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Global fertilizer rebound drives Nutrien higher

Company sees a multiyear cyclical recovery in agriculture and crop inputs under way.

Nutrien Inc. is the world’s largest producer of agricultural fertilizers which it sells in bulk and at the retail level to farmers.

After five lean years, 2020 was a good one and this one looks to be even better. The company’s shares are up 52 per cent in the past 12 months as the global agriculture sector has recovered from the depths of the pandemic.

Nutrien expects higher fertilizer prices and volumes this year as well as contributions from investments in new technology. They will add to a multiyear cyclical recovery in agriculture and crop inputs.

Here’s an update:

Nutrien (TSX: NTRis based in Saskatchewan and was formed in 2018 from the merger of Agrium Corp. and Potash Corp. Potash was a globally dominant  fertilizer producer, while Agrium offered a retail network of about 2,000 stores. This network dominates in North America and Australia and is expanding in Latin America. The merger provided a way to compete with large producers in Belarus and Russia.

Nutrien’s shares have extended their gains this year and are up 11.3% year-to-date at the current price of $68.16 on the TSX.

In its latest quarter, reported in mid-February, sales of $4.05 billion were 17% higher than a year earlier. Net earnings of $316 million or 55 cents per share  compared with a loss of $48 million or 8 cents.

 In a conference call CEO Chuck Magro (who announced his retirement last week) said Nutrien expects an excellent spring planting season and strong company-wide growth as it enjoys a continuing recovery. It expects higher fertilizer prices and volumes with global demand rising, especially in China.  

 “We could be seeing the start of a multiyear cyclical recovery in agriculture and crop inputs.” he told analysts.

 In a development since those earnings, Nutrien settled a dispute with the Egyptian government over Nutrien’s 26% stake in a state-owned fertilizer company. Nutrien sued over the cancellation of a marketing agreement. It has dropped its suit and sold its stake to the Egyptian government for $540 million.

The new CEO is Mayo Schmidt, who joined Nutrien’s board of directors in May 2019. He previously served as president and CEO of Hydro One Ltd.

As reported by the Globe & Mail, there was no indication of any controversy or pressure behind the executive changes. Mr. Magro had been CEO since the Potash-Agrium merger and is leaving to pursue other opportunities. It did not offer details.

In February, Nutrien raised its dividend for the third time in three years to 46 cents per share, up a penny. It yields 3.39% at current prices. It also plans to buy back up to 5  per cent of its shares over the next year. 

This is an edited version of article that appeared in the Internet Wealth Builder on April 26, 2021.  For information on how to reprint this article please view this page.

Adam Mayers writes about investing and personal finance. He is a contributor to the Globe & Mail’s Globe Advisor and a contributing editor to Gordon Pape's Internet Wealth Builder newsletter. Adam was Business Editor and investment columnist at The Toronto Star and is the author of six books.

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