Nutrien Ltd. on April 12 confirmed earlier reports that it is seeking to sell its retail operations in Argentina, Chile, and Uruguay in order to focus on Brazil and other global markets (GM April 5, p. 1). The Canadian company is prioritizing key markets in a bid to boost returns for investors, a spokesperson said in an emailed statement to Bloomberg.
Nutrien, which has been in South America for more than a quarter century, is working to recover after sharply missing profit expectations in the last three months of 2023 amid plunging fertilizer prices that hurt retail results.
In full-year 2023, Nutrien recognized a $465 million non-cash impairment primarily to goodwill relating to its Retail – South American assets, mainly due to the impact of crop input price volatility, more moderate long-term growth assumptions, and higher interest rates.
Nutrien told analysts last fall that it had paused additional investments in Brazil until there is greater stabilization of the market (GM Nov. 3, 2023). “We will utilize this period to integrate recent acquisitions and optimize our cost structure,” said Pedro Farah, Executive Vice President and Chief Financial Officer.
Previously, the company had been on a buying spree, particularly in Brazil. By mid-July 2022 it expected to surpass its stated target of $100 million of adjusted EBITDA in Brazil by 2023. After its latest acquisition at the time of Casa do Adubo SA (GM July 22, 2022), it expected Latin American sales to reach $2.2 billion and move the company’s Brazil footprint from five states to 13.
Nutrien expected the Casa do Adubo SA deal to take it to 180 commercial units in Latin America, including customer-facing retail branches and experience centers, five industrial plants, and four fertilizer blenders. In addition, Nutrien said it would have more than 3,500 employees in the region, including more than 700 crop consultants serving growers in Argentina, Brazil, Chile, and Uruguay. In late 2021, it increased its plans for blending plants in Brazil from four to 12 (GM Dec. 17, 2021), which it said would be able to cover 10% of local demand.
Nutrien had 48 retail outlets in Argentina, 12 in Chile, and six in Uruguay as of late 2021 (GM Dec. 17, 2021). The company had not responded to inquiries at press time for an update.
Nutrien said in its annual report that Argentina’s currency controls meant it lost money when it transferred currency out of the country because it had to use a more expensive exchange rate. New President Javier Milei has promised to scrap the controls as he seeks to deregulate the economy.
Nutrien’s exit from the Argentine retail business comes as the country seeks to cheapen the herbicide and fertilizer market for farmers by reducing import taxes on both inputs. Other companies have also abandoned Argentina’s tough business environment in recent years, including HSBC Holdings PLC and Walmart Inc. Bayer AG ditched its Argentine soy seed business in 2021.
Nutrien didn’t say what it is planning to do with its 50% stake in nitrogen producer Profertil SA. Argentina state-run energy company YPF SA is the other partner. YPF, under new management appointed by Milei, is looking to divest assets to focus on shale drilling.
Nutrien said it would continue to support all customers and partners through its divestiture process.