Nutrien feels the pinch of dropping potash prices in Q3

Nutrien (NYSE:NTR) experienced a 2.4% decline in post-market trading on Wednesday after it significantly missed its Q3 adjusted earnings targets. The company’s sales plummeted by 31% year-over-year, reaching $5.63 billion, largely attributed to reduced net selling prices across all its segments.

In stark contrast to its previous year’s performance, the world’s predominant fertilizer manufacturer announced that its Q3 net income dwindled to $82 million, or $0.15 per share, from the $1.58 billion, or $2.94 per share, recorded in the same quarter last year.

Despite witnessing a remarkable 23% surge in Q3 potash sales volumes – the highest for any third quarter to date, primarily fueled by robust demand from North America and Brazil – revenues suffered a sharp 51% decline, standing at $972 million. This is largely due to potash prices averaging at $250 per metric ton, a significant drop from the $633 per ton seen in the year-earlier quarter.

Meanwhile, Q3 nitrogen sales volumes dipped by 11% year-over-year, pulling revenues down by 57% to $659 million. Unexpected outages in Q3 and the rescheduling of maintenance at its Borger site to Q4 led Nutrien to revise its full-year nitrogen sales volume forecast downwards.

In terms of annual outlook, Nutrien has fine-tuned its guidance for adjusted earnings, now estimating a range of $4.15-$5.00 per share, a downward shift from its previous $3.85-$5.60 per share projection. This adjustment positions it below the $5.21 consensus estimate by analysts. Adjusted EBITDA predictions now stand between $5.8 billion and $6.4 billion, revised from the earlier $5.5 billion to $6.7 billion.

Furthermore, Nutrien has reduced its forecast for FY 2023 cash from operations to $4 billion-$4.5 billion from an initial $4.4 billion-$4.9 billion, while maintaining an anticipated capital expenditure of approximately $2.7 billion.

Concluding on an optimistic note, Nutrien projected that the global demand for fertilizers would see a 5%-10% uptick in Q4 compared to the figures from the corresponding period last year.

Source: Seeking Alpha