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Nutrien CEO encouraged by strong demand and fertilizer market stabilization

Improved mine automation helped fertilizer giant Nutrien Ltd. increase potash production in the first quarter amid strong demand for its products, the company’s chief executive said.
Nutrien company logo is shown in a handout. THE CANADIAN PRESS/HO

Improved mine automation helped fertilizer giant Nutrien Ltd. increase potash production in the first quarter amid strong demand for its products, the company’s chief executive said. 

“We're encouraged by the strength of demand and continued market stabilization that we saw in the first quarter,” president and CEO Ken Seitz told analysts on an earnings call on Thursday.

The Saskatoon-based company saw unprecedented volatility in fertilizer markets last year that led it to indefinitely pause a planned ramp-up of potash production, and to suspend work on its Geismar clean ammonia project.

The ammonia project is still on pause, Seitz said in an interview, and the company is remaining flexible when it comes to potash production. 

“We have the capacity that we need now to be able to meet ... our share of global demand,” said Seitz. 

“We can grow along with the market, maintain market share, and we have capacity in place to do that over the next few years.” 

Eventually, Seitz wants to deploy moreautomation, with all six of Nutrien’s underground mines becoming either fully autonomous or fully tele-remote. 

"Can we take those learnings, those automation learnings, to other parts of our business? I mean, absolutely," he added. 

"As we look to mechanize and automate even on some of our surface applications, those technologies, we can mobilize them into other corners of our business."

Like many companies right now, Nutrien is testing artificial intelligence technology, particularly in the area of safety. The company is using AI to sift through decades of safety data, Seitz said. 

“It's a root cause analysis on all of our potential for serious injuries,” said Seitz, adding it has revealed “extraordinary” information on some high-risk areas for the company.

In the future, Seitz sees more potential applications for AI in the business, such as in agronomic services.

“It's early days for us, but ... we definitely have test cases,” he said. 

In its first quarter, the fertilizer giant reported earnings of US$165 million, down 71 per cent from US$576 million a year earlier, primarily due to lower net fertilizer selling prices. 

However, it says declining prices were partially offset by increased retail earnings, higher fertilizer sales volumes and lower natural gas costs.

Diluted net earnings per share were 32 cents US, down from US$1.14 last year. On an adjusted basis, earnings were 46 cents US, down from US$1.11. 

Sales totalled US$5.4 billion, down 12 per cent from US$6.1 billion during the same quarter last year.

Two years ago, fertilizer prices spiked in March as the Russia-Ukraine war sent shockwaves through global agricultural markets. Over the past year and a half, those markets have been volatile, but Nutrien saw signs of stabilization heading into the end of 2023. 

This year is all about stabilization, said Seitz. 

Margins are improving and normalizing across several key areas of Nutrien’s business, said Seitz, such as retail, and in geographies like North America and Australia. In Brazil, things are taking longer, he added, but said that’s a relatively small component of the company’s business. 

Global potash supply and demand has been "relatively balanced," the company said in its earnings release, noting that historically, demand in the first quarter has required higher shipment levels. The company maintained its 2024 full-year potash shipment forecast of 68 to 71 million tonnes. 

The company also maintained its 2024 forecast for retail adjusted earnings before taxes, interest, depreciation and amortization of US$1.65 billion to US$1.85 billion. 

Shares in Nutrien rose 4.52 per cent Thursday on the Toronto Stock Exchange to $79.58. 

This report by The Canadian Press was first published May 9, 2024.

Companies in this story: (TSX:NTR)

Rosa Saba, The Canadian Press

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