Nutrien Ltd (NYSE: NTR) stock fell over 3.8% in the pre-market session of November 3rd, 2020 (Source: Google finance) after the company posted lower than expected results for the third quarter of FY 20. The company continues to believe the phosphate market is fundamentally oversupplied which could limit a long-term price recovery.
The market conditions are improving around the world with higher crop and fertilizer prices, lower expected inventories and strong demand for crop inputs as the company finish the year and enter 2021.
Moreover, the Retail posted 13% higher adjusted EBITDA in the first nine months of 2020, over the same period in 2019 due to double-digit growth in sales and gross margin. Potash sales volumes in the third quarter and first nine months of 2020 have increased compared to the same periods in 2019.
NTR in the third quarter of FY 20 has reported the adjusted earnings per share of 23 cents, while reported the adjusted revenue growth of 35.9 percent to $4.21 billion in the third quarter of FY 20. For fiscal 2020, the company expects adjusted net earnings to be in the range of $1.60 to $1.85 per share (from $1.50 to $1.90 per share previously) and adjusted EBITDA to be in the range of $3.5 to $3.7 billion (from $3.5 to $3.8 billion previously).
In addition, Global potash demand has been strong in 2020 and the company continues to expect global potash shipments and consumption to increase by approximately 2 million tonnes from 2019 levels. As a result, the company maintains the 2020 shipment forecast between 65 and 67 million tonnes. The company expects that potash delivered in North America in the fall of 2020 will mainly be applied to ground and that channel inventories will be lower at the end of 2020 compared to recent years. The company also expects that strong fall applications in China, due to historically high crop prices in combination with seasonal increases in compound NPK production, to support strong potash consumption in the remainder of 2020. Meanwhile, demand in India is expected to continue to be supported by the favorable growing conditions and increased minimum support prices for crops. Global phosphate prices have increased due to strong demand in India and Brazil and trade flow changes related to countervailing duty investigations in the US.