Nutrien’s woes mount, as fertilizer giant slashes capital expenditures, slashes profit forecast again

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Nutrien Ltd. NTR-T is indefinitely suspending plans to ramp up its potash production, cutting its capital expenditure and reducing its profit forecast yet again, as a prolonged slump in the global fertilizer market takes its toll on the Canadian giant.

Saskatoon-based Nutrien announced late Wednesday that it is reducing its 2023 adjusted net earnings per share guidance to roughly US$4.72 a share, compared with around US$6.50 a share in May – a figure that had already been revised downward from February.

The fertilizer company had already warned last month that its profit forecast would likely be soon pared back, after it was forced to cut production at one of its mines owing to the inability to export potash out of the port of Vancouver amid the strike by the International Longshore and Warehouse Union.

Nutrien’s exports were curtailed in the second quarter by continuing problems at a terminal in Portland, Ore. That facility was knocked out of potash service after a structural failure with its conveyor system in May.

Formed in 2018 after the merger of Agrium Inc. with PotashCorp of Saskatchewan, Nutrien is one of the world’s largest fertilizer producers, producing potash, nitrogen and phosphate. The company is also a major agricultural retailer in the United States and Canada, selling fertilizers, seeds and pesticides.

Although there were fears over a possible global shortage of potash after sanctions were imposed on major producers Belarus and Russia in 2021 and 2022, the market instead has been weak. That’s in large part because both countries have been able to find alternative routes to subvert the sanctions, and find buyers in markets such as China.

Nutrien chief executive officer Ken Seitzin a statement referenced the “unprecedented volatility” the company has been grappling with in the global crop input market over the past 18 months.

A few months after Russia invaded Ukraine last year, Nutrien announced it was boosting a plan to increase its potash production to 18 million tonnes by 2025, which was a little more than 20-per-cent higher than its volumes at the time.

Nutrien on Wednesday said it was indefinitely pausing the plan for the big ramp up.

The price of potash has drifted down to approximately US$328 a tonne, compared with a peak of US$1,200 reached in April, 2022.

Nutrien’s Toronto Stock Exchange-listed shares have fallen by 15 per cent over the past year.

The company’s adjusted earnings per share in the second quarter came in at US$2.53 a share, far weaker than the Refinitiv estimate of US$2.77 a share.

Nutrien also said it is suspending work on a new ammonia plant it had planned to build in Geismar, La. in part because of higher than expected capital costs.

The big Canadian fertilizer company competes with Tampa-based The Mosaic Company MOS-N and Genmany’s K&S AG in its home province of Saskatchewan, and in a few years will go head-to-head with Anglo-Australian mining giant BHP Group Inc BHPLF, which is building a massive new potash mine called Jansen.