Agrium Reports Solid Second Quarter Earnings

CALGARY, AB--(Marketwired - August 03, 2016) - Agrium Inc. (TSX: AGU) (NYSE: AGU) announced today its 2016 second quarter earnings, with net earnings attributable to equity holders of Agrium of $564-million ($4.08 diluted earnings per share) compared to $674-million ($4.71 diluted earnings per share) in the second quarter of 2015. The reduction in net earnings this quarter was driven primarily by continued weakness in global nutrient prices. This was partially offset by solid demand for crop inputs, lower costs and strong margins within our ag-retail distribution business.

Highlights:

• Second quarter adjusted net earnings were $578-million or $4.18 per share (see page 2 for adjusted net earnings reconciliation)¹.
• Retail earnings results were the second highest in history and in line with our guidance, due to strong margins which were supported by our proprietary product lines, lower costs and an increase in normalized comparable store sales.
• Wholesale delivered solid operational results due to industry-leading nitrogen margins, higher overall production and sales volumes and lower costs.
• Agrium has acquired 33 retail locations with expected annual sales in excess of $230-million on a year-to-date basis. In addition to these completed transactions, Agrium is currently working on the completion of the Cargill and another retail acquisition which together would add over 30 locations and represent over $300-million of expected annual sales. As a result, Agrium will easily surpass the pace of retail acquisitions over the past couple of years.
• Agrium has invested $15-million into Finistere Ventures Fund II, a leading AgTech venture fund focused on identifying and investing in early-to-growth stage companies within plant nutrition, biologicals, seed technology, digital agriculture and novel farm systems.
• Annual guidance range has been revised to $5.00 to $5.30 diluted earnings per share due to the weak outlook for nutrient prices (see page 3 for guidance assumptions and further details).

"Agrium reported solid second quarter results driven by lower costs and strong margins across most of our business portfolio, supported by a stable cash flow from our retail operations. Our steadfast focus on operational excellence continues to deliver results and we believe our strategy and assets will create long-term shareholder value," commented Chuck Magro, Agrium's President and CEO.

"We also made excellent progress on our growth and innovation strategy this quarter. We surpassed the number of retail locations acquired annually over the past couple of years and have a full pipeline of acquisitions and new build opportunities remaining in 2016," added Mr. Magro. "Our recent investment in Finistere supports our agricultural innovation and technology strategy which will be instrumental in meeting the challenge of feeding a growing global population, providing our customers with new products and solutions, and generating future earnings growth for shareholders," concluded Mr. Magro.

¹ Effective tax rate of 27.5 percent for the second quarter and first half of 2016 used for the adjusted net earnings and per share calculations. These are non-IFRS measures which represent net earnings adjusted for certain income (expenses) that are considered to be non-operational in nature. We believe these measures provide meaningful comparison to the earnings of other companies by eliminating share-based payments expense (recovery), gains (losses) on foreign exchange and related gains (losses) on non-qualifying derivative hedges and significant non-operating, non-recurring items. These should not be considered as a substitute for, or superior to, measures of financial performance prepared in accordance with IFRS and may not be directly comparable to similar measures presented by other companies.

ADJUSTED NET EARNINGS RECONCILIATION

		Three months ended						Six months ended
		June 30, 2016						June 30, 2016
(millions of U.S. dollars, except per share amounts)		Expense		Net earnings impact (post-tax	)	Per share (a	)	Expense		Net earnings impact (post-tax	)	Per share (a	)
				565		4.08				568		4.09
Adjustments:
	Share-based payments	13		9		0.07		17		12		0.09
	Foreign exchange loss  net of non-qualifying derivatives	6		4		0.03		8		6		0.04
Adjusted net earnings (b)				578		4.18				586		4.22

(a)	This represents diluted per share information attributable to   equity holders of Agrium.
(b)	Effective tax rate of 27.5 percent for the second quarter and   first half of 2016 was used for the adjusted net earnings and per share   calculations.

MARKET OUTLOOK

Agricultural and Crop Input Fundamentals

• Agricultural prices were volatile over the past quarter. Crop prices increased through mid-June, driven by declining South American corn and soybean production estimates, but crop prices declined again in July due to higher than expected planted acreage and very favorable growing conditions across North America. There is potential for production of U.S. corn and soybeans to set record highs, barring a significant deterioration in growing conditions in August and September.
• While this has pressured crop prices, grower sentiment has been supported by the potential for strong crop yields and we expect robust fungicide and nutritional demand in order to preserve yield potential.
• Wet conditions across most North American growing regions have created an ideal environment for disease development and delayed herbicide applications. This factor and the desire by growers to protect strong yield potential are expected to support strong fungicide and herbicide demand this summer.
• Strong crop development this year is likely to result in high levels of nutrient removal from soils and is expected to support fall application demand.

Nitrogen

• Nitrogen prices have been pressured due to slow demand from India and seasonal pricing pressure. Indian urea imports in 2016 have been 19 percent below last year's levels; however, the import pace is expected to improve in the second half of the year.
• Chinese urea exports were down 25 percent in the first half of 2016, as Chinese export prices have been uncompetitive with most international markets and domestic production has been declining continuously since March 2016.
• U.S. offshore urea imports over the past three months are down approximately 30 percent compared to a year ago as North American prices have been below import parity levels.
• Nitrogen buyers have managed inventories carefully entering a period when there is the potential for new capacity to come on-stream. We expect this will lead to pent-up demand becoming apparent closer to the North American seasonal application period.

Potash

• End users have managed inventories carefully over the past year, which has pressured potash producer shipments but depleted inventory levels among end users globally.
• Deliveries in the second half of 2016 are expected to be supported by a number of positive factors, including the normal seasonal upturn in demand and the recent supply agreements with China and India which have provided increased certainty to the market. In Brazil, firm domestic crop prices have supported stronger than expected demand so far in 2016 and North American retail inventories are believed to be below average levels.
• We do not expect any additional capacity to come on-stream in the second half of 2016. Global effective potash capacity is now more than 2 percent below where it was in 2014, largely due to the recent capacity closures.

Phosphate

• Indian diammonium phosphate (DAP) imports are down close to 40 percent in the first half of 2016, due partly to high domestic inventories at the beginning of the year. The weak Indian demand has been a source of pressure on the market; however, the demand outlook for the remainder of 2016 is more positive as the monsoon season progresses and reductions in the maximum retail price are expected to be positive for grower demand.
• Another source of pressure has been Brazilian phosphate imports, which have not improved from depressed 2015 levels. The demand outlook for the second half is positive given the firm crop price environment in Brazil and the fact that import demand for other nutrients has increased year-over-year.
• Chinese exports of DAP and monoammonium phosphate (MAP) were down 31 percent in the first half of 2016. We expect that the pace of Chinese phosphate exports will increase in the second half of 2016, but continue to be below 2015 levels.
• In the first half of 2016, the U.S. phosphate market was pressured by exports being down 15 percent and imports into the U.S. up more than 40 percent year-over-year. This was partly offset by production being lower and domestic shipments being higher than the first six months of last year. Similar to other products, we expect a return to a more normal fall application window to support strong second half U.S. phosphate shipments.

2016 ANNUAL GUIDANCE

Based on our Market Outlook, Agrium expects to achieve annual diluted earnings per share of $5.00 to $5.30 in 2016 compared to our previous estimate of $5.25 to $6.25. We have lowered our annual guidance range due to an expected weak pricing environment for all nutrients, partially offset by expected continued strong performance by our Retail business and lower year-over-year costs. The second half 2016 diluted earnings per share range based on the annual guidance range is weighted over 80 percent to the fourth quarter.

Our estimates of nitrogen and potash production remain between 3.5 million to 3.7 million and 2.3 million to 2.4 million tonnes, respectively.

We are anticipating strong demand for Retail crop nutrient sales tonnes this fall and have narrowed our expectation for Retail EBITDA¹ between $1.1-billion to $1.15-billion, and Retail nutrient sales tonnes between 9.8 million to 10.2 million tonnes.

Our estimates for the Canada/U.S. foreign exchange rate and NYMEX for 2016 have been updated based on current market conditions.

This guidance and updated additional measures and related assumptions are summarized in the table below. Guidance excludes the impact of share-based payments expense (recovery), gains (losses) on foreign exchange and non-qualifying derivative hedges. Volumetric and earnings estimates assume normal seasonal growing and harvest patterns in the geographies where Agrium operates.

¹ Earnings (loss) from continuing operations before finance costs, income taxes, depreciation and amortization.

2016 ANNUAL GUIDANCE RANGE AND ASSUMPTIONS

			Annual
			Low		High
Diluted EPS (in U.S. dollars)			$5.00		$5.30
Guidance assumptions:
Wholesale:
	Production tonnes:
		Nitrogen (millions)	3.5		3.7
		Potash (millions)	2.3		2.4
Retail:
	EBITDA (millions of U.S. dollars)		$1,100		$1,150
	Crop nutrient sales tonnes (millions)		9.8		10.2
Other:
	Tax rate		28	%	27	%
	Sustaining capital expenditures (millions of U.S. dollars)		$500		$550
	Total capital expenditures (millions of U.S. dollars)		$800		$900
	Canada/U.S. foreign exchange rate		$1.30		$1.34
	NYMEX gas price ($/MMBtu)		$2.65		$2.25

MANAGEMENT'S DISCUSSION AND ANALYSIS

August 3, 2016

Unless otherwise noted, all financial information in this Management's Discussion and Analysis (MD&A) is prepared using accounting policies in accordance with International Financial Reporting Standards (IFRS) and is presented in accordance with International Accounting Standard 34 - Interim Financial Reporting. All comparisons of results for the second quarter of 2016 (three months ended June 30, 2016) and for the six months ended June 30, 2016 are against results for the second quarter of 2015 (three months ended June 30, 2015) and six months ended June 30, 2015. All dollar amounts refer to United States (U.S.) dollars except where otherwise stated. The financial measure cash operating coverage ratio used in this MD&A is not prescribed by IFRS. Our method of calculation may not be directly comparable to that of other companies. We consider this non-IFRS financial measure to provide useful information to both management and investors in measuring our financial performance. This non-IFRS financial measure should not be considered as a substitute for, or superior to, measures of financial performance prepared in accordance with IFRS. Please refer to the section entitled "Non-IFRS Financial Measures" of this MD&A for further details, including a reconciliation of such measure to its most directly comparable measure calculated in accordance with IFRS.

The following interim MD&A is as of August 3, 2016 and should be read in conjunction with the Consolidated Interim Financial Statements for the three months and six months ended June 30, 2016 (the "Consolidated Financial Statements"), and the annual MD&A and financial statements for the year ended December 31, 2015 included in our 2015 Annual Report to Shareholders. The Board of Directors carries out its responsibility for review of this disclosure principally through its Audit Committee, comprised exclusively of independent directors. The Audit Committee reviews, and prior to publication, approves this disclosure, pursuant to the authority delegated to it by the Board of Directors. No update is provided to the disclosure in our annual MD&A except for material information since the date of our annual MD&A. In respect of Forward-Looking Statements, please refer to the section titled "Forward-Looking Statements" in this MD&A.

2016 Second Quarter Operating Results

CONSOLIDATED NET EARNINGS

Financial Overview
	Three months ended June 30,								Six months ended June 30,
(millions of U.S. dollars, except per share amounts and where noted)	2016		2015		Change		% Change		2016		2015		Change		% Change
Sales	6,415		6,992		(577	)	(8	)	9,140		9,864		(724	)	(7	)
Gross profit	1,525		1,708		(183	)	(11	)	2,079		2,292		(213	)	(9	)
Expenses	677		682		(5	)	(1	)	1,156		1,191		(35	)	(3	)
Earnings before finance costs and income taxes	848		1,026		(178	)	(17	)	923		1,101		(178	)	(16	)
Net earnings	565		675		(110	)	(16	)	568		689		(121	)	(18	)
Diluted earnings per share	4.08		4.71		(0.63	)	(13	)	4.09		4.78		(0.69	)	(14	)
Effective tax rate (%)	27.5		30		(2.5	)	N/A		27.5		29		(1.5	)	N/A

Sales and Gross Profit
		Three months ended June 30,						Six months ended June 30,
(millions of U.S. dollars)		2016		2015		Change		2016		2015		Change
Sales
	Retail	5,791		6,160		(369	)	8,081		8,423		(342	)
	Wholesale	882		1,174		(292	)	1,531		2,041		(510	)
	Other	(258	)	(342	)	84		(472	)	(600	)	128
		6,415		6,992		(577	)	9,140		9,864		(724	)
Gross profit
	Retail	1,279		1,264		15		1,681		1,635		46
	Wholesale	201		409		(208	)	354		643		(289	)
	Other	45		35		10		44		14		30
		1,525		1,708		(183	)	2,079		2,292		(213	)

• Retail's sales decreased primarily as a result of lower crop nutrient prices. Retail's gross profit increased for both the second quarter and first half of 2016 despite lower sales due to an increase in higher-margin proprietary product sales.
• Wholesale's sales and gross profit decreased compared to the second quarter and first half of last year primarily due to lower realized selling prices, which were consistent with weak benchmark prices.

Expenses

• General and administrative expenses decreased by $4-million (6 percent) and $16-million (12 percent) for the second quarter and first half of 2016, respectively, compared to the same periods last year as a result of reduced payroll and office expenses.
• Our share-based payments expense increased by $7-million and decreased by $34-million in the second quarter and first half of 2016, respectively, compared to the same periods last year due to the movements in our share price.
• We completed the sale of our non-core Purchase for Resale terminals resulting in a gain on sale of assets of $38-million in the first quarter of 2015.
• Earnings from associates and joint ventures increased in the second quarter and first half of 2016 as we recorded our share of Profertil S.A. ("Profertil")'s reversal of a gas tariff provision. We also recorded a $6-million loss related to our share of the losses in Canpotex Limited ("Canpotex") as it cancelled its plan to build an export terminal in British Columbia. Additionally, we terminated a distribution agreement with one of our U.S. distributors and incurred costs of $8-million in the second quarter of 2016.
• For further breakdown on Other expenses see table provided below:

Other expenses breakdown
	Three months ended						Six months ended
	June 30,						June 30,
(millions of U.S. dollars)	2016		2015		Change		2016		2015		Change
Loss on foreign exchange and related derivatives	6		1		5		8		-		8
Interest income	(16	)	(16	)	-		(29	)	(33	)	4
Gain on sale of assets	-		-		-		-		(38	)	38
Environmental remediation and asset retirement obligations	3		-		3		5		9		(4	)
Bad debt expense	21		25		(4	)	29		32		(3	)
Potash profit and capital tax	5		5		-		8		10		(2	)
Other	32		11		21		41		13		28
	51		26		25		62		(7	)	69

Depreciation and Amortization

Depreciation and amortization breakdown

		Three months ended June 30,
		2016								2015
		Cost of				General				Cost of				General
		product				and				product				and
(millions of U.S. dollars)		sold		Selling		administrative		Total		sold		Selling		administrative		Total
Retail		1		67		-		68		2		64		-		66
Wholesale
	Nitrogen	23		-		-		23		20		-		-		20
	Potash	31		-		-		31		13		-		-		13
	Phosphate	13		-		-		13		11		-		-		11
	Wholesale Other (a)	6		-		1		7		3		-		2		5
		73		-		1		74		47		-		2		49
Other		-		-		3		3		-		-		4		4
Total		74		67		4		145		49		64		6		119

		Six months ended June 30,
		2016								2015
		Cost of				General				Cost of				General
		product				and				product				and
(millions of U.S. dollars)		sold		Selling		administrative		Total		sold		Selling		administrative		Total
Retail		3		130		2		135		3		118		2		123
Wholesale
	Nitrogen	36		-		-		36		38		-		-		38
	Potash	51		-		-		51		27		-		-		27
	Phosphate	23		-		-		23		24		-		-		24
	Wholesale Other (a)	7		-		1		8		8		-		2		10
		117		-		1		118		97		-		2		99
Other		-		-		6		6		-		-		8		8
Total		120		130		9		259		100		118		12		230

(a)	This includes product purchased for resale, ammonium sulfate,Environmentally Smart Nitrogen® (ESN) and other products.

• Depreciation and amortization expense increased in second quarter and first half of 2016 as we increased our sales volumes from the ramp-up of production at our Vanscoy potash facility.

Effective Tax Rate

• The effective tax rate of 27.5 percent for both the second quarter and first half of 2016 was lower compared to the effective tax rates of 30 percent and 29 percent for the second quarter and first half of 2015, respectively, due to a decrease of income earned in high-taxed jurisdictions.

BUSINESS SEGMENT PERFORMANCE

Retail
	Three months ended June 30,
(millions of U.S. dollars, except where noted)	2016		2015		Change
Sales	5,791		6,160		(369	)
Cost of product sold	4,512		4,896		(384	)
Gross profit	1,279		1,264		15
EBITDA	744		713		31
Selling and general and administrative expenses	598		612		(14	)

• Retail reported near-record second quarter and first half gross profit and EBITDA, despite total sales being lower year-over-year as a result of depressed nutrient prices. The increase in gross profit was due to strong margins across most product lines and a reduction in selling, general and administration costs contributed to this quarter's results.
• Total Retail selling and general and administrative expenses were down $14-million from the second quarter of last year. Our continued focus on operational excellence resulted in our cash operating coverage ratio being down 4 percentage points on a rolling four quarter basis over the same period last year and strong results for the current quarter.
• U.S. operations experienced solid demand this quarter for all major crop inputs and benefited from higher sales of proprietary products. This resulted in a $35-million increase in our U.S. EBITDA. Our Canadian operations achieved a slightly higher EBITDA over the second quarter of last year, as lower general and administrative expenses more than offset a slight reduction in gross profit.
• Internationally, South American EBITDA increased by $7-million due to strong crop protection gross profit and lower general and administrative expenses, while Australian EBITDA was down $9-million compared to the prior year, primarily due to lower fertilizer volumes in the region.

Retail sales and gross profit by product line
	Three months ended June 30,
	Sales						Gross profit						Gross profit (%)
(millions of U.S. dollars, except where noted)	2016		2015		Change		2016		2015		Change		2016		2015
Crop nutrients	2,190		2,608		(418	)	433		454		(21	)	20		17
Crop protection products	2,250		2,169		81		471		457		14		21		21
Seed	926		982		(56	)	181		164		17		20		17
Merchandise	162		174		(12	)	28		27		1		17		16
Services and other	263		227		36		166		162		4		63		71

Crop nutrients

• Total crop nutrient sales were 16 percent lower this quarter compared to the same period last year due primarily to significantly lower prices across all nutrients.
• Total crop nutrient volumes were slightly lower this quarter, compared to the same period last year, primarily as a result of the early spring in the U.S., which resulted in strong volumes in the first quarter. Year to date, nutrient sales volumes are 3 percent higher in the U.S. compared to the prior year. In Canada, second quarter nutrient sales volumes were up 5 percent compared to the same period last year. However, they were down 3 percent when compared to the first six months of the year, after a slow first quarter and a large increase in pulse crop acreage this year which requires less nitrogen fertilizer. In South America, nutrient volumes were up 26 percent during the quarter and 19 percent for the first six months of the year due to an improved political environment in Argentina which is supportive of the agricultural industry.
• Total crop nutrient gross profit was lower by 5 percent this quarter due to a slight reduction in per tonne nutrient margins this year and to an early start to the spring season which shifted volumes into the first quarter. North American nutrient margin per tonne was similar to last year, despite average nutrient selling prices being 16 percent lower this year. As a result, gross profit as a percentage of sales rose to 20 percent this quarter, compared to 17 percent in the second quarter of 2015.

Crop protection products

• Total crop protection sales were up 4 percent this quarter, and were higher in all regions as weather conditions supported crop protection applications.
• Crop protection margins as a percentage of sales this quarter were similar to last year's levels, supported by a higher proportion of proprietary product sales this quarter.
• Proprietary crop protection sales as a percentage of total crop protection sales this quarter increased 2 percent over the prior year.

Seed

• Seed sales were down 6 percent this quarter compared to the same period last year, as significant seed volumes were drawn into the first quarter due to the early start to spring seeding.
• Total seed margins as a percentage of sales this quarter increased 3 percentage points compared to the same period last year. The significant increase in margins was due to strong volumes and margins for our proprietary seed products and increased sales of treated seed. The acreage shift to corn and cotton in 2016 also resulted in higher volumes of these seeds this year, which have higher margins than other crops.

Merchandise

• Merchandise sales decreased 7 percent compared to the same period last year primarily due to lower fuel volumes and pricing in Canada.
• Gross profit as a percentage of sales increased 1 percent this quarter, primarily due to a reduction in the lower-margin Canadian fuel business.

Services and other

• Sales for services and other was up 16 percent this quarter, primarily due to higher livestock marketing sales in Australia as a result of higher cattle prices.

Wholesale
	Three months ended June 30,
(millions of U.S. dollars, except where noted)	2016		2015		Change
Sales	882		1,174		(292	)
Sales volumes (tonnes 000's)	2,736		2,644		92
Cost of product sold	681		765		(84	)
Gross profit	201		409		(208	)
EBITDA	254		429		(175	)
Expenses	21		29		(8	)

• Total sales were lower than the same period last year due to lower global fertilizer prices across all nutrients. Lower prices were partially offset by higher sales volumes, primarily from increased potash availability resulting from the post expansion ramp-up of production at the Vanscoy facility.
• Lower sales were further offset by a reduction in fixed costs this quarter compared to the same period last year as a result of our ongoing cost review process.

Wholesale NPK product information
	Three months ended June 30,
	Nitrogen						Potash						Phosphate
	2016		2015		Change		2016		2015		Change		2016		2015		Change
Gross profit (U.S. dollar millions)	148		270		(122	)	16		68		(52	)	5		29		(24	)
Sales volumes (tonnes 000's)	1,168		1,223		(55	)	697		509		188		305		290		15
Selling price ($/tonne)	337		451		(114	)	194		327		(133	)	526		665		(139	)
Cost of product sold ($/tonne)	210		231		(21	)	172		193		(21	)	508		563		(55	)
Gross margin ($/tonne)	127		220		(93	)	22		134		(112	)	18		102		(84	)

Nitrogen

• Nitrogen gross profit was down 45 percent compared to the same period last year primarily due to significantly lower global benchmark nitrogen prices, partially offset by lower cost of production.
• Sales volumes were slightly lower than the same period last year due primarily to an extended planned outage at the Borger facility, and a strong pull of ammonia volumes in the first quarter of 2016. UAN sales volumes were also lower due to the divestiture of the West Sacramento upgrade facility at the end of 2015.
• Realized selling prices per tonne were down 25 percent compared to the same period last year due to lower international and domestic nitrogen prices.
• Cost of product sold per tonne was 9 percent lower than the same period last year due to lower natural gas prices.

Natural gas prices: North American indices and North American Agrium prices
	Three months ended June 30,
(U.S. dollars per MMBtu)	2016		2015
Overall gas cost excluding realized derivative impact	1.28		2.34
Realized derivative impact	0.48		0.05
Overall gas cost	1.76		2.39
Average NYMEX	1.95		2.67
Average AECO	0.97		2.16

Potash

• Potash gross profit declined 76 percent compared to the same period last year due to downward pressure on potash benchmark prices.
• Lower selling prices were partly offset by higher sales volumes this year. Sales volumes were 37 percent higher than the same period last year, as second quarter volumes last year were impacted by the ramp-up of our Vanscoy potash facility expansion. International sales volumes were 47 percent higher than the second quarter of last year, due to Agrium's higher Canpotex allocation in 2016 and higher product availability.
• Realized selling prices have contracted sharply over the past year, with international selling prices down 37 percent period-over-period and an even larger decline of 41 percent in North American markets.
• Cost of product sold per tonne was 11 percent lower than the same period last year. The lower costs are predominately due to the higher production volumes associated with the ramp-up of our Vanscoy facility expansion and a weaker Canadian dollar.

Phosphate

• Phosphate gross profit was 83 percent lower than the same period last year due predominately to lower realized selling prices. Higher sales volumes and lower cost of product sold per tonne partially offset the impact from the significant decline in prices.
• Sales volumes were up 5 percent compared to the second quarter of 2015, as phosphate sales were slightly delayed this year.

Wholesale Other

Wholesale Other: gross profit breakdown
	Three months ended June 30,
(millions of U.S. dollars)	2016		2015		Change
Ammonium sulfate	20		21		(1	)
ESN	12		14		(2	)
Product purchased for resale	(1	)	1		(2	)
Other	1		6		(5	)
	32		42		(10	)

• Gross profit from Wholesale Other was 24 percent lower than the same period last year due predominately to lower realized selling prices for all Other products, partially offset by higher ammonium sulfate and ESN sales volumes.

Expenses

• Wholesale expenses decreased by $8-million in the current quarter. This was primarily due to a reversal of a gas tariff provision in Profertil, resulting in a $21-million increase to our earnings from associates and joint ventures. This was partially offset by a $6-million loss related to our share in Canpotex's losses from the cancellation of its export terminal in British Columbia.

Other

EBITDA for our Other non-operating business unit for the second quarter of 2016 had a net expense of $5-million, compared to net earnings of $3-million for the second quarter of 2015. The variance was primarily due to a higher share-based payments expense of $7-million as a result of the movement in our share price.

FINANCIAL CONDITION

The following are changes to working capital on our Consolidated Balance Sheets for the six months ended June 30, 2016 compared to December 31, 2015.

(millions of U.S. dollars, except where noted)		June 30, 2016		December 31, 2015		$ Change		% Change			Explanation of the change in balance
Current assets
	Cash and cash equivalents	307		515		(208	)	(40	%)		See discussion under the section "Liquidity and Capital Resources".
	Accounts receivable	3,638		2,053		1,585		77	%		Sales during the spring season resulted in higher Retail trade and vendor rebates receivable.
	Income taxes receivable	95		4		91		2,275	%		First half tax installments paid exceeded the first half tax provision in Canada.
	Inventories	2,605		3,314		(709	)	(21	%)		Inventory drawdown due to increased seasonal sales activity.
	Prepaid expenses and deposits	131		688		(557	)	(81	%)		Drawdown of prepaid inventory due to increased seasonal sales activity in the spring.
	Other current assets	124		144		(20	)	(14	%)		-
Current liabilities
	Short-term debt	1,069		835		234		28	%		Increased financing for working capital requirements.
	Accounts payable	3,830		3,919		(89	)	(2	%)		-
	Income taxes payable	128		82		46		56	%		First half tax provision exceeds the first half tax installments paid in the U.S.
	Current portion of long-term debt	107		8		99		1,238	%		Increase relates to $100-million 7.7 percent debentures due in 2017.
	Current portion of other provisions	74		85		(11	)	(13	%)		-
Working capital		1,692		1,789		(97	)	(5	%)

LIQUIDITY AND CAPITAL RESOURCES

Agrium generally expects that it will be able to meet its working capital requirements, capital resource needs and shareholder returns through a variety of sources, including available cash on hand, cash provided by operations, short-term borrowings from the issuance of commercial paper, and borrowings from our credit facilities, as well as long-term debt and equity capacity from the capital markets.

As of June 30, 2016, we have sufficient current assets to meet our current liabilities.

Summary of Consolidated Statements of Cash Flows

Below is a summary of our cash provided by or used in operating, investing, and financing activities as reflected in the Consolidated Statements of Cash Flows:

	Six months ended June 30,
(millions of U.S. dollars)	2016		2015		Change
Cash provided by operating activities	438		796		(358	)
Cash used in investing activities	(574	)	(914	)	340
Cash used in financing activities	(25	)	(89	)	64
Effect of exchange rate changes on cash and cash equivalents	(47	)	6		(53	)
Decrease in cash and cash equivalents	(208	)	(201	)	(7	)

Cash provided by operating activities	•	$176-million decrease in cash resulting from greater taxes paid in the first six months of 2016 compared to 2015.
	•	$50-million decrease in cash due to higher interest payments made in the first half of 2016 resulting from the timing of interest paid on debt.
Cash used in investing activities	•	Lower capital expenditures compared to the first half of 2015 due a decreased spending on our Vanscoy potash facility and Borger expansion projects.
Cash used in financing activities	•	Lower cash used in financing as $100-million share repurchases were made in the first half of 2015.

Capital Spending and Expenditures (a)
		Three months ended				Six months ended
		June 30,				June 30,
(millions of U.S. dollars)		2016		2015		2016		2015
Retail
	Sustaining	28		38		75		92
	Investing	10		8		19		17
		38		46		94		109
	Acquisitions(b)	81		24		175		84
		119		70		269		193
Wholesale
	Sustaining	102		87		151		127
	Investing	87		206		155		501
		189		293		306		628
Other
	Sustaining	1		1		2		2
	Investing	2		1		2		1
		3		2		4		3
Total
	Sustaining	131		126		228		221
	Investing	99		215		176		519
		230		341		404		740
	Acquisitions(b)	81		24		175		84
		311		365		579		824

(a)	This excludes capitalized borrowing costs.
(b)	This represents business acquisitions and includes acquired working capital; property, plant and equipment; intangibles; goodwill; and investments in associates and joint ventures.

• Our investing capital expenditures decreased in the second quarter and first half of 2016 compared to the same periods last year due to the ramp-up of our Vanscoy potash facility in the second quarter and first half of 2015 combined with decreased spending for the Borger project.
• Subsequent to June 30, 2016, we entered into a binding purchase agreement with Cargill AgHorizons (U.S.) to acquire 18 ag-retail locations located across the northern U.S. Corn Belt region. The acquisition is expected to close by the end of the third quarter of 2016 subject to customary closing conditions and regulatory clearances.
• We expect Agrium's capital expenditures for the remainder of 2016 to approximate $220-million to $325-million. We also expect to require approximately $175-million to complete our previously announced acquisitions. We anticipate that we will be able to finance the announced projects through a combination of cash provided from operating activities and existing credit facilities.

Short-term Debt

• Our short-term debt of $1-billion at June 30, 2016 is outlined in note 5 of our Summarized Notes to the Consolidated Financial Statements.
• Our short-term debt increased by $234-million during the first half of 2016, which in turn contributed to a decrease in our unutilized short-term financing capacity to $1.8-billion at June 30, 2016.

Capital Management

• Our revolving credit facilities require that we maintain specific interest coverage and debt-to-capital ratios, as well as other non-financial covenants as defined in our credit agreements. We were in compliance with all covenants at June 30, 2016. Our ability to comply with these covenants has not changed since December 31, 2015.

SHARE REPURCHASES

We are allowed to purchase for cancellation, on the Toronto Stock Exchange (TSX) or New York Stock Exchange an aggregate of 6,908,450 common shares (5 percent) of our outstanding shares. Repurchases may be made under a Normal Course Issuer Bid (NCIB) approved by the TSX until February 18, 2017. The actual number of shares purchased will be at Agrium's discretion and will depend on market conditions, share prices, Agrium's cash position and other factors.

There were no shares repurchased under the NCIB for the first half of 2016 or the period from July 1, 2016 to August 3, 2016.

Shareholders can obtain a copy of the NCIB notice submitted to the TSX from Agrium without charge upon request.

OUTSTANDING SHARE DATA

Agrium had 138,175,400 common shares outstanding at July 29, 2016. At that date, the number of common shares issuable pursuant to stock options outstanding (issuable assuming full conversion, where each stock option granted can be exercised for one common share) was 937,528.

SELECTED QUARTERLY INFORMATION
(millions of U.S. dollars,		2016		2016		2015		2015		2015		2015		2014		2014
except per share amounts)		Q2		Q1		Q4		Q3		Q2		Q1		Q4		Q3
Sales		6,415		2,725		2,407		2,524		6,992		2,872		2,705		2,920
Gross profit		1,525		554		900		696		1,708		584		732		665
Net earnings from continuing operations		565		3		200		99		675		14		70		91
Net loss from discontinued operations		-		-		-		-		-		-		(19	)	(41	)
Net earnings		565		3		200		99		675		14		51		50
Earnings per share from continuing operations attributable to equity holders of Agrium:
	Basic and diluted	4.08		0.02		1.45		0.72		4.71		0.08		0.46		0.63
Loss per share from discontinued operations attributable to equity holders of Agrium:
	Basic and diluted	-		-		-		-		-		-		(0.13	)	(0.28	)
Earnings per share attributable to equity holders of Agrium:
	Basic and diluted	4.08		0.02		1.45		0.72		4.71		0.08		0.33		0.35
Dividends declared		122		121		121		120		125		112		112		107
Dividends declared per share		0.875		0.875		0.875		0.875		0.875		0.780		0.780		0.750

The agricultural products business is seasonal. Consequently, year-over-year comparisons are more appropriate than quarter-over-quarter comparisons. Crop input sales are primarily concentrated in the spring and fall crop input application seasons. Crop nutrient inventories are normally accumulated leading up to each application season. Our cash collections from accounts receivables generally occur after the application season is complete, and our customer prepayments are concentrated in December and January.

NON-IFRS FINANCIAL MEASURES

Financial measures that are not specified, defined or determined under IFRS are non-IFRS measures unless they are presented in our Consolidated Financial Statements. The following table outlines our non-IFRS financial measure, its definition and why management uses the measure.

Non-IFRS financial measure		Definition		Why we use the measure and why it is useful to investors
Cash operating coverage ratio		Cash operating coverage ratio represents gross profit excluding depreciation and amortization less EBITDA, divided by gross profit excluding depreciation and amortization.		Assists management and investors in understanding the costs and underlying economics of our operations and in assessing our operating performance and our ability to generate free cash flow from our business units and overall as a company.

Retail cash operating coverage ratio
	Rolling four quarters ended June 30,
(millions of U.S. dollars, except as noted)	2016		2015
Gross profit	2,774		2,791
Depreciation and amortization in cost of product sold	6		6
Gross profit excluding depreciation and amortization	2,780		2,797
EBITDA	1,116		1,016
Operating expenses excluding depreciation and amortization	1,664		1,781
Cash operating coverage ratio (%)	60		64

CRITICAL ACCOUNTING ESTIMATES

We prepare our Consolidated Financial Statements in accordance with IFRS, which requires us to make judgments, assumptions and estimates in applying accounting policies. For further information on the Company's critical accounting estimates, refer to the section "Critical Accounting Estimates" in our 2015 annual MD&A, which is contained in our 2015 Annual Report. Since the date of our 2015 annual MD&A, there have not been any material changes to our critical accounting estimates.

CHANGES IN ACCOUNTING POLICIES

The accounting policies applied in our Consolidated Financial Statements for the three and six months ended June 30, 2016 are the same as those applied in our audited annual financial statements in our 2015 Annual Report.

BUSINESS RISKS

The information presented in the "Enterprise Risk Management" section on pages 63 - 66 in our 2015 annual MD&A and under the heading "Risk Factors" on pages 23 - 34 in our Annual Information Form for the year ended December 31, 2015 has not changed materially since December 31, 2015.

CONTROLS AND PROCEDURES

There have been no changes in our internal control over financial reporting during the three months ended June 30, 2016 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PUBLIC SECURITIES FILINGS

Additional information about our Company, including our 2015 Annual Information Form is filed with the Canadian securities regulatory authorities through SEDAR at www.sedar.com and with the U.S. securities regulatory authorities through EDGAR at www.sec.gov.

FORWARD-LOOKING STATEMENTS

Certain statements and other information included in this document constitute "forward-looking information" and/or "financial outlook" 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 news 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: updated 2016 annual guidance, including expectations regarding our diluted earnings per share; capital spending expectations for the remaining two quarters of 2016; expectations regarding performance of our business segments in 2016; expectations regarding completion of previously announced acquisitions; and our market outlook for the remainder of 2016, including nitrogen, potash and phosphate outlook and including anticipated supply and demand for our products and services, expected market and industry conditions with respect to crop nutrient application rates, planted acres, crop mix, prices and the impact of currency fluctuations and import and export volumes. These forward-looking statements are subject to a number of assumptions, risks and uncertainties, many of which are beyond our control, which could cause actual results to differ materially from such forward-looking statements. As such, undue reliance should not be placed on these 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 and elsewhere in this document. 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 additional key assumptions that have been made include, among other things, assumptions with respect to Agrium's ability to successfully integrate and realize the anticipated benefits of its already completed and future acquisitions and that we will be able to implement our standards, controls, procedures and policies at any acquired businesses to realize the expected synergies; that future business, regulatory and industry conditions will be within the parameters expected by Agrium, including with respect to prices, margins, product availability and supplier agreements; the completion of our expansion projects on schedule, as planned and on budget; assumptions with respect to global economic conditions and the accuracy of our market outlook expectations for 2016 and in the future; the adequacy of our cash generated from operations and our ability to access our credit facilities or capital markets for additional sources of financing; our ability to identify suitable candidates for acquisitions and negotiate acceptable terms; our ability to maintain our investment grade rating and achieve our performance targets; and our receipt, on time, of all necessary permits, utilities and project approvals with respect to our expansion projects and that we will have the resources necessary to meet the projects' approach. Also refer to the discussion under the heading "Key Assumptions and Risks in Respect of Forward-Looking Statements" in our 2015 annual MD&A and under the heading "Market Outlook" in this document, with respect to further material assumptions associated with our forward-looking statements.

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 global economic, market and business conditions; weather conditions, including impacts from regional flooding and/or drought conditions; crop planted acreage, yield and prices; the supply and demand and price levels for our major products may vary from what we currently anticipate; 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, regional natural gas supply restrictions, as well as counterparty and sovereign risk; delays in completion of turnarounds at our major facilities; gas supply interruptions at the Egyptian Misr Fertilizers Production Company S.A.E. nitrogen facility expansion in Egypt; the risk of additional capital expenditure cost escalation or delays in respect of our Borger nitrogen expansion project and the ramp-up of production following the tie-in of our Vanscoy potash expansion project; 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 U.S. including those disclosed under the heading "Risk Factors" in our Annual Information Form for the year ended December 31, 2015 and under the headings "Enterprise Risk Management" and "Key Assumptions and Risks in respect of Forward-Looking Statements" in our 2015 annual MD&A.

The purpose of our expected diluted earnings per share guidance range is to assist readers in understanding our expected and targeted financial results, and this information may not be appropriate for other purposes.

Agrium disclaims any intention or obligation to update or revise any forward-looking statements in this document 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 global producer and distributor of agricultural products, services and solutions. Agrium produces nitrogen, potash and phosphate fertilizers, with a combined wholesale nutrient capacity of over nine million tonnes and with significant competitive advantages across our product lines. We supply key products and services directly to growers, including crop nutrients, crop protection, seed, as well as agronomic and application services, thereby helping growers to meet the ever growing global demand for food and fibre. Agrium retail-distribution has an unmatched network of over 1,400 facilities and over 3,800 crop consultants who provide advice and products to our grower customers to help them increase their yields and returns on hundreds of different crops. With a focus on sustainability, the company strives to improve the communities in which it operates through safety, education, environmental improvement and new technologies such as the development of precision agriculture and controlled release nutrient products. Agrium is focused on driving operational excellence across our businesses, pursuing value-enhancing growth opportunities and returning capital to shareholders. For more information visit: www.agrium.com.

A WEBSITE SIMULCAST of the 2016 2^nd Quarter Conference Call will be available in a listen-only mode beginning Thursday, August 4^th, 2016 at 8:00 a.m. MT (10:00 a.m. ET). Please visit the following website: www.agrium.com.

AGRIUM INC.
Consolidated Statements of Operations
(Unaudited)
				Three months ended				Six months ended
				June 30,				June 30,
(millions of U.S. dollars, unless otherwise stated)			Notes	2016		2015		2016		2015
Sales				6,415		6,992		9,140		9,864
Cost of product sold				4,890		5,284		7,061		7,572
Gross profit				1,525		1,708		2,079		2,292
Expenses
	Selling			574		585		988		1,015
	General and administrative			62		66		117		133
	Share-based payments			13		6		17		51
	Earnings from associates and joint ventures			(23	)	(1	)	(28	)	(1	)
	Other expenses (income)		4	51		26		62		(7	)
Earnings before finance costs and income taxes				848		1,026		923		1,101
	Finance costs related to long-term debt			50		50		102		87
	Other finance costs			20		18		38		37
Earnings before income taxes				778		958		783		977
	Income taxes			213		283		215		288
Net earnings				565		675		568		689
	Attributable to
		Equity holders of Agrium		564		674		566		686
		Non-controlling interest		1		1		2		3
Net earnings				565		675		568		689
Earnings per share attributable to equity holders of Agrium
	Basic and diluted earnings per share			4.08		4.71		4.09		4.78
	Weighted average number of shares outstanding for basic and diluted earnings per share (millions of common shares)			138		143		138		143
See accompanying notes.

Basis of preparation and statement of compliance

These consolidated interim financial statements ("interim financial statements") were approved for issuance by the Audit Committee on August 3, 2016. We prepared these interim financial statements in accordance with International Accounting Standard 34 Interim 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 2015 Annual Report, available at www.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 2015 Annual Report.

AGRIUM INC.
Consolidated Statements of Comprehensive Income
(Unaudited)
						Three months ended				Six months ended
						June 30,				June 30,
(millions of U.S. dollars)					Notes	2016		2015		2016		2015
Net earnings						565		675		568		689
	Other comprehensive (loss) income
		Items that are or may be reclassified to earnings
			Cash flow hedges		3
				Effective portion of changes in fair value		17		(4	)	(6	)	(20	)
				Deferred income taxes		(4	)	1		3		5
			Share of comprehensive (loss) income of associates and joint ventures			(1	)	-		1		(5	)
			Foreign currency translation
				(Losses) gains		(26	)	57		153		(238	)
				Reclassifications to earnings		-		1		-		1
						(14	)	55		151		(257	)
		Items that will never be reclassified to earnings
			Post-employment benefits
				Actuarial losses		(24	)	-		(24	)	-
				Deferred income taxes		7		1		7		1
						(17	)	1		(17	)	1
	Other comprehensive (loss) income					(31	)	56		134		(256	)
Comprehensive income						534		731		702		433
Attributable to
	Equity holders of Agrium					533		730		700		431
	Non-controlling interest					1		1		2		2
Comprehensive income						534		731		702		433
See accompanying notes.

AGRIUM INC.
Consolidated Balance Sheets
(Unaudited)
					June 30,					December 31,
(millions of U.S. dollars)				Notes	2016		2015			2015
Assets
	Current assets
		Cash and cash equivalents			307		647			515
		Accounts receivable			3,638		3,556			2,053
		Income taxes receivable			95		3			4
		Inventories			2,605		2,868			3,314
		Prepaid expenses and deposits			131		119			688
		Other current assets			124		138			144
					6,900		7,331			6,718
	Property, plant and equipment				6,832		6,506			6,333
	Intangibles				635		669			632
	Goodwill				2,023		2,004			1,980
	Investments in associates and joint ventures				665		603			607
	Other assets				52		68			54
	Deferred income tax assets				44		65			53
					17,151		17,246			16,377
Liabilities and shareholders' equity
	Current liabilities
		Short-term debt		5	1,069		681			835
		Accounts payable			3,830		4,038			3,919
		Income taxes payable			128		110			82
		Current portion of long-term debt			107		1			8
		Current portion of other provisions			74		88			85
					5,208		4,918			4,929
	Long-term debt				4,412		4,533			4,513
	Post-employment benefits				162		146			124
	Other provisions				338		329			336
	Other liabilities				54		81			85
	Deferred income tax liabilities				491		446			383
					10,665		10,453			10,370
	Shareholders' equity
		Share capital			1,762		1,812			1,757
		Retained earnings			5,839		5,864			5,533
		Accumulated other comprehensive loss			(1,119	)	(891	)		(1,287	)
		Equity holders of Agrium			6,482		6,785			6,003
		Non-controlling interest			4		8			4
		Total equity			6,486		6,793			6,007
					17,151		17,246			16,377
See accompanying notes.

AGRIUM INC.
Consolidated Statements of Cash Flows
(Unaudited)
			Three months ended				Six months ended
			June 30,				June 30,
(millions of U.S. dollars)			2016		2015		2016		2015
Operating
	Net earnings		565		675		568		689
	Adjustments for
		Depreciation and amortization	145		119		259		230
		Earnings from associates and joint ventures	(23	)	(1	)	(28	)	(1	)
		Share-based payments	13		6		17		51
		Unrealized (gain) loss on derivative financial instruments	(61	)	(13	)	22		13
		Unrealized foreign exchange loss (gain)	83		(51	)	(41	)	(10	)
		Interest income	(16	)	(16	)	(29	)	(33	)
		Finance costs	70		68		140		124
		Income taxes	213		283		215		288
		Other	(7	)	6		(1	)	(19	)
	Interest received		15		16		29		33
	Interest paid		(51	)	(48	)	(140	)	(90	)
	Income taxes (paid) received		(24	)	(7	)	(165	)	11
	Dividends from associates and joint ventures		1		1		2		2
	Net changes in non-cash working capital		(828	)	(947	)	(410	)	(492	)
Cash provided by operating activities			95		91		438		796
Investing
	Business acquisitions, net of cash acquired		(81	)	(24	)	(175	)	(84	)
	Capital expenditures		(230	)	(341	)	(404	)	(740	)
	Capitalized borrowing costs		(7	)	(8	)	(12	)	(23	)
	Purchase of investments		(18	)	(43	)	(41	)	(85	)
	Proceeds from sale of investments		46		27		64		45
	Proceeds from sale of property, plant and equipment		6		4		10		54
	Other		(5	)	6		(8	)	11
	Net changes in non-cash working capital		(8	)	(74	)	(8	)	(92	)
Cash used in investing activities			(297	)	(453	)	(574	)	(914	)
Financing
	Short-term debt		426		422		222		(738	)
	Long-term debt issued		-		-		-		1,000
	Transaction costs on long-term debt		-		-		-		(14	)
	Repayment of long-term debt		(4	)	(2	)	(6	)	(15	)
	Dividends paid		(122	)	(114	)	(241	)	(223	)
	Shares issued		-		-		-		1
	Shares repurchased		-		(100	)	-		(100	)
Cash provided by (used in) financing activities			300		206		(25	)	(89	)
Effect of exchange rate changes on cash and cash equivalents			(67	)	23		(47	)	6
Increase (decrease) in cash and cash equivalents			31		(133	)	(208	)	(201	)
Cash and cash equivalents - beginning of period			276		780		515		848
Cash and cash equivalents - end of period			307		647		307		647
See accompanying notes.

AGRIUM INC.

Consolidated 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 interest		Total equity
December 31, 2014			144		1,821		5,502		(27	)	(11	)	(605	)	(643	)	6,680		7		6,687
	Net earnings		-		-		686		-		-		-		-		686		3		689
	Other comprehensive income (loss), net of tax
		Post-employment benefits	-		-		1		-		-		-		-		1		-		1
		Other	-		-		-		(15	)	(5	)	(236	)	(256	)	(256	)	(1	)	(257	)
	Comprehensive income (loss), net of tax		-		-		687		(15	)	(5	)	(236	)	(256	)	431		2		433
	Dividends ($1.655 per share)		-		-		(237	)	-		-		-		-		(237	)	-		(237	)
	Non-controlling interest transactions		-		-		-		-		-		-		-		-		(1	)	(1	)
	Shares repurchased		(1	)	(12	)	(88	)	-		-		-		-		(100	)	-		(100	)
	Share-based payment transactions		-		3		-		-		-		-		-		3		-		3
	Reclassification of cash flow hedges, net of tax		-		-		-		8		-		-		8		8		-		8
June 30, 2015			143		1,812		5,864		(34	)	(16	)	(841	)	(891	)	6,785		8		6,793
December 31, 2015			138		1,757		5,533		(56	)	(17	)	(1,214	)	(1,287	)	6,003		4		6,007
	Net earnings		-		-		566		-		-		-		-		566		2		568
	Other comprehensive income (loss), net of tax
		Post-employment benefits	-		-		(17	)	-		-		-		-		(17	)	-		(17	)
		Other	-		-		-		(3	)	1		153		151		151		-		151
	Comprehensive income (loss), net of tax		-		-		549		(3	)	1		153		151		700		2		702
	Dividends ($1.75 per share)		-		-		(243	)	-		-		-		-		(243	)	-		(243	)
	Non-controlling interest transactions		-		-		-		-		-		-		-		-		(2	)	(2	)
	Share-based payment transactions		-		5		-		-		-		-		-		5		-		5
	Reclassification of cash flow hedges, net of tax		-		-		-		17		-		-		17		17		-		17
June 30, 2016			138		1,762		5,839		(42	)	(16	)	(1,061	)	(1,119	)	6,482		4		6,486

See accompanying notes.

AGRIUM INC.
Summarized Notes to the Consolidated Financial Statements
For the three and six months ended June 30, 2016
(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 through the following businesses:
  • Nitrogen: Manufacturing in Alberta and Texas
  • Potash: Mining and processing in Saskatchewan
  • Phosphate: Mining and production facilities in Alberta and Idaho
  • Wholesale Other: Purchasing and reselling crop nutrient products from other suppliers to customers in the Americas and Europe; producing blended crop nutrients and Environmentally Smart Nitrogen^® (ESN) polymer-coated nitrogen crop nutrients; and operations of 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.

2. Operating Segments

Segment information by business unit			Three months ended June 30,
			2016								2015
			Retail		Wholesale		Other (a	)	Total		Retail		Wholesale		Other (a	)	Total
Sales		- external	5,780		635		-		6,415		6,144		848		-		6,992
		- inter-segment	11		247		(258	)	-		16		326		(342	)	-
Total sales			5,791		882		(258	)	6,415		6,160		1,174		(342	)	6,992
Cost of product sold			4,512		681		(303	)	4,890		4,896		765		(377	)	5,284
Gross profit			1,279		201		45		1,525		1,264		409		35		1,708
Gross profit (%)			22		23				24		21		35				24
Expenses
	Selling		570		8		(4	)	574		580		9		(4	)	585
	General and administrative		28		8		26		62		32		6		28		66
	Share-based payments		-		-		13		13		-		-		6		6
	(Earnings) loss from associates and joint ventures		(3	)	(21	)	1		(23	)	(3	)	-		2		(1	)
	Other expenses		8		26		17		51		8		14		4		26
Earnings (loss) before finance costs and income taxes			676		180		(8	)	848		647		380		(1	)	1,026
	Finance costs		-		-		70		70		-		-		68		68
Earnings (loss) before income taxes			676		180		(78	)	778		647		380		(69	)	958
	Depreciation and amortization		68		74		3		145		66		49		4		119
	Finance costs		-		-		70		70		-		-		68		68
EBITDA (b)			744		254		(5	)	993		713		429		3		1,145

(a)	Includes inter-segment eliminations.
(b)	EBITDA is earnings (loss) from continuing operations before finance costs, income taxes, depreciation and amortization.

Segment information by business unit			Six months ended June 30,
			2016								2015
			Retail		Wholesale		Other (a	)	Total		Retail		Wholesale		Other (a	)	Total
Sales		- external	8,058		1,082		-		9,140		8,404		1,460		-		9,864
		- inter-segment	23		449		(472	)	-		19		581		(600	)	-
Total sales			8,081		1,531		(472	)	9,140		8,423		2,041		(600	)	9,864
Cost of product sold			6,400		1,177		(516	)	7,061		6,788		1,398		(614	)	7,572
Gross profit			1,681		354		44		2,079		1,635		643		14		2,292
Gross profit (%)			21		23				23		19		32				23
Expenses
	Selling		980		16		(8	)	988		1,003		20		(8	)	1,015
	General and administrative		50		16		51		117		58		16		59		133
	Share-based payments		-		-		17		17		-		-		51		51
	(Earnings) loss from associates and joint ventures		(7	)	(22	)	1		(28	)	(4	)	3		-		(1	)
	Other expenses (income)		5		45		12		62		(4	)	(8	)	5		(7	)
Earnings (loss) before finance costs and income taxes			653		299		(29	)	923		582		612		(93	)	1,101
	Finance costs		-		-		140		140		-		-		124		124
Earnings (loss) before income taxes			653		299		(169	)	783		582		612		(217	)	977
	Depreciation and amortization		135		118		6		259		123		99		8		230
	Finance costs		-		-		140		140		-		-		124		124
EBITDA			788		417		(23	)	1,182		705		711		(85	)	1,331

(a)	Includes inter-segment eliminations.

Segment information - Retail			Three months ended June 30,
			2016							2015
			North America		International		Retail (a	)		North America		International		Retail
Sales		- external	5,038		742		5,780			5,405		739		6,144
		- inter-segment	11		-		11			16		-		16
Total sales			5,049		742		5,791			5,421		739		6,160
Cost of product sold			3,893		619		4,512			4,286		610		4,896
Gross profit			1,156		123		1,279			1,135		129		1,264
Expenses
	Selling		484		86		570			489		91		580
	General and administrative		20		8		28			23		9		32
	Earnings from associates and joint ventures		(2	)	(1	)	(3	)		(2	)	(1	)	(3	)
	Other expenses (income)		16		(8	)	8			15		(7	)	8
Earnings before income taxes			638		38		676			610		37		647
	Depreciation and amortization		63		5		68			57		9		66
EBITDA			701		43		744			667		46		713

(a)	Included within the Retail business unit is a separate Financial Services operating segment with total sales of $4-million and EBITDA of $4-million.

Segment information - Retail			Six months ended June 30,
			2016							2015
			North America		International		Retail (a	)		North America		International		Retail
Sales		- external	6,835		1,223		8,058			7,178		1,226		8,404
		- inter-segment	23		-		23			19		-		19
Total sales			6,858		1,223		8,081			7,197		1,226		8,423
Cost of product sold			5,399		1,001		6,400			5,789		999		6,788
Gross profit			1,459		222		1,681			1,408		227		1,635
Expenses
	Selling		821		159		980			834		169		1,003
	General and administrative		35		15		50			40		18		58
	Earnings from associates and joint ventures		(6	)	(1	)	(7	)		(3	)	(1	)	(4	)
	Other expenses (income)		22		(17	)	5			12		(16	)	(4	)
Earnings before income taxes			587		66		653			525		57		582
	Depreciation and amortization		124		11		135			109		14		123
EBITDA			711		77		788			634		71		705

(a)	Included within the Retail business unit is a separate Financial Services operating segment with total sales of $4-million and EBITDA of $4-million.

Segment information - Wholesale			Three months ended June 30,
			2016										2015
									Wholesale										Wholesale
			Nitrogen		Potash		Phosphate		Other (a	)	Wholesale		Nitrogen		Potash		Phosphate		Other (a	)	Wholesale
Sales		- external	296		85		110		144		635		415		112		118		203		848
		- inter-segment	98		50		50		49		247		138		54		74		60		326
Total sales			394		135		160		193		882		553		166		192		263		1,174
Cost of product sold			246		119		155		161		681		283		98		163		221		765
Gross profit			148		16		5		32		201		270		68		29		42		409
Expenses
	Selling		3		2		1		2		8		4		2		1		2		9
	General and administrative		3		1		1		3		8		2		1		1		2		6
	Earnings from associates and joint ventures		-		-		-		(21	)	(21	)	-		-		-		-		-
	Other expenses (income)		16		14		(1	)	(3	)	26		8		6		1		(1	)	14
Earnings (loss) before income taxes			126		(1	)	4		51		180		256		59		26		39		380
	Depreciation and amortization		23		31		13		7		74		20		13		11		5		49
EBITDA			149		30		17		58		254		276		72		37		44		429

(a)	Includes product purchased for resale, ammonium sulfate, ESN and other products.

Segment information - Wholesale			Six months ended June 30,
			2016										2015
									Wholesale										Wholesale
			Nitrogen		Potash		Phosphate		Other (a	)	Wholesale		Nitrogen		Potash		Phosphate		Other (a	)	Wholesale
Sales		- external	469		133		190		290		1,082		633		137		228		462		1,460
		- inter-segment	175		93		100		81		449		235		96		145		105		581
Total sales			644		226		290		371		1,531		868		233		373		567		2,041
Cost of product sold			401		196		265		315		1,177		455		158		299		486		1,398
Gross profit			243		30		25		56		354		413		75		74		81		643
Expenses
	Selling		7		4		2		3		16		8		3		2		7		20
	General and administrative		7		3		2		4		16		5		3		3		5		16
	(Earnings) loss from associates and joint ventures		-		-		-		(22	)	(22	)	-		-		-		3		3
	Other expenses (income)		22		20		3		-		45		6		11		13		(38	)	(8	)
Earnings before income taxes			207		3		18		71		299		394		58		56		104		612
	Depreciation and amortization		36		51		23		8		118		38		27		24		10		99
EBITDA			243		54		41		79		417		432		85		80		114		711

(a)	Includes product purchased for resale, ammonium sulfate, ESN and other products.

Gross profit by product line		Three months ended June 30,													Six months ended June 30,
		2016							2015						2016							2015
				Cost of							Cost of						Cost of							Cost of
				product		Gross					product		Gross				product		Gross					product		Gross
		Sales		sold		profit			Sales		sold		profit		Sales		sold		profit			Sales		sold		profit
Retail
	Crop nutrients	2,190		1,757		433			2,608		2,154		454		3,029		2,462		567			3,519		2,939		580
	Crop protection products	2,250		1,779		471			2,169		1,712		457		3,081		2,489		592			2,962		2,397		565
	Seed	926		745		181			982		818		164		1,302		1,070		232			1,290		1,086		204
	Merchandise	162		134		28			174		147		27		279		232		47			316		269		47
	Services and other (a)	263		97		166			227		65		162		390		147		243			336		97		239
		5,791		4,512		1,279			6,160		4,896		1,264		8,081		6,400		1,681			8,423		6,788		1,635
Wholesale
	Nitrogen	394		246		148			553		283		270		644		401		243			868		455		413
	Potash	135		119		16			166		98		68		226		196		30			233		158		75
	Phosphate	160		155		5			192		163		29		290		265		25			373		299		74
	Product purchased for resale	52		53		(1	)		104		103		1		149		145		4			296		288		8
	Ammonium sulfate, ESN and other	141		108		33			159		118		41		222		170		52			271		198		73
		882		681		201			1,174		765		409		1,531		1,177		354			2,041		1,398		643
Other inter-segment eliminations		(258	)	(303	)	45			(342	)	(377	)	35		(472	)	(516	)	44			(600	)	(614	)	14
Total		6,415		4,890		1,525			6,992		5,284		1,708		9,140		7,061		2,079			9,864		7,572		2,292
Wholesale share of joint ventures
	Nitrogen	40		37		3			45		39		6		65		58		7			66		61		5
	Product purchased for resale	-		-		-			12		12		-		-		-		-			38		37		1
		40		37		3			57		51		6		65		58		7			104		98		6
Total Wholesale including proportionate share in joint ventures		922		718		204			1,231		816		415		1,596		1,235		361			2,145		1,496		649

(a)	Includes financial services products.

Selected volumes and per tonne information				Three months ended June 30,
				2016								2015
								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		4,133		462		361		101		4,144		550		446		104
		International		715		390		366		24		722		454		421		33
	Total crop nutrients			4,848		452		363		89		4,866		536		443		93
Wholesale
	Nitrogen
		North America
			Ammonia	394		443						441		584
			Urea	503		303						471		419
			Other	271		249						311		313
	Total nitrogen			1,168		337		210		127		1,223		451		231		220
	Potash
		North America		440		219						334		371
		International		257		152						175		243
	Total potash			697		194		172		22		509		327		193		134
	Phosphate			305		526		508		18		290		665		563		102
	Product purchased for resale			192		272		277		(5	)	282		369		367		2
	Ammonium sulfate			114		296		120		176		96		386		164		222
	ESN and other			260								244
Total Wholesale				2,736		322		248		74		2,644		444		289		155
Wholesale share of joint ventures
	Nitrogen			133		305		285		20		114		395		338		57
	Product purchased for resale			-		-		-		-		32		351		341		10
				133		305		285		20		146		386		339		47
Total Wholesale including proportionate share in joint ventures				2,869		322		251		71		2,790		441		292		149

Selected volumes and per tonne information				Six months ended June 30,
				2016								2015
								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		5,653		459		364		95		5,579		540		442		98
		International		1,155		376		351		25		1,174		431		400		31
	Total crop nutrients			6,808		445		362		83		6,753		521		435		86
Wholesale
	Nitrogen
		North America
			Ammonia	624		427						616		569
			Urea	822		316						819		420
			Other	463		256						549		316
	Total nitrogen			1,909		338		210		128		1,984		437		229		208
	Potash
		North America		703		217						483		378
		International		450		163						211		240
	Total potash			1,153		196		170		26		694		336		228		108
	Phosphate			525		553		505		48		572		652		522		130
	Product purchased for resale			489		304		297		7		830		356		347		9
	Ammonium sulfate			171		294		118		176		178		362		150		212
	ESN and other			415								420
Total Wholesale				4,662		328		252		76		4,678		436		299		137
Wholesale share of joint ventures
	Nitrogen			216		301		270		31		166		399		367		32
	Product purchased for resale			-		-		-		-		117		321		309		12
				216		301		270		31		283		367		343		24
Total Wholesale including proportionate share in joint ventures				4,878		327		253		74		4,961		432		301		131

3. Risk Management

Commodity price risk
Natural gas derivative financial instruments outstanding (notional amounts in millions of MMBtu)
		June 30,							December 31,
		2016							2015
				Average		Fair value					Average		Fair value
				contract		of assets					contract		of assets
		Notional		price (a	)	(liabilities	)		Notional		price (a	)	(liabilities	)
Designated as hedges
	AECO swaps	61		2.97		(46	)		74		2.78		(56	)
						(46	)						(56	)

(a)	U.S. dollars per MMBtu.

	Fair value of assets (liabilities)
Maturities of natural gas derivative contracts	2016		2017		2018
Designated as hedges	(11	)	(17	)	(18	)

Impact of change in fair value of natural gas derivative financial instruments	June 30,			December 31,
	2016			2015
A $10-million impact to other comprehensive income requires movement in gas prices per MMBtu	0.23			0.28

Use of derivatives to hedge exposure to natural gas market price risk
Term (gas year - 12 months ending October 31)	2016		2017		2018		2019
Maximum allowable (% of forecast gas requirements)	75		75		75		25		(a	)
Forecast average monthly natural gas consumption (millions of MMBtu)	9		9		9		9
Gas requirements hedged using derivatives designated as hedges (%)	25		25		21		-

(a)	Maximum monthly hedged volume may not exceed 90 percent of planned monthly requirements.

For our natural gas derivatives designated in hedging relationships, the underlying risk of the derivative contracts is identical to the hedged risk, and 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)

			June 30,								December 31,
			2016								2015
							Average		Fair value						Average		Fair value
							contract		of assets						contract		of assets
Sell/Buy			Notional		Maturities		price (a	)	(liabilities	)	Notional		Maturities		price (a	)	(liabilities	)
	Forwards
		USD/CAD	87		2016		1.30		-		190		2016		1.38		(1	)
		CAD/USD	1,911		2016		1.29		12		1,805		2016		1.35		45
		USD/AUD	75		2016		1.43		5		73		2016		1.42		2
		AUD/USD	55		2016		1.41		(3	)	143		2016		1.43		(3	)
	Options
		USD/CAD - buy USD puts	55		2016		1.30		2		-		-		-		-
		USD/CAD - sell USD calls	96		2016		1.40		(1	)	-		-		-		-
		USD/AUD - buy USD puts	-		-		-		-		59		2016		1.38		(1	)
									15								42

(a)	Foreign currency per U.S. dollar.

			June 30,							December 31,
			2016							2015
			Fair value							Fair value
			Level 1		Level 2		Carrying value			Level 1		Level 2		Carrying value
Financial instruments measured at fair value on a recurring basis
	Cash and cash equivalents		-		307		307			-		515		515
	Accounts receivable - derivatives		-		23		23			-		48		48
	Other current financial assets - marketable securities		21		100		121			20		122		142
	Accounts payable - derivatives		-		39		39			-		29		29
	Other financial liabilities - derivatives		-		15		15			-		33		33
Financial instruments measured at amortized cost
	Current portion of long-term debt
		Debentures	-		104		100			-		-		-
		Floating rate debt	-		7		7			-		8		8
	Long-term debt
		Debentures	-		4,809		4,371			-		4,464		4,469
		Fixed and floating rate debt	-		41		41			-		44		44

There have been no transfers between Level 1 and Level 2 fair value measurements in the six months ended June 30, 2016 or June 30, 2015. We do not measure any of our financial instruments using Level 3 inputs.

4. Expenses

	Three months ended				Six months ended
Other expenses	June 30,				June 30,
	2016		2015		2016		2015
Loss on foreign exchange and related derivatives	6		1		8		-
Interest income	(16	)	(16	)	(29	)	(33	)
Gain on sale of assets	-		-		-		(38	)
Environmental remediation and asset retirement obligations	3		-		5		9
Bad debt expense	21		25		29		32
Potash profit and capital tax	5		5		8		10
Other	32		11		41		13
	51		26		62		(7	)

5. Debt

						June 30,			December 31,
						2016			2015
		Maturity		Rate (%) (a	)
Short-term debt
	Commercial paper	2016		0.94		950			632
	Credit facilities			4.82		119			203
						1,069			835

(a)	Weighted average rates at June 30, 2016.