Nutrien Ltd T.NTR

Alternate Symbol(s): NTR

Chemicals Basic Materials

Nutrien Ltd. is a Canada-based provider of crop inputs and services. The Company operates a network of production, distribution and ag retail facilities to serve the needs of growers. The Company operates through four segments: Nutrien Ag Solutions (Retail), Potash, Nitrogen and Phosphate. The Retail segment distributes crop nutrients, crop protection products, seed and merchandise. Its Retail provides services directly to growers through a network of farm centers in North America, South America and Australia. Its retail operations serve growers in seven countries across three continents. The Potash, Nitrogen and Phosphate segments are differentiated by the chemical nutrients contained in the products that each produces. The Company produces and distributes about 26 million tons of potash, nitrogen, and phosphate products for global agricultural, industrial, and feed customers. The Company’s agriculture retail network services over 500,000 grower accounts worldwide.

TSX:NTR - Post by User

Nutrien Ltd

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Post by retiredcfon Aug 04, 2023 9:13am

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Post# 35572923

TD 2

As before, this is a USD target. GLTA

Nutrien Ltd.

(NTR-N) US$64.55

Q2/23 Adj. EBITDA Essentially In Line; 2023 Guidance Lowered Event

Q2/23 adj. EBITDA of $2,478mm was broadly in line with consensus/TD at $2,504mm/$2,537mm, although adj. EPS missed expectations ($2.53 vs. consensus/TD at $2.79/$2.80). Meanwhile, as we expected, Nutrien lowered its 2023 adj. EBITDA/EPS guidance ranges (driven largely by decreased global potash prices and lower offshore potash sales volumes, being hurt in part by logistical challenges). However, the guidance reduction was somewhat larger than forecast, with the midpoint of NTR's updated adj. EBITDA guidance range being ~8% below pre-quarter consensus.
NTR also announced various strategic actions to reduce controllable costs and enhance FCF (including an indefinite pause in its potash production ramp- up plans and suspension of work on the Geismar clean ammonia project).

Impact: SLIGHTLY NEGATIVE

We characterize the release as SLIGHTLY NEGATIVE, based primarily on 2023's revised guidance shortfall vs expectations. Still, we are encouraged by NTR's constructive outlook commentary regarding agriculture/fertilizer markets, and we expect investors to be encouraged by NTR's strategic actions.
2023 adj. EBITDA guidance is now $5.5bln–$6.7bln (was $6.5bln–$8.0bln), which compares to pre-quarter consensus/TD at $6.6bln/$6.5bln.
NTR sees weather and geopolitical challenges contributing to tight global grain/ oilseed supply, and providing support for prices. For potash, NTR has seen strong Q3/23 demand in N.A., and increased engagement in offshore spot markets (led by Brazil). For nitrogen, urea prices have recently increased, and NTR expects ammonia markets to strengthen during the balance of the year.
Our estimates have declined modestly, which, in turn, has caused our target price to decline slightly to $81.00 (was $83.00).

TD Investment Conclusion

Although the market reacted unfavourably to NTR's Q2/23 release (stock down ~4% yesterday), we see the premise for our recent NTR upgrade as very much intact. Crop prices appear likely to remain well-supported over the foreseeable future, and we are encouraged by emerging evidence of an upturn in fertilizer prices, along with the prospect of stronger crop input demand. We reiterate our BUY rating.