CALGARY — Nutrien Ltd. will slightly delay the timing of its plan to ramp up potash production, due to slumping sales.
The Saskatoon-based company, which is the largest fertilizer producer in the world, announced disappointing fourth-quarter financial results Wednesday evening.
Nutrien Ltd. came in below Wall Street estimates, earning $1.1 billion in the fourth quarter of 2022, down seven per cent from the same quarter a year earlier.
On a conference call with analysts Thursday, CEO Ken Seitz said Nutrien will slightly delay its previously announced plan to increase its annual potash production capability to 18 million tonnes by 2025, and will instead reach that milestone by 2026 instead.
However, Seitz said long-term fundamentals for potash remain strong, and Nutrien simply wants to be flexible and adjust its plans to match the pace of demand recovery.
“The outlook for our business is strong as we expect global supply issues to persist and demand for crop inputs to increase in 2023," Seitz said.
It has been a volatile period for Nutrien, which achieved record earnings in 2021 and then saw fertilizer prices spike in March of 2022 as the Russia-Ukraine war shook up global agricultural markets and reduced supplies of fertilizer from Eastern Europe.
To meet increased global demand, Nutrien announced its potash ramp-up plan, which represents an increase of more than five million tonnes, or 40 per cent, compared to 2020 production levels.
The company has said it will achieve this by investing in expansions at its existing Saskatchewan mines, including the hiring of approximately 350 more people.
However, in the second half of 2022, the company suffered what it calls a "historic" decline in the pace of its potash shipments. In North America and Brazil in particular, farmers appeared to be postponing fertilizer purchases in the face of high prices. Last year's cool wet spring in North America also compressed the planting season and led to less fertilizer going into the ground.
Seitz said the company has seen improved potash demand so far in 2023, but added Nutrien's estimate for global potash shipments this year is 63 to 67 million tonnes, which is still constrained compared to the historical trend demand of around 70 million tonnes.
In spite of the dramatic decline in potash demands in the second half of 2022, the first six months of the year were so strong that Nutrien's earnings for the full financial year were $7.7 billion, 142 per cent higher than in 2021.
This report by The Canadian Press was first published Feb. 16, 2023.
Companies in this story: (TSX:TKTK)
Amanda Stephenson, The Canadian Press