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FULL YEAR: NUTRIEN'S SALES DOWN 23%, NET EARNINGS DOWN 83%: $1.28 BILLION
Source: Nutrien news release

SASKATOON, Saskatchewan--Nutrien Ltd. (TSX and NYSE: NTR) announced today its fourth quarter 2023 results, with net earnings of $176 million ($0.35 diluted net earnings per share). Fourth quarter 2023 adjusted net earnings per share1 was $0.37 and adjusted EBITDA was $1.1 billion.

"We saw a continuation of strong fertilizer market fundamentals in North America during the fourth quarter driven by improved affordability, an extended fall application season and low channel inventories. Utilizing the strengths of our integrated business, we achieved record fourth-quarter potash deliveries, increased crop nutrient sales volumes across our global Retail network and generated strong cash flow from operations," commented Ken Seitz, Nutrien's President and CEO.

"As we look ahead to 2024, we expect to deliver higher fertilizer sales volumes and Retail earnings, supported by increased crop input market stability and demand. We continue to prioritize strategic initiatives that enhance our capability to serve growers in our core markets, maintain the low-cost position and reliability of our assets, and position the Company for growth," added Mr. Seitz.

Highlights:

*Generated net earnings of $1.3 billion ($2.53 diluted net earnings per share) and adjusted EBITDA1 of $6.1 billion ($4.44 adjusted net earnings per share1) in 2023, down from the record levels achieved in 2022.

*Adjusted EBITDA declined primarily due to lower net realized selling prices across all segments and lower Nutrien Ag Solutions ("Retail") earnings.

*Cash provided by operating activities totaled $5.1 billion in 2023, representing 84 percent of adjusted EBITDA.

*Retail adjusted EBITDA of $1.5 billion in 2023 decreased primarily due to lower gross margin for both crop nutrients and crop protection products, as we sold through high-cost inventory.

*Crop nutrient sales volumes increased as growers returned to more normalized application rates to replenish nutrients in the soil. We continued to grow our proprietary nutritional and biostimulant sales and margins through differentiated product offerings and expanded manufacturing capacity.

*Potash full year 2023 adjusted EBITDA declined to $2.4 billion due to lower net realized selling prices. We delivered record fourth quarter potash sales volumes driven by strong demand in North America and increased offshore sales.

*Nitrogen full year 2023 adjusted EBITDA decreased to $1.9 billion due to lower net realized selling prices for all major nitrogen products, which more than offset lower natural gas costs and higher sales volumes.

*In the fourth quarter of 2023, we recognized a $76 million non-cash impairment in our Nitrogen segment relating to our Trinidad property, plant and equipment due to a new natural gas contract and the resulting outlook for higher expected natural gas costs and constrained near-term availability.

*We expect improved natural gas availability in Trinidad as the development of additional gas fields is anticipated to add new supply starting in 2026.

*Returned $2.1 billion to shareholders in 2023 through dividends and share repurchases. Nutrien's Board of Directors approved an increase in the quarterly dividend to $0.54 per share. Nutrien continues to target a stable and growing dividend with our dividend per share increasing by 35 percent since the beginning of 2018.

*Nutrien's Board of Directors also approved the purchase of up to 5 percent of Nutrien's outstanding common shares over a twelve-month period through a normal course issuer bid ("NCIB"). The NCIB is subject to acceptance by the Toronto Stock Exchange.

Agriculture and Retail

*Global grain stocks-to-use ratios remain historically low going into the 2024 growing season as tightening supplies of wheat and rice have offset increased corn supplies in the US and Brazil. We expect weather and geopolitical issues will continue to impact grain and oilseed production, exports and inventory levels.

*Crop prices have declined from historically high levels in 2022, but lower crop input prices have resulted in improved demand, evidenced by the strong North American fall application season in 2023. We expect US corn plantings to range from 91 to 92 million acres in 2024 and soybean plantings to range from 87 to 88 million acres.

*In Brazil, dry weather during the summer crop growing season and lower corn prices could result in lower corn area in 2024. Brazilian growers are expected to continue to expand soybean acreage, which we anticipate will support the need for strong fertilizer imports in the second and third quarters of 2024.

*In Australia, growers have benefited from multiple years of above-average yields and fundamentals remain supportive entering 2024. Timely precipitation led to higher-than-expected winter crop production, however if the El NiƱo weather pattern continues, it could pose a risk for the 2024 growing season.

Crop Nutrient Markets

*Global potash demand was strong through the second half of 2023, and we estimate full-year shipments were between 67 to 68 million tonnes. The increase was supported by strong consumption and increased imports in key markets such as North America, China and Brazil.

*We expect global potash demand will continue to recover towards trend levels in 2024 with full-year shipments projected between 68 to 71 million tonnes. We anticipate a relatively balanced global market with incremental supply from producers in Canada, Russia, Belarus and Laos.

*We are seeing strong potash demand ahead of the North American spring application season as channel inventories were tight to start the year. Potash demand in Southeast Asia is expected to increase significantly in 2024 due to much lower inventory levels compared to the prior year and favorable economics for key crops such as oil palm and rice.

*We expect lower potash imports from China compared to the record levels in 2023 but for demand to remain at historically high levels driven by increased consumption.
We expect nitrogen supply constraints to persist in 2024, including limited Russian ammonia exports, reduced European operating rates and Chinese urea export restrictions. North American natural gas prices remain highly competitive compared to Europe and Asia, and we expect Henry Hub natural gas prices to average approximately $2.50 per MMBtu for the year.

*The US nitrogen supply and demand balance is projected to be tight ahead of the spring application season, as nitrogen fertilizer net imports in the first half of the 2023/2024 fertilizer year were down an estimated 55 percent compared to the three-year average. Global industrial nitrogen demand remains a risk in 2024 as industrial production, most notably in Europe and Asia, has yet to rebound to historical levels.

*Phosphate fertilizer markets have remained relatively strong in the first quarter of 2024, particularly in North America where channel inventories were low entering the year. We expect Chinese phosphate exports to be similar to 2023 levels and tight stocks in India to support demand ahead of their key planting season.

To read the entire report click here.


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