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Nutrien Ltd posts record earnings in Q1

Grain Central, May 11, 2022

Nutrien corporate office in Calgary. The company head office is in Saskatoon. Photo: Nutrien

NUTRIEN Limited has generated record net earnings of US$1.4 billion in the first quarter of 2022 due to higher realised prices and strong retail performance, it said in its latest results announcement issued May 2 from its headquarters in Saskatoon, Canada.

This was up from net earnings of $1.2B in the previous quarter.

The company’s retail division, Nutrien Ag Solutions, delivered record first-quarter adjusted EBITDA of $240 million as a result of supportive market conditions in its key operating regions.

Retail sales and gross margin both increased by 30 per cent in the first quarter of 2022.

Impact on potash

Potash adjusted EBITDA increased to $1.4B due to higher net realised selling prices.

Russia and Belarus account for approximately 40pc of global potash production and exports.

Financial sanctions and other restrictions imposed on Russia and Belarus have significantly constrained supply, with reported potash exports from the region approximately 20pc lower in Jan-Feb 2022 compared to the corresponding 2021 period.

As a result, Nutrien has reduced its projected range of total global potash shipments from companies including itself to 60-65M tonnes (Mt) in 2022.

“We are estimating a wider-than-normal range of global potash shipments given the level of uncertainty of supply from Russia and Belarus,” the company said.

On March 16, Nutrien announced its intention to increase potash production capability by nearly 1Mt tonnes in response to the uncertainty of potash supply from eastern Europe.

North American sales volumes decreased due to a delayed start to the planting season, with offshore volumes increasing as a result of strong global demand.

Nutrien has raised its potash sales-volume guidance to 14.5-15.1Mt in 2022, including the extra 1Mt announced in March.

Natural gas hike offset

Nutrien’s adjusted EBITDA for nitrogen increased to $995M in Jan-Mar 2022, up from $921M in Oct-Dec 2021.

“Higher net realised selling prices more than offset higher natural gas costs and lower sales volumes due to unplanned production outages, along with the delayed start to the planting season in North America.”

Phosphate adjusted EBITDA increased to $239M in Jan-Mar 2022, more than double the corresponding period in 2021 due to higher net realised selling prices.

Nutrien said global nitrogen supplies have tightened due to reduced availability from Russia, the largest global exporter of nitrogen products, as well as Chinese Government restrictions on urea exports.

“Russian natural gas supply uncertainty has also contributed to very high and volatile natural gas prices in Europe, which has led to reduced nitrogen operating rates in the region.

“While underlying agricultural and industrial fundamentals support nitrogen demand, tight supplies could constrain demand in markets such as Europe and in some regions of North America.

Nutrien has lowered nitrogen sales volume guidance to 10.7-11.1Mt in 2022, down from 10.8-11.3Mt seen for 2022 in Nutrien’s February statement.

“This reflects the impact of unplanned plant outages that occurred during the first quarter of 2022.”

Nutrien said global phosphate supply has been impacted by a reduction in Russian and Chinese DAP and MAP fertiliser exports.

“Phosphate markets have been further supported by a significant increase in sulphur and ammonia costs.”

Global snapshot

Nutrien’s Q1 results said global grain and oilseed inventories were well below historical average levels entering 2022 due to strong demand and lower-than-expected supply in recent growing seasons.

“The Russia and Ukraine conflict has led to further tightening of crop export supplies and heightened global food security concerns.

“Prices for key crops such as corn, soybean and wheat are 50-90pc above the 10-year average, providing a strong incentive for growers to increase production.”

Nutrien has cited the USDA’s expectation that combined planted area of US corn, soybeans, and cotton could set a record in 2022.

“Wet and cool weather delayed the start of the North American spring season and could impact planting decisions and the timing of input demand.

“While drought conditions reduced the size of the South American soybean crop, the safrinha corn crop is reported to be in relatively good condition.

“Prospective corn and soybean margins remain well above historical average levels, and we expect strong demand for crop inputs in 2022.

“Soil-moisture conditions are favourable entering the Australian winter-planting season as some of the drier areas in Western Australia have received rains, and areas that have experienced flooding are not expected to materially change cropping area.”

Source: Nutrien Ltd

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