Growth in PhosphateCapacity Before and After Maaden
Demand Growth
Little new phosphate capacity outside Chinaand the delayed Saudi Arabias MaadenProject
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STRENGTH THROUGH GROWTHAND DIVERSITY22
Approximately 25% reduction in demand from 2007 peak to 2009
Expect global demand to return to 2007 levels by 2011/12 2010: 50 million tonnes KCl
2011: 57 million tonnes KCl
-6
-5
-4
-3
-2
-1
0
1
2
34
5
6
2006 2007 2008 2009 2010 2011 2012 2013 2014
Other FSU Canada
Sources: Fertecon, IFA, AgriumFSU denotes the Former Soviet Union (Belarus, Russia, Uzbekistan)
(milliontonnesofK2O)
Potash Capacity Additions
Demand Growth
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STRENGTH THROUGH GROWTHAND DIVERSITY23
ESN Value Proposition
$-
$10.00
$20.00
$30.00
$40.00
$50.00
$60.00
$70.00
$80.00
Corn Wheat Canola
USD/
Acre
ESN Cost ESN Benefit
Assumes per bushel prices of $4.00 for corn, $5.00 for wheat and $10.00 for canola
Per acre benefit $40 $30 $20
Benefit/Cost ratio 2.4 3.5 3.2
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