- In its Q1 2023 financial update, Nutrien Ltd. (TSX:NTR) cut its annual profit forecast as elevated fertilizer prices, pointing to Western sanctions on Russia and Belarus as the cause
- Potash shipments from Belarus are projected to be above the company’s previous expectation for 2023, partially offset by lower expected exports from Russia
- Nutrien is revising its full-year 2023 adjusted EBITDA guidance to $6.5 to $8.0 billion and full year 2023 adjusted net earnings guidance to $5.50 to $7.50 per share
- Nutrien Ltd. (NTR) opened trading at C$81.82 per share
Russia’s invasion of Ukraine has seen a lot of global impacts since it began, some of which are being felt across a number of industries.
In its Q1 2023 financial update, Nutrien Ltd. (TSX:NTR) cut its annual profit forecast as elevated fertilizer prices, pointing to Western sanctions on Russia and Belarus as the cause.
Potash shipments from Belarus are projected to be above the company’s previous expectation for 2023, partially offset by lower expected exports from Russia.
Nutrien’s leadership now projects Belarusian shipments will be down 25 to 40 per cent this year and Russian shipments down 25 to 35 percent compared to 2021. The company has maintained its global potash shipment forecast between 63 and 67 million tonnes in 2023.
However, Nutrien noted that potash demand has strengthened in North America as the spring application season has progressed, while engagement in offshore markets has been more variable. The team now anticipates increased global potash demand in the second half of 2023 as a result of lower expected inventories and improved grower affordability compared to 2022.
The company stated that geopolitical and also weather-related challenges continue to impact global agriculture commodity markets, including significant production and export reductions from Ukraine and severe drought conditions in Argentina.
The global grain stocks-to-use ratio is projected to end the current growing season at the lowest level in more than 25 years. Corn, soybeans, and wheat prices have softened recently due to seasonal pressure resulting from the expectation of higher Brazilian and U.S. crop production. Even so, Nutrien noted that new crop futures are still approximately 15 per cent above the 10-year average and grower margins remain healthy.
Nutrien Ag Solutions adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) declined to $34 million in Q1 2023, which the company explained was primarily due to lower sales and gross margins for crop nutrients and crop protection products compared to the record levels achieved last year. Crop nutrient margins were below normalized levels in Q1 as prices declined and we worked through higher cost inventory. Potash adjusted EBITDA declined to $676 million in Q1 2023 due to lower net realized selling prices and lower sales volumes. North American sales volumes were impacted by just-in-time buying.
Nutrien’s President and CEO, Ken Seitz said the company delivered adjusted EBITDA of $1.4 billion in Q1 2023 and continued to demonstrate the advantages of flexible, low-cost production assets and global distribution network.
“Crop input demand has strengthened as the spring planting season progresses in the northern hemisphere and higher cost inventory is moving through the channel. We are encouraged by the continued stabilization of fertilizer markets following a year of unprecedented volatility and anticipate increased demand in the second half of 2023 due to strong agriculture fundamentals, improved grower affordability and lower inventory levels. With fertilizer prices near mid-cycle levels, we expect to generate strong operating cash flows in 2023 and to maintain a balanced and disciplined approach to capital allocation.”
Based on these and other market factors, Nutrien is revising its full-year 2023 adjusted EBITDA guidance to $6.5 to $8.0 billion and full year 2023 adjusted net earnings guidance to $5.50 to $7.50 per share. Nutrien now projects cash from operations of $5.0 to $5.8 billion, which is expected to be relatively stable due to an anticipated release in working capital.
Nutrien Ltd. (NTR) is the world’s largest provider of crop inputs and services. It produces and distributes 27M tonnes of potash, nitrogen, and phosphate products per year.
Year-to-date, Nutrien Ltd. (NTR) has fallen 18.2 per cent and has lost 35 per cent since this time, last year. NTR opened trading at C$81.82 per share.
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