Nutrien Ltd (NYSE:NTR) stock plunges 12.34% (As on November 3, 11:43:13 AM UTC-4, Source: Google Finance) after the company cut its full-year adjusted earnings forecast for the second time this year as potash prices decline. The company also missed third-quarter profit estimates, hurt by cooling prices of crop nutrients as farmers cut fertilizer application to rein in costs, and rising costs of natural gas, which is used as a feedstock to make nitrogen fertilizers. During the third quarter, the company saw a temporary reduction in potash purchasing in North America and Brazil, which has impacted the sales volumes and realized prices in the second half of the year. However, the underlying demand drivers remain strong and global fertilizer supply challenges still persist, creating a supportive environment for Nutrien as the company look ahead to 2023 and beyond.
NTR in the third quarter of FY 22 has reported the adjusted earnings per share of $2.51, beating the analysts’ estimates for the adjusted earnings per share of $3.97, according to Refinitiv data. The company had reported the adjusted revenue growth of 36 percent to $8.19 billion in the third quarter of FY 22, beating the analysts’ estimates for revenue of $2.47 billion.
Moreover, Nutrien Ag Solutions (“Retail”) delivered record adjusted EBITDA in the first nine months of 2022, due to supportive market conditions in key regions where we operate. Retail cash operating coverage ratio1 as at September 30, 2022 improved to 55 percent compared to 59 percent for the same period in 2021 driven by higher margins. Potash adjusted EBITDA increased in the third quarter and the first nine months of 2022 compared to the prior year due to higher net realized selling prices and record offshore sales volumes, more than offsetting lower North American sales volumes. Nitrogen third quarter and first nine months of 2022 adjusted EBITDA increased compared to the prior year due to higher net realized selling prices that more than offset higher natural gas costs and lower ammonia and urea sales volumes.
The company cut global potash shipment forecast to between 60 million tonnes (mt) and 62 mt for 2022, from 61 mt and 64 mt, blaming higher-than-expected inventory and lower purchases in North America and Brazil during the second half of the year. However, it expects higher potash consumption next year.
Nutrien now expects adjusted earnings for 2022 to be in the range of $13.25 to $14.50 per share, compared with its previous forecast of $15.80 to $17.80 a share.