Nutrien Ltd. reported third-quarter net earnings of $1.58 billion on sales of $8.19 billion, up from the year-ago $726 million and $6.02 billion, respectively. Adjusted EBITDA was $2.47 billion up from the year-ago $1.64 billion.
“Nutrien has delivered record earnings in 2022 due to the strength of agriculture fundamentals, higher fertilizer prices and excellent Retail performance,” said Ken Seitz, Nutrien President and CEO. “During the third quarter, we saw a temporary reduction in potash purchasing in North America and Brazil, which has impacted our sales volumes and realized prices in the second half of the year. However, the underlying demand drivers remain strong and global fertilizer supply challenges still persist, creating a supportive environment for Nutrien as we look ahead to 2023 and beyond.
“We are focused on efficiently supplying our customers with the products and services they need to help sustainably feed a growing world,” he added. “We continue to take a multi-year view of the market and remain confident that our additional low-cost potash and nitrogen production capability will be required to meet future demand.”
Despite the uptick in results, net income, sales, and adjusted EBITDA, all fell below the Bloomberg Consensus, the average analyst estimates of company performance. Analysts had projected $2.15 billion, $8.88 billion, and $3.58 billion, respectively.
Nutrien also adjusted its own guidance, with much of it going downward.
| Guidance Range as of: | ||
| Nov. 2 | Aug. 3 | |
| Adjusted net earnings per share | 13.25-14.50 | 15.80-17.80 |
| Adjusted EBITDA | 12.2-13.2 | 14.0-15.5 |
| Retail adjusted EBITDA | 2.15-2.25 | 2.10-2.20 |
| Potash adjusted EBITDA | 5.8-6.2 | 7.6-8.2 |
| Nitrogen adjusted EBITDA | 4.1-4.4 | 4.0-4.7 |
| Phosphate adjusted EBITDA | 700-800 | 750-850 |
| Potash sales mt (millions) | 12.5-12.9 | 14.3-14.9 |
| Nitrogen sales mt (millions) | 10.4-10.5 | 10.6-11.0 |
*Billions of US dollars, except where otherwise noted.
After the news, shares of Nutrien, the world’s largest potash producer, fell as much as 16% to C$95.49 in Toronto on Thursday Nov. 3.
Nutrien lowered its global potash shipment forecast for 2022 to 60-62 million mt from 61-64 million mt due to the impact of “higher-than-expected” inventory and “cautious buying in North America and Brazil,” during the second half of 2022, the company said. Nutrien forecasts 2023 global shipments to be 64-67 million mt, with Nutrien volumes at 15 million mt.
“In potash, specifically, international buyers have become strikingly emboldened by six months of persistent price declines, electing to leverage time and defer purchases as long as possible,” Raymond James Financial Inc. analyst Steve Hansen wrote in a note.
Still, Nutrien expects “robust” agricultural fundamentals will support increased potash use in 2023 and “pent-up demand will emerge” as inventories are drawn down and prices stabilize. The company’s plan to increase potash production capacity to 18 million tons by 2025 has not changed, Seitz told analysts in an earnings call.
Nutrien lowered nitrogen sales volume guidance to reflect the impact of Trinidad gas curtailments during the second half.
The company recognized a non-cash impairment reversal of $330 million in the third quarter associated with the Phosphate operations and $780 million for the first nine months due to a more favorable outlook for phosphate margins.
Nine-month net earnings were $6.57 billion on sales of $30.4 billion, up from the year-ago $1.97 billion and $20.44 billion, respectively. Adjusted EBITDA was $10.1 billion, up from $4.7 billion.
| Retail (millions) | 3Q-22 | 3Q-21 | YTD-22 | YTD-21 |
| Adjusted EBITDA | 235 | 291 | 1,902 | 1,497 |
| Gross Margin | 917 | 917 | 4,102 | 3,427 |
| Total Sales | 3,980 | 3,347 | 17,263 | 13,856 |
| CN Sales | 1,605 | 1,194 | 7,740 | 5,255 |
| CN Margins | 214 | 246 | 1,417 | 1,169 |
| CN Volume (000 mt) | 1,848 | 2,010 | 9,018 | 10,562 |
| Avg ($/mt) | 869 | 595 | 858 | 498 |
| CN gross margin per mt | 117 | 124 | 157 | 111 |
| Potash (millions) | 3Q-22 | 3Q-21 | YTD-22 | YTD-21 |
| Adjusted EBITDA | 1,378 | 808 | 4,811 | 1,683 |
| Gross Margin | 1,618 | 816 | 5,432 | 1,636 |
| Total Sales | 2,004 | 1,188 | 6,522 | 2,616 |
| Sales Volume (000 mt) | 3,167 | 3,791 | 9,919 | 10,569 |
| Avg ($/mt) | 633 | 313 | 658 | 248 |
| Nitrogen (millions) | 3Q-22 | 3Q-21 | YTD-22 | YTD-21 |
| Adjusted EBITDA | 855 | 532 | 3,090 | 1,387 |
| Gross Margin | 664 | 406 | 2,582 | 972 |
| Total Sales | 1,507 | 973 | 4,849 | 2,528 |
| Sales Volume (000 mt) | 2,626 | 2,521 | 7,486 | 7,890 |
| Avg ($/mt) | 574 | 386 | 648 | 320 |
| Gas Costs ($/mmBtu) | 8.24 | 4.78 | 7.86 | 3.94 |
| Phosphate (millions) | 3Q-22 | 3Q-21 | YTD-22 | YTD-21 |
| Adjusted EBITDA | 143 | 135 | 556 | 344 |
| Gross Margin | 114 | 108 | 477 | 258 |
| Total Sales | 567 | 401 | 1,644 | 1,096 |
| Sales Volume (000 mt) | 640 | 620 | 1,847 | 1,908 |
| Avg ($/mt) | 886 | 648 | 890 | 575 |