Nutrien Ltd. reported second-quarter net earnings of $392 million ($0.78 diluted net earnings per share) and adjusted EBITDA of $2.24 billion, down from $448 million ($0.89 diluted net earnings per share) and $2.48 billion, respectively, in last year’s second quarter. The EBITDA results were up slightly from the average analyst estimate of $2.2 billion.
Nutrien cited lower fertilizer net selling prices and a loss on foreign currency derivatives, partially offset by increased Retail earnings, higher offshore potash sales volumes, and lower natural gas costs.
“Nutrien benefited from improved Retail margins, higher fertilizer sales volumes, and lower operating costs in the first half of 2024,” said Ken Seitz, Nutrien President and CEO. “Our upstream production assets and downstream Retail businesses in North America and Australia have performed well in 2024.”
Nutrien said sales volumes were lower in the second quarter as wet weather in North America impacted the timing of nitrogen applications, while first-half sales volumes were flat from 2023.
Net selling prices were lower in the second quarter and first half for all major nitrogen products, the company said, primarily due to weaker benchmark prices in key nitrogen producing regions. Cost of goods sold per mt decreased in the second quarter and first half mainly due to lower natural gas costs.
Nutrien reported net earnings of $557 million and adjusted EBITDA of $3.3 billion for the first six months, down from last year due to lower fertilizer prices but partially offset by increased Nutrien Ag Solutions earnings, higher potash sales volumes, and lower natural gas costs.
Retail adjusted EBITDA increased to $1.2 billion in the first half supported by strong demand and a normalization of product margins in North America. Nutrien lowered its Retail adjusted EBITDA guidance to $1.5-$1.7 billion, however, due primarily to ongoing market instability in Brazil and the impact of delayed planting in North America in the second quarter.
Potash adjusted EBITDA declined to $1.0 billion in the first half due to lower prices, which more than offset higher sales volumes and lower operating costs. Potash sales volume guidance was raised to 13.2-13.8 million mt due to record first-half sales volumes and the expectation for strong global demand in the second half, Nutrien said, adding that the range “reflects the potential for a relatively short duration Canadian rail strike in the second half.”
“The settlement of contracts with China and India in July is expected to support demand in standard grade markets in the second half of 2024, while uptake on our summer fill program in North America has been strong,” the company said.
Nitrogen adjusted EBITDA decreased to $1.1 billion in the first half due to lower prices, which more than offset lower natural gas costs. The company narrowed its nitrogen sales volume guidance to 10.7-11.1 million mt based on expectations of higher operating rates at its North American and Trinidad plants and growth in sales of urea and UAN. Nutrien said its ammonia production increased in the first half, driven by improved reliability and less turnaround activity.
“Chinese urea export restrictions have been extended into the second half of 2024 and natural gas-related supply reductions could continue to impact nitrogen operating rates in Egypt and Trinidad,” the company said. “US nitrogen inventories were estimated to be below average levels entering the second half of 2024, contributing to strong engagement on our summer fill programs.”
Phosphate adjusted EBITDA decreased in the second quarter and first half primarily due to lower prices, partially offset by lower input costs. Phosphate sales volume guidance was lowered to 2.5-2.6 million mt reflecting extended turnaround activity and delayed mine equipment moves.
“Phosphate fertilizer prices are being supported by tight global supply due to Chinese export restrictions, low channel inventories in North America, and seasonal demand in Brazil and India,” Nutrien said. “We anticipate some impact on demand for phosphate fertilizer in the second half of 2024 as affordability levels have declined compared to potash and nitrogen.”
Nutrien said favorable growing conditions have created an expectation for record US corn and soybean yields and pressured crop prices. “Despite lower crop prices, demand for crop inputs in North America is expected to remain strong in the third quarter of 2024 as growers aim to maintain optimal plant health and yield potential,” the company said. “We anticipate that good affordability for potash and nitrogen will support fall application rates in 2024.”
Nutrien recognized a $195 million non-cash impairment of assets due to the company’s previously announced decision to halt its Geismar Clean Ammonia project (GM June 14, p. 1).
The company also highlighted is margin improvement plan in Brazil, which included the curtailment of three fertilizer blenders and the closure of 21 selling locations in the second quarter (GM May 31, p. 26). Nutrien recognized a $335 million non-cash impairment of its Retail-Brazil assets due to ongoing market instability and more moderate margin expectations, and incurred a loss on foreign currency derivatives of approximately $220 million in Brazil.
“In Brazil, we continue to see challenges and are accelerating a margin improvement plan that is focused on further reducing operating costs and rationalizing our footprint to optimize cash flow,” Seitz said.
Nutrien announced that its Board of Directors has declared a quarterly dividend of $0.54 per share payable on Oct. 18, 2024, to shareholders of record on Sept. 27, 2024.