Nutrien Pauses Potash Production & Revise FY Guidance

Nutrien Ltd., a global leader in the agricultural industry, has released its financial results for the second quarter of 2023, revealing insights into the company’s performance, strategic decisions, and market outlook.

Nutrien Financial Performance

Second Quarter 2023 Highlights:

• Net Earnings: Nutrien reported net earnings of $448 million, including non-cash impairments of $465 million related to South American Retail goodwill and $233 million related to Phosphate property.
• Adjusted Earnings: The adjusted net earnings per share were $2.53, and adjusted EBITDA was $2.5 billion.
• First Half of 2023: The company generated net earnings of $1.0 billion and adjusted EBITDA of $3.9 billion, a significant decrease from the record levels in the first half of 2022.
• Retail Performance: Retail adjusted EBITDA declined to $1.1 billion in Q2, impacted by lower gross margins for crop nutrients and crop protection products.
• Potash Performance: Potash adjusted EBITDA declined to $654 million in Q2 due to weaker selling prices and lower offshore sales volumes.
• Nitrogen Performance: Nitrogen adjusted EBITDA declined to $569 million in Q2, affected by lower selling prices for major nitrogen products.
• Share Repurchase: Nutrien repurchased approximately 13.4 million shares year-to-date for approximately $1.0 billion.
• Full-year Guidance: Adjusted EBITDA and net earnings per share guidance for 2023 were revised to $5.5 to $6.7 billion and $3.85 to $5.60 per share, respectively.

Nutrien CEO’s Remarks

Ken Seitz, Nutrien’s President and CEO, acknowledged the impact of unprecedented volatility in global crop input markets over the last 18 months. He emphasized the strengthening demand in key markets like North America but noted a more uneven recovery in offshore markets.

Strategic Actions

Nutrien announced several strategic actions to enhance free cash flow and reduce controllable costs:

• Pausing Potash Production: An indefinite pause of potash ramp-up and suspension of work on the Geismar clean ammonia project.
• Capital Expenditure Reduction: Reducing planned capital expenditures by approximately $200 million in 2023 and targeting a $100 million reduction in expenses.
• Suspension of Clean Ammonia Project: Suspending work on the proposed 1.2 million tonne Geismar clean ammonia project due to increased capital costs, uncertainty in emerging uses for clean ammonia, and prioritization of other capital allocation alternatives.

Market Outlook

Nutrien’s market outlook highlighted several factors affecting the agricultural industry:

• Weather and Geopolitical Challenges: Dry conditions in North America, the war in Ukraine, and Russia’s cancellation of the Black Sea grain deal are impacting global grain and oilseed supply.
• Crop Prices: Crop prices remain historically high, supporting fertilizer affordability.
• Brazilian Market: Brazilian grain and oilseed prices were pressured by record crop size but are expected to remain robust.
• Global Potash Prices: Global potash prices weakened in Q2 2023 but are expected to see strong demand in Q3.
• Financial Guidance Revision: Full-year 2023 adjusted EBITDA guidance was revised to $5.5 to $6.7 billion, reflecting expectations of market factors.

Photo by James Baltz on Unsplash