Nutrien Ltd., Saskatoon, reported second-quarter results that broke records, beat Wall Street estimates, and prompted an uptick in guidance for the year. Second-quarter net earnings were $1.11 billion ($1.94 per diluted share) on sales of $9.76 billion, up from the year-ago $765 million ($1.34 per share) and $8.43 billion, respectively. Adjusted EBITDA was $2.2 billion, up from the year-ago $1.7 billion.
The average analyst projection (Bloomberg Consensus) had adjusted EBITDA of $2.19 billion and sales at $9.71 billion. Analysts were more optimistic on net income at $1.16 billion compared to Nutrien’s $1.11 billion.
“We delivered record earnings across our global business for the second quarter and first half of 2021 and expect the remainder of the year to contribute to a full year record,” said Mayo Schmidt, Nutrien President and CEO. “We showcased Nutrien’s unique competitive advantages, strong operating performance and the significant leverage to higher fertilizer prices as we focus on our purpose to help growers meet the ever-growing demand for increased food production in a sustainable manner. The outlook for global crop and fertilizer markets continues to be very strong and we are positioned to benefit from our structural advantages and as a global leader in agriculture.
“We increased our full year 2021 adjusted EBITDA guidance by over $1.5 billion, supported in part by our quick actions to produce an additional one million mt of potash, illustrating the power of the Potash team’s unparalleled flexible, reliable, and low-cost six-mine network,” he added.
Nutrien raised full-year 2021 adjusted EBITDA and adjusted net earnings per share guidance to $6.0-$6.4 billion and $4.60-$5.10 per share, up from $4.5-$4.9 billion and $2.55-$3.25 per share, respectively. It said this reflects higher expected results across the business, as well as the benefits of increasing 2021 potash sales guidance by one million mt to address global demand. By fourth-quarter 2021, Nutrien expects to surge potash production to an annualized run-rate of approximately 17 million mt.
“We expect global potash demand in 2021 to be at record levels between 69-71 million mt and global inventory levels in key regions to remain very low,” Schmidt told analysts in the company earnings call. “We are the only producer globally with the capability to respond. We delivered record volumes in the first half of 2021 and are on track to achieve a full-year record,” he added, citing exceptional spot market demand in the U.S., Brazil, and Southeast Asia.
Schmidt, however, was a bit cautious, saying that when the Brazil price sits at $680/mt there is some level of concern whether growers will simply mine the soil.
Going forward, he expects global potash demand to grow 2-3 percent per year, which could mean that in the next 8-9 years the industry would need 14-23 million mt/y. And he reminded that if the market needs it, Nutrien has a line on 5 million mt/y more of low-cost, brownfield tons.
On the Nitrogen side, the company said it has completed its major turnaround at Borger, Texas, and it is one-third of the way through its turnaround at Redwater, Alta.
Among its Retail segment highlights was that in the first-half the company’s digital platform delivered $1.57 billion in sales, up from the year-ago $722 million. Digital’s proportion of sales rose to 19 percent from 10 percent. In the meantime, the brick and mortar part of the segment continues to be rationalized; the company estimated that it rationalized some 70 retail branches in North America over the past three years.
Nutrien also boosted segment adjusted EBITDA and sales volume expectations: Retail to $1.6-$1.7 billion from $1.55-$1.65 billion; Potash to $2.4-$2.6 billion from $1.5-$1.7 billion; Nitrogen to $1.85-$2.05 billion from 1.3-$1.5 billion; Phosphate to $400-$500 million from $275-$375 million; Potash sales tons to 13.5-13.9 million mt from 12.5-13.0 million mt; and Nitrogen sales tons to 10.8-11.2 million mt from 10.9-11.4 million mt.
Nutrien’s Board of Directors declared a quarterly dividend of $0.46 per share payable on Oct. 5, 2021, to shareholders of record on Sept. 30, 2021.
Six-month net earnings were $1.2 billion ($2.16 per share) on sales of $14.4 billion, up from the year-ago $730 million ($1.28 per share) and $12.6 billion, respectively. Adjusted EBITDA was up at $3 billion from the year-ago $2.2 billion.
| Retail (millions) | 2Q-21 | 2Q-20 | YTD-21 | YTD-20 |
| Adjusted EBITDA | 1,097 | 964 | 1,206 | 971 |
| Gross Margin | 1,858 | 1,627 | 2,510 | 2,168 |
| Total Sales | 7,537 | 6,764 | 10,509 | 9,425 |
| CN Sales | 3,045 | 2,527 | 4,061 | 3,312 |
| CN Margins | 703 | 559 | 923 | 715 |
| CN Volume (000 mt) | 6,152 | 6,122 | 8,552 | 8,147 |
| Avg ($/mt) | 495 | 413 | 475 | 406 |
| CN gross margin per mt | 114 | 91 | 108 | 88 |
| Potash (millions) | 2Q-21 | 2Q-20 | YTD-21 | YTD-20 |
| Adjusted EBITDA | 495 | 335 | 875 | 620 |
| Gross Margin | 500 | 278 | 820 | 530 |
| Total Sales | 817 | 558 | 1,428 | 1,105 |
| Sales Volume (000 mt) | 3,621 | 3,615 | 6,778 | 6,492 |
| Avg ($/mt) | 226 | 163 | 211 | 170 |
| Nitrogen (millions) | 2Q-21 | 2Q-20 | YTD-21 | YTD-20 |
| Adjusted EBITDA | 555 | 383 | 855 | 619 |
| Gross Margin | 416 | 208 | 566 | 305 |
| Total Sales | 982 | 696 | 1,555 | 1,226 |
| Sales Volume (000 mt) | 2,966 | 3,190 | 5,369 | 5,718 |
| Avg ($/mt) | 331 | 218 | 290 | 214 |
| Phosphate (millions) | 2Q-21 | 2Q-20 | YTD-21 | YTD-20 |
| Adjusted EBITDA | 112 | 77 | 209 | 123 |
| Gross Margin | 84 | 28 | 150 | 21 |
| Total Sales | 351 | 250 | 695 | 529 |
| Sales Volume (000 mt) | 586 | 666 | 1,288 | 1,425 |
| Avg ($/mt) | 598 | 375 | 539 | 372 |