Earlier this year, Nutrien suspended production at its Allan, Lanigan, and Vanscoy mines for an eight-week period. Seen here is the company’s Cory mine, which celebrates its 50 years in operation this year. Image used under license from Nutrien Ltd.
Nutrien Ltd. (Nutrien) announced yesterday its 2019 third-quarter results, with net earnings from continuing operations of $141 million ($0.24 diluted earnings per share). Third-quarter adjusted net earnings was $0.24 per share and adjusted EBITDA was $785 million. Adjusted net earnings (total and per share amounts), and adjusted EBITDA, together with the related annual guidance, Potash adjusted EBITDA and free cash flow are non-IFRS financial measures. See “Non-IFRS Financial Measures” section for further information.
“Nutrien’s third-quarter results and fourth-quarter expectations are impacted by short-term market softness. However, we believe that agriculture fundamentals are starting to strengthen and we expect 2020 to be a strong year for crop input demand for which we are well positioned to benefit,” commented Chuck Magro, Nutrien’s president and CEO. “Over the course of the year, we have allocated capital to grow our retail business while continuing to return significant capital to our shareholders. That is what our integrated business model is designed to do, and we remain confident that it will drive significant long-term value creation.”
• Retail performed very well with EBITDA increasing 64 per cent in the third quarter of 2019 compared to the same period last year due to the delayed timing of crop input demand in the US and stronger margins. Nutrien’s sales, service, and supply chain strength helped to grow share in key markets on a year-to-date basis.
• Potash adjusted EBITDA was down 14 per cent in the third quarter of 2019 compared to the third quarter of 2018 due to lower sales volumes caused by a temporary reduction in global demand.
• Nitrogen EBITDA in the third quarter was nine per cent lower than the same period last year due primarily to lower net realized selling prices for ammonia.
• Nutrien generated $2.0 billion in free cash flow in the first nine months of 2019, up 28 per cent from the same period in 2018.
• Nutrien announced the close of its acquisition of Ruralco Holdings Limited at the end of the quarter, the third largest agriculture retailer in Australia.
• Nutrien full-year 2019 adjusted net earnings per share and adjusted EBITDA guidance were lowered to $2.30 to $2.55 per share and $4.0 to $4.3 billion, respectively.
Global potash prices declined during the third quarter of 2019 as customers in key offshore markets drew from inventories built by strong first-half 2019 shipments, delaying new annual contracts in China and India. Global producers announced curtailments to rebalance supply over the near term.
We anticipate potash demand to remain subdued through the fourth quarter of 2019 as customers continue to draw down inventory. We are lowering our 2019 projection of global potash deliveries to 64 to 65 million tonnes (previously 65-67 million tonnes). We are also further lowering our potash sales volume guidance to 11.6 to 12.0 million tonnes, which represents an incremental 300,000 tonnes impact to the 700,000 tonne downward revision announced on September 11, 2019 (potash sales volume guidance provided on July 29, 2019 was 12.6 to 13.0 million tonnes).
We expect global potash deliveries to rebound to 67 to 69 million tonnes in 2020 as offshore inventories are depleted, Western Hemisphere planted acreage increases significantly and affordability for growers remains attractive with improved prices for corn, soybeans and palm oil.