Nutrien Ltd., Saskatoon, reported second-quarter net earnings of $3.6 billion ($6.51 per diluted share) and adjusted EBITDA of $4.99 billion, besting the Bloomberg Consensus, the average estimates of major analysts, which were $3.16 billion and $4.9 billion, respectively. Nutrien sales were $14.5 billion, just shy of analyst projections of $14.6 billion. By comparison, year-ago net earnings were $1.11 billion ($1.94 per share) on sales of $9.76 billion, with adjusted EBITDA of $2.22 billion.
“Nutrien delivered record earnings in the first half of 2022 due to the strength of market fundamentals, strong operating performance, the advantaged position of our global production assets, and the excellent results of Retail,” said Ken Seitz, Nutrien’s Interim President and CEO. “We generated strong results across our integrated business and demonstrated our unmatched capability to efficiently supply our customers with the products they need to help sustainably feed a growing world.
“We expect supply challenges across global energy, agriculture, and fertilizer markets to persist well beyond 2022,” he added. “The strength of our projected cash flow provides an opportunity to accelerate high-return strategic growth initiatives and return significant capital to shareholders. We intend on completing our 10% share repurchase program in 2022, increasing the total amount of capital returned to shareholders to approximately $6 billion during the year.
“We expect nitrogen prices to strengthen in the second half, supported by high European gas prices as well as restricted Chinese urea and Russian ammonia exports,” Seitz told analysts. The company also said that it has been exporting more UAN from the U.S. than it has previously and it is looking at opportunities to export more ammonia.
Nutrien reversed a non-cash impairment of $450 million related to its Phosphate operations, which impacted net earnings. In 2020, Nutrien recorded an impairment of Aurora phosphate assets totaling $545 million as a result of lower long-term forecasted global phosphate prices.
In 2017 and 2020, the company recorded an impairment totaling $465 million on its White Springs assets, and the company now said that could also see an impairment reversal, with the maximum being $340 million.
Despite the uptick in earnings, Nutrien revised downward full-year 2022 adjusted EBITDA guidance to $14-$15.5 billion from the $14.5-$16.5 billion given in May. The company said the revision was primarily due to lower expected Nitrogen earnings as a result of lower nitrogen benchmark pricing and higher natural gas costs. Full-year adjusted net earnings per share guidance was dropped to $15.80-$17.80 from $16.20-$18.70, with this guidance including plans to allocate approximately $5 billion to share repurchases in 2022.
Nutrien also lowered potash and nitrogen sales volume guidance to reflect the impact of lower application in North America this spring. Potash sales volumes went to 14.3-14.9 million mt from 14.5-15.1 million mt, while adjusted EBITDA was narrowed to $7.6-$8.2 billion from $7.5-$8.3 billion. The company has also tightened its forecast for global potash shipments to 61-64 million mt from 60-65 million mt.
Nitrogen sales volumes went to 10.6-11.0 million mt from 10.7-11.1 million mt and adjusted EBITDA to $4.0-$4.7 billion from $5.0-$5.8 billion. Phosphate adjusted EBITDA guidance went to $750-$850 million from $800-$900 million.
Nutrien revised Retail adjusted EBITDA guidance upward $2.1-$2.2 billion from $1.8-$1.9 billion.
Six-month net earnings were $4.99 billion ($8.99 per share) on sales of $22.16 billion, up from the year-ago $1.25 billion ($2.16 per share) and $14.42 billion. Adjusted EBITDA was $7.61 billion, up from $3.02 billion.
| Retail (millions) | 2Q-22 | 2Q-21 | YTD-22 | YTD-21 |
| Adjusted EBITDA | 1,427 | 1,097 | 1,667 | 1,206 |
| Gross Margin | 2,340 | 1,858 | 3,185 | 2,510 |
| Total Sales | 9,422 | 7,537 | 13,283 | 10,509 |
| CN Sales | 4,548 | 3,045 | 6,135 | 4,061 |
| CN Margins | 911 | 703 | 1,203 | 923 |
| CN Volume (000 mt) | 4,995 | 6,152 | 7,170 | 8,552 |
| Avg ($/mt) | 911 | 495 | 856 | 475 |
| CN gross margin per mt | 182 | 114 | 168 | 108 |
| Potash (millions) | 2Q-22 | 2Q-21 | YTD-22 | YTD-21 |
| Adjusted EBITDA | 2,027 | 495 | 3,433 | 875 |
| Gross Margin | 2,269 | 500 | 3,814 | 820 |
| Total Sales | 2,668 | 817 | 4,518 | 1,428 |
| Sales Volume (000 mt) | 3,709 | 3,621 | 6,752 | 6,778 |
| Avg ($/mt) | 719 | 226 | 669 | 211 |
| Nitrogen (millions) | 2Q-22 | 2Q-21 | YTD-22 | YTD-21 |
| Adjusted EBITDA | 1,240 | 555 | 2,235 | 855 |
| Gross Margin | 1,058 | 416 | 1,918 | 566 |
| Total Sales | 1,880 | 982 | 3,342 | 1,555 |
| Sales Volume (000 mt) | 2,595 | 2,966 | 4,860 | 5,369 |
| Avg ($/mt) | 724 | 331 | 688 | 290 |
| Gas Costs ($/mmBtu) | 8.48 | 3.89 | 7.68 | 3.54 |
| Phosphate (millions) | 2Q-22 | 2Q-21 | YTD-22 | YTD-21 |
| Adjusted EBITDA | 184 | 112 | 423 | 209 |
| Gross Margin | 156 | 84 | 363 | 150 |
| Total Sales | 514 | 351 | 1,077 | 695 |
| Sales Volume (000 mt) | 556 | 586 | 1,207 | 1,288 |
| Avg ($/mt) | 925 | 598 | 892 | 539 |