Big grain crops fuel Nutrien's global result; bigger prospects ahead

Big grain demand lifts Nutrien profits and more tipped in 2021

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Nutrien achieved better than expected profits for 2020 on the back of rising global grain crop prices, in particular high US crop exports.

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Canadian-based fertiliser and farm inputs giant Nutrien has reported better than expected fourth-quarter profits on the back of rising global grain crop prices, in particular high US crop exports.

Following record high US corn sales to China and the expectations of bigger planting across multiple North American grain segments Nutrien is expecting strong fertiliser demand for the year ahead.

"Agriculture fundamentals began to improve in late 2020 and we are starting to see the benefit to our business from this cyclic recovery," said chief executive officer Chuck Magro.

In 2021 the farm services division, Nutrien Ag Solutions expected to benefit from higher planted acreage, increased discretionary spend in North America and continued growth in Australia and Brazil.

Earnings and cash flow in the fourth quarter of 2020 were up significantly over the same period in 2019 and on an annual basis, with the global business generating free cash flow for the year of $US1.8 billion and $US2.4b after accounting for improvements in working capital.

Nutrien Ag Solutions earnings before interest, tax, depreciation and amortisation jumped 29 per cent, which Mr Magro said was mostly thanks to organic growth, plus "a stellar performance in Australia and Brazil" and a wide-open autumn application season in the US.

Retail earnings outside of the US grew 32pc, accounting for almost a third of the company's total total retail EBITDA in 2020.

US crop protection margins were up noticeably year-over-year.

Chuck Magro

Chuck Magro

"Our EBITDA per US selling location increased 11pc, surpassing $US1 million per facility and fast approaching our 2023 target of $US1.1m per facility," he said.

"For 2021, we expect further improvement in our crop protection margins across all of the operations.

"We expect higher planted acreage globally.

"In the US alone, we anticipate total planted acreage to increase by approximately 10 million acres."

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He said strong crop prices and the highest US grower margins in at least seven years, would prompt a strong crop input spend in 2021, which was already showing signs of being underway given the level of customer prepay and soil sampling activity.

"Our annual guidance is for adjusted EBITDA of $4 billion to $4.5 billion, with all business units expected to achieve significantly higher year-over-year growth," he said.

"We intend to continue to strengthen our competitive leadership position through innovation in the retail ag sector, offering new products and services and expanding our full acreage solutions which generate value for our customers."

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