Nutrien Delivers Record First Half Earnings and Expects Strong Second Half
Nutrien Ltd. reported strong Q2 2022 results, posting net earnings of $3.6 billion ($6.51 per share) boosted by a $450 million non-cash impairment reversal. Adjusted net earnings per share reached $5.85, with adjusted EBITDA at $5.0 billion. The company anticipates ongoing supply challenges across the agriculture sector and plans to complete its 10% share repurchase program, returning approximately $6 billion to shareholders in 2022. Nutrien's adjusted EBITDA guidance for the year is now set between $14.0 billion and $15.5 billion.
- Net earnings of $5.0 billion and adjusted EBITDA of $7.6 billion in H1 2022.
- Record adjusted EBITDA growth of 38% year-over-year in Nutrien Ag Solutions (Retail).
- Plans to allocate approximately $5 billion to share repurchases in 2022.
- Lower North American sales volumes due to a compressed application season.
All amounts are in US dollars except as otherwise noted
“Nutrien delivered record earnings in the first half of 2022 due to the strength of market fundamentals, strong operating performance, the advantaged position of our global production assets and the excellent results of Retail. We generated strong results across our integrated business and demonstrated our unmatched capability to efficiently supply our customers with the products they need to help sustainably feed a growing world,” commented
“We expect supply challenges across global energy, agriculture and fertilizer markets to persist well beyond 2022. The strength of our projected cash flow provides an opportunity to accelerate high-return strategic growth initiatives and return significant capital to shareholders. We intend on completing our 10 percent share repurchase program in 2022, increasing the total amount of capital returned to shareholders to approximately
Highlights:
-
Nutrien generated net earnings of and adjusted EBITDA1 of$5.0 billion in the first half of 2022 due to higher realized prices and strong Retail performance, more than offsetting a reduction in fertilizer sales volumes. As a result, cash provided by operating activities increased to$7.6 billion in the first half of 2022.$2.5 billion -
Nutrien revised full-year 2022 adjusted EBITDA guidance1 and adjusted net earnings per share guidance1 to to$14.0 and$15.5 billion to$15.80 per share, respectively. Adjusted net earnings per share guidance includes our plans to allocate approximately$17.80 to share repurchases in 2022.$5 billion - Nutrien Ag Solutions (“Retail”) delivered record adjusted EBITDA in the second quarter and the first half of 2022. First-half adjusted EBITDA was up 38 percent year-over-year as a result of strong sales and gross margin growth, due to supportive market conditions in key regions where we operate. Retail cash operating coverage ratio1 improved to 54 percent compared to 60 percent for the same period in 2021 driven by higher margins.
- Potash adjusted EBITDA in the second quarter and the first half of 2022 increased compared to the prior year due to higher net realized selling prices and strong offshore sales volumes. North American sales volumes were lower than the same period last year due to a compressed application season.
- Nitrogen second quarter and first half 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 sales volumes.
-
In the second quarter of 2022, we recognized a non-cash impairment reversal of
associated with our Phosphate operations due to a more favorable outlook for phosphate margins.$450 million -
Nutrien repurchased approximately 22 million shares year-to-date as ofAugust 2, 2022 , under our share repurchase programs, for a total of approximately .$1.8 billion -
On
May 18, 2022 ,Nutrien announced it is evaluating its existing site atGeismar, Louisiana to build the world’s largest clean ammonia facility. The project would leverage low-cost natural gas, tidewater access to world markets, and high-quality carbon capture and sequestration infrastructure to serve growing demand in agricultural, industrial and emerging energy markets. -
On
June 9, 2022 ,Nutrien announced its intention to increase potash production capability to 18 million tonnes by 2025 in response to the uncertainty of potash supply fromEastern Europe being able to meet global demand. -
Nutrien announced agreements to acquire Brazilian ag retail companies Casa doAdubo S.A. and Marca Agro Mercantil. These acquisitions support Nutrien’s Retail growth strategy inBrazil and upon completion of the acquisitions, we expect to surpass our stated target of annual adjusted EBITDA in$100 million Brazil by 2023.
1 These (and any related guidance, if applicable) are non-IFRS financial measures. See the “Non-IFRS Financial Measures” section for further information. |
Management’s Discussion and Analysis
The following management’s discussion and analysis (“MD&A”) is the responsibility of management and is dated as of
This MD&A is based on and should be read in conjunction with the Company’s unaudited interim condensed consolidated financial statements as at and for the three and six months ended
Market Outlook and Guidance
Agriculture and Retail
- Global grain and oilseed stocks-to-use ratios remain well below historical average levels, which we believe will continue to be supportive for crop prices. Prices for key crops such as corn, soybeans and wheat are up 25 to 35 percent compared to the 10-year average, providing strong incentive for growers to increase production.
-
The
US Department of Agriculture (USDA) projects that Ukrainian wheat and corn production will be down by more than 40 percent and combined Ukrainian exports of corn, wheat and barley will be down by approximately 60 percent year-over-year in 2022/23. While diplomatic efforts to restore exports from Ukrainian ports has progressed, the overall reduction in Ukrainian production in 2022 is expected to continue to constrain supplies for the forthcoming year. -
US crop conditions started the 2022 growing season favorably, however, recent hot and dry weather has accelerated crop development and could limit yield potential. In
Western Canada , growing conditions have improved from the severe 2021 drought. We expect the combination of robust grower economics and favorable growing conditions to support demand for crop nutritional products, fungicides and insecticides in the third quarter of 2022. - Prospective Brazilian grower margins remain historically high and analysts expect a 2 to 4 percent increase in soybean planted area in the 2022 planting season. While we expect this to support overall crop input demand, fertilizer inventories have been slow to move from port to inland positions and we expect import demand will resurface as these inventories move inland for Brazil’s spring planting season in the second half of 2022.
Crop Nutrient Markets
-
Restricted supplies of potash from
Russia andBelarus kept potash prices at historically high levels through the first half of 2022. Potash shipments fromRussia andBelarus were estimated to be down approximately 25 and 50 percent respectively in the first half of 2022, with the majority ofBelarus exports occurring in the first quarter. We have narrowed our global potash shipment forecast to between 61 and 64 million tonnes in 2022 and continue to expect demand to be constrained by restrictions on exports fromRussia andBelarus . -
A dramatic increase in European natural gas prices has once again led to reduced nitrogen operating rates in the region. Tightening European ammonia supplies and significantly reduced Russian ammonia exports from the
Black Sea are pressuring global ammonia availability. We expect strong seasonal nitrogen demand in the second half of 2022 following a period of delayed purchases due to benchmark price volatility. - The Chinese government continues to impose export restrictions on urea and phosphate fertilizers that are expected to limit its export volumes in the second half of 2022.
Financial Guidance
-
Nutrien revised full-year 2022 adjusted EBITDA guidance1 and full-year 2022 adjusted net earnings per share guidance1 primarily due to lower expected Nitrogen earnings as a result of lower nitrogen benchmark pricing and higher natural gas costs. Retail adjusted EBITDA guidance was increased to reflect strong performance in the second quarter. Adjusted net earnings per share guidance includes our plans to allocate approximately to share repurchases in 2022.$5 billion -
Nutrien lowered potash and nitrogen sales volume guidance to reflect the impact of lower application inNorth America this spring.
All guidance numbers, including those noted above are outlined in the table below. Refer to page 53 of Nutrien’s 2021 Annual Report for related assumptions and sensitivities.
|
Guidance Ranges1 as of |
||||||
|
|
|
|||||
(billions of US dollars, except as otherwise noted) |
Low |
|
High |
|
Low |
|
High |
Adjusted net earnings per share 2 |
15.80 |
|
17.80 |
|
16.20 |
|
18.70 |
Adjusted EBITDA 2 |
14.0 |
|
15.5 |
|
14.5 |
|
16.5 |
Retail adjusted EBITDA |
2.1 |
|
2.2 |
|
1.8 |
|
1.9 |
Potash adjusted EBITDA |
7.6 |
|
8.2 |
|
7.5 |
|
8.3 |
Nitrogen adjusted EBITDA |
4.0 |
|
4.7 |
|
5.0 |
|
5.8 |
Phosphate adjusted EBITDA (in US millions) |
750 |
|
850 |
|
800 |
|
900 |
Potash sales tonnes (millions) 3 |
14.3 |
|
14.9 |
|
14.5 |
|
15.1 |
Nitrogen sales tonnes (millions) 3 |
10.6 |
|
11.0 |
|
10.7 |
|
11.1 |
Depreciation and amortization |
2.0 |
|
2.1 |
|
2.0 |
|
2.1 |
Effective tax rate on adjusted earnings (%) |
25.5 |
|
26.5 |
|
25.5 |
|
26.5 |
Sustaining capital expenditures 4 |
1.3 |
|
1.4 |
|
1.2 |
|
1.3 |
1 See the "Forward-Looking Statements" section. |
|||||||
2 These are non-IFRS financial measures. See the "Non-IFRS Financial Measures" section. |
|||||||
3 Manufactured product only. Nitrogen sales tonnes excludes ESN® products. |
|||||||
4 This is a supplementary financial measure. See the "Other Financial Measures" section. |
Consolidated Results
|
Three Months Ended |
|
Six Months Ended |
|||||||||
(millions of US dollars, except as otherwise noted) |
2022 |
|
2021 |
|
% Change |
|
2022 |
|
2021 |
|
% Change |
|
Sales |
14,506 |
|
9,763 |
|
49 |
|
22,163 |
|
14,421 |
|
54 |
|
Freight, transportation and distribution |
221 |
|
222 |
|
‐ |
|
424 |
|
433 |
|
(2) |
|
Cost of goods sold |
8,286 |
|
6,659 |
|
24 |
|
12,483 |
|
9,950 |
|
25 |
|
Gross margin |
5,999 |
|
2,882 |
|
108 |
|
9,256 |
|
4,038 |
|
129 |
|
Expenses |
1,054 |
|
1,263 |
|
(17) |
|
2,312 |
|
2,141 |
|
8 |
|
Net earnings |
3,601 |
|
1,113 |
|
224 |
|
4,986 |
|
1,246 |
|
300 |
|
Adjusted EBITDA 1 |
4,993 |
|
2,215 |
|
125 |
|
7,608 |
|
3,021 |
|
152 |
|
Diluted net earnings per share |
6.51 |
|
1.94 |
|
236 |
|
8.99 |
|
2.16 |
|
316 |
|
Adjusted net earnings per share 1 |
5.85 |
|
2.08 |
|
181 |
|
8.53 |
|
2.37 |
|
260 |
|
Cash provided by operating activities |
2,558 |
|
1,966 |
|
30 |
|
2,496 |
|
1,814 |
|
38 |
|
Free cash flow 1 |
3,413 |
|
1,413 |
|
142 |
|
5,227 |
|
1,889 |
|
177 |
|
Free cash flow including changes in non-cash operating working capital 1 |
2,302 |
|
1,662 |
|
39 |
|
2,046 |
|
1,346 |
|
52 |
|
1 These are non-IFRS financial measures. See the "Non-IFRS Financial Measures" section. |
Net earnings and adjusted EBITDA more than doubled in the second quarter and first half of 2022 compared to the same period in 2021. This was due to higher net realized selling prices from global supply uncertainties across our nutrient businesses and strong Retail performance. In the second quarter of 2022, we recorded a non-cash impairment reversal of
Segment Results
Our discussion of segment results set out on the following pages is a comparison of the results for the three and six months ended
Nutrien Ag Solutions (“Retail”)
Three Months Ended |
||||||||||||||||
(millions of US dollars, except |
Dollars |
|
Gross Margin |
|
Gross Margin (%) |
|||||||||||
as otherwise noted) |
2022 |
|
2021 |
|
% Change |
|
2022 |
|
2021 |
|
% Change |
|
2022 |
|
2021 |
|
Sales |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Crop nutrients |
4,548 |
|
3,045 |
|
49 |
|
911 |
|
703 |
|
30 |
|
20 |
|
23 |
|
Crop protection products |
2,983 |
|
2,666 |
|
12 |
|
805 |
|
587 |
|
37 |
|
27 |
|
22 |
|
Seed |
1,269 |
|
1,216 |
|
4 |
|
283 |
|
237 |
|
19 |
|
22 |
|
19 |
|
Merchandise |
280 |
|
268 |
|
4 |
|
51 |
|
45 |
|
13 |
|
18 |
|
17 |
|
Nutrien Financial |
91 |
|
59 |
|
54 |
|
91 |
|
59 |
|
54 |
|
100 |
|
100 |
|
Services and other 1 |
310 |
|
320 |
|
(3) |
|
258 |
|
264 |
|
(2) |
|
83 |
|
83 |
|
Nutrien Financial elimination 1, 2 |
(59) |
|
(37) |
|
59 |
|
(59) |
|
(37) |
|
59 |
|
100 |
|
100 |
|
|
9,422 |
|
7,537 |
|
25 |
|
2,340 |
|
1,858 |
|
26 |
|
25 |
|
25 |
|
Cost of goods sold |
7,082 |
|
5,679 |
|
25 |
|
|
|
|
|
|
|
|
|
|
|
Gross margin |
2,340 |
|
1,858 |
|
26 |
|
|
|
|
|
|
|
|
|
|
|
Expenses 3 |
1,088 |
|
938 |
|
16 |
|
|
|
|
|
|
|
|
|
|
|
Earnings before finance costs and taxes ("EBIT") |
1,252 |
|
920 |
|
36 |
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization |
175 |
|
169 |
|
4 |
|
|
|
|
|
|
|
|
|
|
|
EBITDA |
1,427 |
|
1,089 |
|
31 |
|
|
|
|
|
|
|
|
|
|
|
Adjustments 4 |
‐ |
|
8 |
|
(100) |
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA |
1,427 |
|
1,097 |
|
30 |
|
|
|
|
|
|
|
|
|
|
|
1 Certain immaterial figures have been reclassified for the three months ended |
||||||||||||||||
2 Represents elimination for the interest and service fees charged by Nutrien Financial to Retail branches. |
||||||||||||||||
3 Includes selling expenses of |
||||||||||||||||
4 See Note 2 to the interim financial statements. |
|
Six Months Ended |
|||||||||||||||
(millions of US dollars, except |
Dollars |
|
Gross Margin |
|
Gross Margin (%) |
|||||||||||
as otherwise noted) |
2022 |
|
2021 |
|
% Change |
|
2022 |
|
2021 |
|
% Change |
|
2022 |
|
2021 |
|
Sales |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Crop nutrients |
6,135 |
|
4,061 |
|
51 |
|
1,203 |
|
923 |
|
30 |
|
20 |
|
23 |
|
Crop protection products |
4,370 |
|
3,751 |
|
17 |
|
1,087 |
|
763 |
|
42 |
|
25 |
|
20 |
|
Seed |
1,727 |
|
1,679 |
|
3 |
|
349 |
|
306 |
|
14 |
|
20 |
|
18 |
|
Merchandise |
514 |
|
498 |
|
3 |
|
92 |
|
83 |
|
11 |
|
18 |
|
17 |
|
Nutrien Financial |
140 |
|
84 |
|
67 |
|
140 |
|
84 |
|
67 |
|
100 |
|
100 |
|
Services and other 1 |
485 |
|
485 |
|
‐ |
|
402 |
|
400 |
|
1 |
|
83 |
|
82 |
|
Nutrien Financial elimination 1 |
(88) |
|
(49) |
|
80 |
|
(88) |
|
(49) |
|
80 |
|
100 |
|
100 |
|
|
13,283 |
|
10,509 |
|
26 |
|
3,185 |
|
2,510 |
|
27 |
|
24 |
|
24 |
|
Cost of goods sold |
10,098 |
|
7,999 |
|
26 |
|
|
|
|
|
|
|
|
|
|
|
Gross margin |
3,185 |
|
2,510 |
|
27 |
|
|
|
|
|
|
|
|
|
|
|
Expenses 2 |
1,843 |
|
1,659 |
|
11 |
|
|
|
|
|
|
|
|
|
|
|
EBIT |
1,342 |
|
851 |
|
58 |
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization |
344 |
|
346 |
|
(1) |
|
|
|
|
|
|
|
|
|
|
|
EBITDA |
1,686 |
|
1,197 |
|
41 |
|
|
|
|
|
|
|
|
|
|
|
Adjustments 3 |
(19) |
|
9 |
|
n/m |
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA |
1,667 |
|
1,206 |
|
38 |
|
|
|
|
|
|
|
|
|
|
|
1 Certain immaterial figures have been reclassified for the six months ended |
||||||||||||||||
2 Includes selling expenses of |
||||||||||||||||
3 See Note 2 to the interim financial statements. |
-
Adjusted EBITDA increased in the second quarter and first half of 2022 due to higher sales and gross margins across nearly all product categories and regions where we operate. This was supported by strong agriculture fundamentals, higher selling prices and growth in proprietary products sales. Retail cash operating coverage ratio1 improved as at
June 30, 2022 to 54 percent from 60 percent in the same period in 2021 due to significantly higher gross margin. -
Crop nutrients sales and gross margin increased significantly in the second quarter and first half of 2022 due to higher selling prices. Gross margin per tonne increased in the second quarter and first half of 2022 compared to the same periods in the prior year due to strategic procurement and the timing of inventory purchases. Sales volumes decreased due to a pull forward of sales into the fourth quarter of 2021 and reduced application resulting from a delayed planting season in
North America . - Crop protection products sales and gross margin increased in the second quarter and first half of 2022 in all regions we operate due to higher prices, along with increased sales and gross margin in proprietary products. Gross margin percent increased by 5 percentage points in the second quarter and first half of 2022, supported by the reliability of our supply chain and strategic procurement in a rising price environment.
-
Seed sales and gross margin increased in the second quarter and first half of 2022 due to higher pricing, an increase in proprietary seed margins and strong demand in
Australia . -
Merchandise sales increased in the second quarter and first half of 2022 primarily driven by favorable market conditions for
Australia animal health products, with increased flock and herd sizes along with higher fencing sales. - Nutrien Financial sales increased in the second quarter and first half of 2022 due to higher utilization and adoption of our programs and a higher interest-bearing trade receivable balance, driven by strong commodity pricing.
-
Services and other sales decreased in the second quarter due to lower fertilizer application services, and held flat through the first half of 2022, due to favorable weather conditions in
Australia in the first quarter.
1 These (and any related guidance, if applicable) are non-IFRS financial measures. See the “Non-IFRS Financial Measures” section for further information. |
Potash
|
Three Months Ended |
|||||||||||||||||
(millions of US dollars, except |
Dollars |
|
Tonnes (thousands) |
|
Average per Tonne |
|||||||||||||
as otherwise noted) |
2022 |
|
2021 |
% Change |
|
2022 |
|
2021 |
% Change |
|
2022 |
|
2021 |
% Change |
||||
Manufactured product |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
680 |
|
326 |
|
109 |
|
933 |
|
1,172 |
|
(20) |
|
729 |
|
278 |
|
162 |
|
Offshore |
1,988 |
|
491 |
|
305 |
|
2,776 |
|
2,449 |
|
13 |
|
716 |
|
200 |
|
258 |
|
|
2,668 |
|
817 |
|
227 |
|
3,709 |
|
3,621 |
|
2 |
|
719 |
|
226 |
|
218 |
|
Cost of goods sold |
399 |
|
317 |
|
26 |
|
|
|
|
|
|
|
107 |
|
88 |
|
22 |
|
Gross margin – total |
2,269 |
|
500 |
|
354 |
|
|
|
|
|
|
|
612 |
|
138 |
|
343 |
|
Expenses 1 |
372 |
|
123 |
|
202 |
|
Depreciation and amortization |
|
35 |
|
32 |
|
9 |
|||||
EBIT |
1,897 |
|
377 |
|
403 |
|
Gross margin excluding depreciation |
|
|
|
|
|
||||||
Depreciation and amortization |
130 |
|
116 |
|
12 |
|
and amortization – manufactured 3 |
647 |
|
170 |
|
281 |
||||||
EBITDA |
2,027 |
|
493 |
|
311 |
|
Potash controllable cash cost of |
|
|
|
|
|
|
|||||
Adjustments 2 |
‐ |
|
2 |
|
(100) |
|
product manufactured 3 |
|
52 |
|
50 |
|
4 |
|||||
Adjusted EBITDA |
2,027 |
|
495 |
|
309 |
|
|
|
|
|
|
|
|
|
|
|
|
|
1 Includes provincial mining taxes of |
||||||||||||||||||
2 See Note 2 to the interim financial statements. |
||||||||||||||||||
3 These are non-IFRS financial measures. See the "Non-IFRS Financial Measures" section. |
|
Six Months Ended |
|||||||||||||||||
(millions of US dollars, except |
Dollars |
|
Tonnes (thousands) |
|
Average per Tonne |
|||||||||||||
as otherwise noted) |
2022 |
|
2021 |
% Change |
|
2022 |
|
2021 |
% Change |
|
2022 |
|
2021 |
% Change |
||||
Manufactured product |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,513 |
|
658 |
|
130 |
|
2,151 |
|
2,642 |
|
(19) |
|
703 |
|
249 |
|
182 |
|
Offshore |
3,005 |
|
770 |
|
290 |
|
4,601 |
|
4,136 |
|
11 |
|
653 |
|
186 |
|
251 |
|
|
4,518 |
|
1,428 |
|
216 |
|
6,752 |
|
6,778 |
|
‐ |
|
669 |
|
211 |
|
217 |
|
Cost of goods sold |
704 |
|
608 |
|
16 |
|
|
|
|
|
|
|
104 |
|
90 |
|
16 |
|
Gross margin – total |
3,814 |
|
820 |
|
365 |
|
|
|
|
|
|
|
565 |
|
121 |
|
367 |
|
Expenses 1 |
623 |
|
187 |
|
233 |
|
Depreciation and amortization |
|
36 |
|
35 |
|
1 |
|||||
EBIT |
3,191 |
|
633 |
|
404 |
|
Gross margin excluding depreciation |
|
|
|
|
|
||||||
Depreciation and amortization |
242 |
|
240 |
|
1 |
|
and amortization – manufactured |
601 |
|
156 |
|
284 |
||||||
EBITDA |
3,433 |
|
873 |
|
293 |
|
Potash controllable cash cost of |
|
|
|
|
|
|
|||||
Adjustments 2 |
‐ |
|
2 |
|
(100) |
|
product manufactured |
|
51 |
|
50 |
|
2 |
|||||
Adjusted EBITDA |
3,433 |
|
875 |
|
292 |
|
|
|
|
|
|
|
|
|
|
|
|
|
1 Includes provincial mining taxes of |
||||||||||||||||||
2 See Note 2 to the interim financial statements. |
- Adjusted EBITDA increased in the second quarter and first half of 2022 due to higher net realized selling prices and strong offshore sales volumes, which more than offset lower North American sales volumes, higher royalties and provincial mining taxes.
- Sales volumes were the highest of any second quarter on record due to strong demand in offshore markets. North American sales volumes were impacted by delayed planting and a compressed application window.
-
Net realized selling price increased in the second quarter and first half of 2022 due to the impact of supply constraints, in particular related to uncertainty on future supply from
Russia andBelarus . - Cost of goods sold per tonne increased in the second quarter and first half of 2022 primarily due to higher royalties resulting from increased net realized selling prices. Potash controllable cash cost of product manufactured increased slightly in the second quarter and first half of 2022 due to higher input costs driven by inflation.
Canpotex Sales by Market
(percentage of sales volumes, except as |
Three Months Ended |
|
Six Months Ended |
|||||
otherwise noted) |
2022 |
2021 |
Change |
|
2022 |
2021 |
Change |
|
|
40 |
35 |
5 |
|
36 |
33 |
3 |
|
Other Asian markets 1 |
28 |
41 |
(13) |
|
35 |
39 |
(4) |
|
|
12 |
11 |
1 |
|
12 |
12 |
‐ |
|
Other markets |
11 |
10 |
1 |
|
11 |
11 |
‐ |
|
|
9 |
3 |
6 |
|
6 |
5 |
1 |
|
|
100 |
100 |
|
|
100 |
100 |
|
|
1 All Asian markets except |
Nitrogen
Three Months Ended |
||||||||||||||||||
(millions of US dollars, except |
Dollars |
|
Tonnes (thousands) |
|
Average per Tonne |
|||||||||||||
as otherwise noted) |
2022 |
|
2021 |
% Change |
|
2022 |
|
2021 |
% Change |
|
2022 |
|
2021 |
% Change |
||||
Manufactured product |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ammonia |
743 |
|
346 |
|
115 |
|
643 |
|
836 |
|
(23) |
|
1,157 |
|
416 |
|
178 |
|
Urea |
601 |
|
346 |
|
74 |
|
810 |
|
819 |
|
(1) |
|
742 |
|
421 |
|
76 |
|
Solutions, nitrates and sulfates |
536 |
|
290 |
|
85 |
|
1,142 |
|
1,311 |
|
(13) |
|
469 |
|
221 |
|
112 |
|
|
1,880 |
|
982 |
|
91 |
|
2,595 |
|
2,966 |
|
(13) |
|
724 |
|
331 |
|
119 |
|
Cost of goods sold |
839 |
|
597 |
|
41 |
|
|
|
|
|
|
|
323 |
|
201 |
|
61 |
|
Gross margin – manufactured |
1,041 |
|
385 |
|
170 |
|
|
|
|
|
|
|
401 |
|
130 |
|
208 |
|
Gross margin – other 1 |
17 |
|
31 |
|
(45) |
|
Depreciation and amortization |
54 |
|
52 |
|
2 |
||||||
Gross margin – total |
1,058 |
|
416 |
|
154 |
|
Gross margin excluding depreciation |
|
|
|
|
|
||||||
(Income) expenses |
(43) |
|
17 |
|
n/m |
|
and amortization – manufactured 3 |
455 |
|
182 |
|
149 |
||||||
EBIT |
1,101 |
|
399 |
|
176 |
|
Ammonia controllable cash cost of |
|
|
|
|
|
||||||
Depreciation and amortization |
139 |
|
155 |
|
(10) |
|
product manufactured 3 |
58 |
|
51 |
|
14 |
||||||
EBITDA |
1,240 |
|
554 |
|
124 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjustments 2 |
‐ |
|
1 |
|
(100) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA |
1,240 |
|
555 |
|
123 |
|
|
|
|
|
|
|
|
|
|
|
|
|
1 Includes other nitrogen (including ESN®) and purchased products and comprises net sales of |
||||||||||||||||||
2 See Note 2 to the interim financial statements. |
||||||||||||||||||
3 These are non-IFRS financial measures. See the "Non-IFRS Financial Measures" section. |
Six Months Ended |
||||||||||||||||||
(millions of US dollars, except |
Dollars |
|
Tonnes (thousands) |
|
Average per Tonne |
|||||||||||||
as otherwise noted) |
2022 |
|
2021 |
% Change |
|
2022 |
|
2021 |
% Change |
|
2022 |
|
2021 |
% Change |
||||
Manufactured product |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ammonia |
1,303 |
|
506 |
|
158 |
|
1,238 |
|
1,408 |
|
(12) |
|
1,052 |
|
360 |
|
192 |
|
Urea |
1,064 |
|
595 |
|
79 |
|
1,401 |
|
1,576 |
|
(11) |
|
760 |
|
377 |
|
102 |
|
Solutions, nitrates and sulfates |
975 |
|
454 |
|
115 |
|
2,221 |
|
2,385 |
|
(7) |
|
439 |
|
190 |
|
131 |
|
|
3,342 |
|
1,555 |
|
115 |
|
4,860 |
|
5,369 |
|
(9) |
|
688 |
|
290 |
|
137 |
|
Cost of goods sold |
1,479 |
|
1,037 |
|
43 |
|
|
|
|
|
|
|
305 |
|
194 |
|
57 |
|
Gross margin - manufactured |
1,863 |
|
518 |
|
260 |
|
|
|
|
|
|
|
383 |
|
96 |
|
299 |
|
Gross margin – other 1 |
55 |
|
48 |
|
15 |
|
Depreciation and amortization |
54 |
|
53 |
|
2 |
||||||
Gross margin – total |
1,918 |
|
566 |
|
239 |
|
Gross margin excluding depreciation |
|
|
|
|
|
||||||
Income |
(55) |
|
‐ |
|
‐ |
|
and amortization – manufactured |
437 |
|
149 |
|
193 |
||||||
EBIT |
1,973 |
|
566 |
|
249 |
|
Ammonia controllable cash cost of |
|
|
|
|
|
||||||
Depreciation and amortization |
262 |
|
284 |
|
(8) |
|
product manufactured |
57 |
|
51 |
|
12 |
||||||
EBITDA |
2,235 |
|
850 |
|
163 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjustments 2 |
‐ |
|
5 |
|
(100) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA |
2,235 |
|
855 |
|
161 |
|
|
|
|
|
|
|
|
|
|
|
|
|
1 Includes other nitrogen (including ESN®) and purchased products and comprises net sales of |
||||||||||||||||||
2 See Note 2 to the interim financial statements. |
- Adjusted EBITDA increased in the second quarter and first half of 2022 primarily due to higher net realized selling prices and higher earnings from equity-accounted investees, which more than offset higher natural gas costs and lower sales volumes.
-
Sales volumes decreased in the second quarter and first half of 2022 due to unplanned plant outages that impacted ammonia and urea production, along with a cool and wet spring in
North America that condensed the application window for direct application of ammonia and delayed application of other nitrogen products. - Net realized selling price in the second quarter and first half of 2022 were higher due to strong benchmark prices resulting from the strength in global demand and tight supply, along with higher energy prices in key nitrogen exporting regions.
- Cost of goods sold per tonne in the second quarter and first half of 2022 increased primarily due to higher natural gas costs and higher raw material costs.
Natural Gas Prices in Cost of Production
|
Three Months Ended |
|
Six Months Ended |
|||||||||
(US dollars per MMBtu, except as otherwise noted) |
2022 |
|
2021 |
|
% Change |
|
2022 |
|
2021 |
|
% Change |
|
Overall gas cost excluding realized derivative impact |
8.54 |
|
3.86 |
|
121 |
|
7.72 |
|
3.51 |
|
120 |
|
Realized derivative impact |
(0.06) |
|
0.03 |
|
n/m |
|
(0.04) |
|
0.03 |
|
n/m |
|
Overall gas cost |
8.48 |
|
3.89 |
|
118 |
|
7.68 |
|
3.54 |
|
117 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average NYMEX |
7.17 |
|
2.83 |
|
153 |
|
6.06 |
|
2.76 |
|
120 |
|
Average AECO |
4.95 |
|
2.32 |
|
113 |
|
4.28 |
|
2.31 |
|
85 |
-
Natural gas prices in our cost of production increased in the second quarter and first half of 2022 as a result of higher North American gas index prices and increased gas costs in
Trinidad , where our gas prices are linked to ammonia benchmark prices.
Phosphate
|
Three Months Ended |
|||||||||||||||||
(millions of US dollars, except |
Dollars |
|
Tonnes (thousands) |
|
Average per Tonne |
|||||||||||||
as otherwise noted) |
2022 |
|
2021 |
% Change |
|
2022 |
|
2021 |
% Change |
|
2022 |
|
2021 |
% Change |
||||
Manufactured product |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fertilizer |
325 |
|
232 |
|
40 |
|
366 |
|
394 |
|
(7) |
|
888 |
|
588 |
|
51 |
|
Industrial and feed |
189 |
|
119 |
|
59 |
|
190 |
|
192 |
|
(1) |
|
996 |
|
621 |
|
60 |
|
|
514 |
|
351 |
|
46 |
|
556 |
|
586 |
|
(5) |
|
925 |
|
598 |
|
55 |
|
Cost of goods sold |
352 |
|
271 |
|
30 |
|
|
|
|
|
|
|
634 |
|
463 |
|
37 |
|
Gross margin - manufactured |
162 |
|
80 |
|
103 |
|
|
|
|
|
|
|
291 |
|
135 |
|
116 |
|
Gross margin – other 1 |
(6) |
|
4 |
|
n/m |
|
Depreciation and amortization |
74 |
|
60 |
|
23 |
||||||
Gross margin – total |
156 |
|
84 |
|
86 |
|
Gross margin excluding depreciation |
|
|
|
|
|
||||||
(Income) expenses |
(437) |
|
7 |
|
n/m |
|
and amortization – manufactured 3 |
365 |
|
195 |
|
87 |
||||||
EBIT |
593 |
|
77 |
|
670 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization |
41 |
|
35 |
|
17 |
|
|
|
|
|
|
|
|
|
|
|
|
|
EBITDA |
634 |
|
112 |
|
466 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjustments 2 |
(450) |
|
‐ |
|
n/m |
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA |
184 |
|
112 |
|
64 |
|
|
|
|
|
|
|
|
|
|
|
|
|
1 Includes other phosphate and purchased products and comprises net sales of |
||||||||||||||||||
2 See Notes 2 and 3 to the interim financial statements. Includes impairment reversal of assets of |
||||||||||||||||||
3 This is a non-IFRS financial measure. See the "Non-IFRS Financial Measures" section. |
|
Six Months Ended |
|||||||||||||||||
(millions of US dollars, except |
Dollars |
|
Tonnes (thousands) |
|
Average per Tonne |
|||||||||||||
as otherwise noted) |
2022 |
|
2021 |
% Change |
|
2022 |
|
2021 |
% Change |
|
2022 |
|
2021 |
% Change |
||||
Manufactured product |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fertilizer |
718 |
|
462 |
|
55 |
|
826 |
|
903 |
|
(9) |
|
869 |
|
511 |
|
70 |
|
Industrial and feed |
359 |
|
233 |
|
54 |
|
381 |
|
385 |
|
(1) |
|
943 |
|
605 |
|
56 |
|
|
1,077 |
|
695 |
|
55 |
|
1,207 |
|
1,288 |
|
(6) |
|
892 |
|
539 |
|
65 |
|
Cost of goods sold |
712 |
|
553 |
|
29 |
|
|
|
|
|
|
|
589 |
|
429 |
|
37 |
|
Gross margin – manufactured |
365 |
|
142 |
|
157 |
|
|
|
|
|
|
|
303 |
|
110 |
|
175 |
|
Gross margin – other 1 |
(2) |
|
8 |
|
n/m |
|
Depreciation and amortization |
|
68 |
|
57 |
|
20 |
|||||
Gross margin – total |
363 |
|
150 |
|
142 |
|
Gross margin excluding depreciation |
|
|
|
|
|
||||||
(Income) expenses |
(428) |
|
14 |
|
n/m |
|
and amortization – manufactured |
371 |
|
167 |
|
123 |
||||||
EBIT |
791 |
|
136 |
|
482 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization |
82 |
|
73 |
|
12 |
|
|
|
|
|
|
|
|
|
|
|
|
|
EBITDA |
873 |
|
209 |
|
318 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjustments 2 |
(450) |
|
‐ |
|
n/m |
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA |
423 |
|
209 |
|
102 |
|
|
|
|
|
|
|
|
|
|
|
|
|
1 Includes other phosphate and purchased products and comprises net sales of |
||||||||||||||||||
2 See Notes 2 and 3 to the interim financial statements. Includes impairment reversal of assets of |
-
Adjusted EBITDA increased in the second quarter and first half of 2022 due to higher net realized selling prices, which more than offset higher raw material costs and lower sales volumes. As part of expenses, we recognized a
non-cash impairment of assets reversal, which is deducted from adjusted EBITDA. This impairment reversal is due to a more favorable outlook for phosphate margins.$450 million -
Sales volumes decreased particularly in fertilizer, as a cool and wet spring in
North America condensed the application window. - Net realized selling price increased in the second quarter and first half of 2022 in connection with the increase in global benchmark prices. Industrial and feed net realized selling prices increased to a greater extent than fertilizer prices in the second quarter of 2022, which reflects the typical lag in industrial and feed price realizations relative to spot fertilizer prices.
- Cost of goods sold per tonne increased primarily due to significantly higher sulfur and ammonia input costs.
Corporate and Others
(millions of US dollars, except as otherwise |
Three Months Ended |
|
Six Months Ended |
|||||||||
noted) |
2022 |
|
2021 |
|
% Change |
|
2022 |
|
2021 |
|
% Change |
|
Selling expenses |
(2) |
|
(9) |
|
(78) |
|
(4) |
|
(15) |
|
(73) |
|
General and administrative expenses |
77 |
|
66 |
|
17 |
|
147 |
|
124 |
|
19 |
|
Share-based compensation (recovery) expense |
(52) |
|
38 |
|
n/m |
|
83 |
|
61 |
|
36 |
|
Other expenses |
48 |
|
83 |
|
(42) |
|
101 |
|
111 |
|
(9) |
|
EBIT |
(71) |
|
(178) |
|
(60) |
|
(327) |
|
(281) |
|
16 |
|
Depreciation and amortization |
20 |
|
10 |
|
100 |
|
36 |
|
22 |
|
64 |
|
EBITDA |
(51) |
|
(168) |
|
(70) |
|
(291) |
|
(259) |
|
12 |
|
Adjustments 1 |
(7) |
|
100 |
|
n/m |
|
167 |
|
143 |
|
17 |
|
Adjusted EBITDA |
(58) |
|
(68) |
|
(15) |
|
(124) |
|
(116) |
|
7 |
|
1 See Note 2 to the interim financial statements. |
- Share-based compensation (recovery) expense – the recovery in the second quarter of 2022 reflects a decrease in the fair value of share-based compensation due to a decrease in our share price, whereas an expense was recorded in the second quarter of 2021 as our share price increased during the period.
- Other expenses were lower in the second quarter and first half of 2022 compared to the same periods in 2021 due to the absence of cloud computing related expenses from our change in accounting policy, partially offset by higher foreign exchange losses related to our international operations.
Eliminations
Eliminations of gross margin between operating segments was a recovery of
Finance Costs, Income Taxes and Other Comprehensive (Loss) Income
(millions of US dollars, except as otherwise |
Three Months Ended |
|
Six Months Ended |
|||||||||
noted) |
2022 |
|
2021 |
|
% Change |
|
2022 |
|
2021 |
|
% Change |
|
Finance costs |
130 |
|
125 |
|
4 |
|
239 |
|
245 |
|
(2) |
|
Income tax expense |
1,214 |
|
381 |
|
219 |
|
1,719 |
|
406 |
|
323 |
|
Other comprehensive (loss) income |
(242) |
|
61 |
|
n/m |
|
(66) |
|
85 |
|
n/m |
- Income tax expense was higher as a result of significantly higher earnings in the second quarter and first half of 2022 compared to the same periods in 2021.
-
Other comprehensive (loss) income is primarily driven by changes in the currency translation of our foreign operations and our investment in Sinofert Holdings Ltd. (“Sinofert”). In the second quarter and first half of 2022, we had fair value losses on our investment in Sinofert due to share price decreases compared to fair value gains due to share price increases in the same periods of 2021. In the second quarter of 2022, we also had a significant loss on foreign currency translation of our Retail operations in
Australia ,Brazil andCanada as these currencies depreciated relative to the US dollar as atJune 30, 2022 compared toMarch 31, 2022 levels. These losses offset the gains on translation for all three currencies in the first quarter of 2022. Whereas, we had a foreign currency translation gain in the second quarter of 2021 and net loss in the second half of 2021.
Liquidity and Capital Resources
Sources and Uses of Liquidity
We continued to manage our capital in accordance with our capital allocation strategy. We believe that our internally generated cash flow, supplemented by available borrowings under our new or existing financing sources, if necessary, will be sufficient to meet our anticipated capital expenditures, planned growth and development activities, and other cash requirements for the foreseeable future. Refer to the “Capital Structure and Management” section for details on our existing long-term debt and credit facilities.
Sources and Uses of Cash
|
Three Months Ended |
|
Six Months Ended |
||||||||
(millions of US dollars, except as otherwise noted) |
2022 |
|
2021 |
|
% Change |
|
2022 |
|
2021 |
|
% Change |
Cash provided by operating activities |
2,558 |
|
1,966 |
|
30 |
|
2,496 |
|
1,814 |
|
38 |
Cash used in investing activities |
(517) |
|
(431) |
|
20 |
|
(974) |
|
(819) |
|
19 |
Cash used in financing activities |
(1,878) |
|
(449) |
|
318 |
|
(1,290) |
|
(640) |
|
102 |
Effect of exchange rate changes on cash and cash equivalents |
(29) |
|
(4) |
|
625 |
|
(20) |
|
(15) |
|
33 |
Increase in cash and cash equivalents |
134 |
|
1,082 |
|
(88) |
|
212 |
|
340 |
|
(38) |
Cash provided by operating activities |
|
Cash used in investing activities |
|
Cash used in financing activities |
|
Financial Condition Review
The following balance sheet categories contained variances that were considered material:
|
As at |
|
|
|
|
|||
(millions of US dollars, except as otherwise noted) |
|
|
|
|
$ Change |
|
% Change |
|
Assets |
|
|
|
|
|
|
|
|
Cash and cash equivalents |
711 |
|
499 |
|
212 |
|
42 |
|
Receivables |
10,171 |
|
5,366 |
|
4,805 |
|
90 |
|
Inventories |
7,160 |
|
6,328 |
|
832 |
|
13 |
|
Prepaid expenses and other current assets |
615 |
|
1,653 |
|
(1,038) |
|
(63) |
|
Property, plant and equipment |
20,492 |
|
20,016 |
|
476 |
|
2 |
|
Liabilities and Equity |
|
|
|
|
|
|
|
|
Short-term debt |
2,403 |
|
1,560 |
|
843 |
|
54 |
|
Current portion of long-term debt |
1,028 |
|
545 |
|
483 |
|
89 |
|
Payables and accrued charges |
11,682 |
|
10,052 |
|
1,630 |
|
16 |
|
Long-term debt |
7,056 |
|
7,521 |
|
(465) |
|
(6) |
|
Share capital |
15,115 |
|
15,457 |
|
(342) |
|
(2) |
|
Retained earnings |
11,563 |
|
8,192 |
|
3,371 |
|
41 |
- Explanations for changes in Cash and cash equivalents are in the “Sources and Uses of Cash” section.
- Receivables increased due to higher sales across all of our segments as a result of higher crop nutrient net realized selling prices consistent with higher benchmark pricing, as well as higher Retail vendor rebates receivables.
-
Inventories increased due to seasonal Retail inventory build-up in
North America and higher costs to produce or purchase inventory due to inflation and tight global supply. The increase was partly offset by a decrease in Retail seed inventory driven by seasonality. - Prepaid expenses and other current assets decreased due to the drawdown of prepaid inventory (primarily seed and crop protection products) during the North American planting and application spring season.
- Property, plant and equipment increased due to an impairment reversal related to our Aurora cash generating unit in the Phosphate segment.
- Short-term debt increased due to additional commercial paper issuances as part of our seasonal working capital management.
-
Payables and accrued charges increased due to a shift in timing of supplier payments, higher input costs from inflation and tight global supply and higher inventory purchases, which were partly offset by lower customer prepayments in
North America as Retail customers took delivery of prepaid sales. -
Long-term debt decreased due to a reclassification to the current portion of long-term debt of our
notes maturing$500 million May 2023 . - Share capital decreased from shares repurchased under our normal course issuer bids partially offset by exercise of stock options.
- Retained earnings increased as net earnings in the first half of 2022 exceeded dividends declared and share repurchases.
Capital Structure and Management
Principal Debt Instruments
As part of the normal course of business, we closely monitor our liquidity position. We use a combination of cash generated from operations and short-term and long-term debt to finance our operations. We were in compliance with our debt covenants and did not have any changes to our credit ratings in the six months ended
|
As at |
|||||||
|
|
|
Outstanding and Committed |
|||||
(millions of US dollars) |
Rate of Interest (%) |
Total Facility Limit |
Short-Term Debt |
Long-Term Debt |
||||
Credit facilities |
|
|
|
|
||||
Unsecured revolving term credit facility |
n/a |
4,500 |
‐ |
‐ |
||||
Uncommitted revolving demand facility |
n/a |
1,000 |
‐ |
‐ |
||||
Other credit facilities |
|
770 |
|
|
||||
South American |
1.4 - 16.3 |
|
140 |
160 |
||||
Other |
1.6 - 4.0 |
|
17 |
3 |
||||
Commercial paper |
1.4 - 2.5 |
|
2,105 |
‐ |
||||
Other short-term debt |
n/a |
|
141 |
‐ |
||||
Total |
|
|
2,403 |
163 |
We also have a commercial paper program, which is limited to the availability of backup funds under the
Subsequent to
Our long-term debt consists primarily of notes. See the “Capital Structure and Management” section of our 2021 Annual Report for information on balances, rates and maturities for our notes.
Outstanding Share Data
|
As at |
|
Common shares |
538,926,006 |
|
Options to purchase common shares |
3,933,487 |
For more information on our capital structure and management, see Note 24 to our 2021 annual financial statements.
On
Quarterly Results
(millions of US dollars, except as otherwise noted) |
Q2 2022 |
Q1 2022 |
Q4 2021 |
Q3 2021 |
Q2 2021 |
Q1 2021 |
Q4 2020 |
Q3 2020 |
||||||||
Sales 1 |
14,506 |
7,657 |
7,267 |
6,024 |
9,763 |
4,658 |
4,052 |
4,227 |
||||||||
Net earnings (loss) |
3,601 |
1,385 |
1,207 |
726 |
1,113 |
133 |
316 |
(587) |
||||||||
Net earnings (loss) attributable to equity holders of |
3,593 |
1,378 |
1,201 |
717 |
1,108 |
127 |
316 |
(587) |
||||||||
Net earnings (loss) per share attributable to equity holders of |
|
|
|
|
|
|
|
|
||||||||
Basic |
6.53 |
2.49 |
2.11 |
1.26 |
1.94 |
0.22 |
0.55 |
(1.03) |
||||||||
Diluted |
6.51 |
2.49 |
2.11 |
1.25 |
1.94 |
0.22 |
0.55 |
(1.03) |
||||||||
1 Certain immaterial figures have been reclassified in the third quarter of 2020. |
Seasonality in our business results from increased demand for products during the planting season. Crop input sales are generally higher in the spring and fall application seasons. Crop input inventories are normally accumulated leading up to each application season. Our cash collections generally occur after the application season is complete, while customer prepayments made to us are concentrated in December and January and inventory prepayments paid to our suppliers are typically concentrated in the period from November to January. Feed and industrial sales are more evenly distributed throughout the year.
Our earnings are significantly affected by fertilizer benchmark prices, which have been volatile over the last two years and are affected by demand-supply conditions, grower affordability and weather.
In the second quarter of 2022, earnings were impacted by a
Critical Accounting Estimates
Our significant accounting policies are disclosed in our 2021 Annual Report. We have discussed the development, selection and application of our key accounting policies, and the critical accounting estimates and assumptions they involve, with the audit committee of the Board. Our critical accounting estimates are discussed on page 49 of our 2021 Annual Report. Other than the critical accounting estimates discussed below, there were no material changes in the three or six months ended
Impairment of Assets
Long-Lived Asset Impairment and Reversals
In the three months ended
The recoverable amount estimate is most sensitive to the following key assumptions: our internal sales and input price forecasts, which consider projections from independent third-party data sources, discount rate, and expected mine life. We used key assumptions that were based on historical data and estimates of future results from internal sources, external price benchmarks, and mineral reserve technical reports, as well as industry and market trends. For our Aurora CGU, there were no reasonably possible changes in key assumptions that would result in a substantial change in the reversal amount.
In 2017 and 2020, we recorded an impairment of assets at our White Springs CGU relating to property, plant and equipment of
Goodwill Impairment
Operating segments have assets allocated to them that must be assessed for impairment when events or circumstances indicate there could be an impairment, or at least annually. Based on our assumptions at the time of our impairment testing, the recoverable amount of each of our CGUs or groups of CGUs was in excess of their carrying amounts. Key assumptions in our testing models may change, and changes that could reasonably be expected to occur may cause impairment or impairment reversals. Such change in assumptions could be driven by global supply and demand and other market factors and changes in regulations and other future events outside our control.
During the six months ended
The Retail –
The following table indicates the percentages by which key assumptions would need to change individually for the estimated recoverable amount to be equal to the carrying amount:
|
|
|
Change Required for |
|||
|
Value Used in Impairment |
|
Carrying Amount to Equal |
|||
Key Assumptions |
Model |
|
Recoverable Amount |
|||
Terminal growth rate (%) |
2.5 |
|
percentage point decrease |
0.6 |
||
Forecasted EBITDA over forecast period (in billions of US dollars) |
7.5 |
|
percent decrease |
5.0 |
||
Discount rate (%) |
8.0 |
|
percentage point increase |
0.4 |
Risk Factors
The current conflict between
Controls and Procedures
Management is responsible for establishing and maintaining adequate internal control over financial reporting, as defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934, as amended, and National Instrument 52-109 Certification of Disclosure in Issuers’ Annual and Interim Filings. Internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and preparation of financial statements for external purposes in accordance with IFRS. Any system of internal control over financial reporting, no matter how well designed, has inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation.
There has been no change in our internal control over financial reporting during the three months ended
Forward-Looking Statements
Certain statements and other information included in this document, including within the "Financial Outlook and Guidance" section, constitute “forward-looking information” or “forward-looking statements” (collectively, “forward-looking statements”) under applicable securities laws (such statements are often accompanied by words such as “anticipate”, “forecast”, “expect”, “believe”, “may”, “will”, “should”, “estimate”, “intend” or other similar words). All statements in this document, other than those relating to historical information or current conditions, are forward-looking statements, including, but not limited to:
All of the forward-looking statements are qualified by the assumptions that are stated or inherent in such forward-looking statements, including the assumptions referred to below and elsewhere in this document. Although we believe that these assumptions are reasonable, having regard to our experience and our perception of historical trends, this list is not exhaustive of the factors that may affect any of the forward-looking statements and the reader should not place undue reliance on these assumptions and such forward-looking statements. Current conditions, economic and otherwise, render assumptions, although reasonable when made, subject to greater uncertainty. The additional key assumptions that have been made include, among other things, assumptions with respect to our ability to successfully complete, integrate and realize the anticipated benefits of our already completed and future acquisitions and divestitures, and that we will be able to implement our standards, controls, procedures and policies in respect of any acquired businesses and to realize the expected synergies; that future business, regulatory and industry conditions will be within the parameters expected by us, including with respect to prices, margins, demand, supply, product availability, supplier agreements, availability and cost of labor and interest, exchange and effective tax rates; assumptions with respect to global economic conditions and the accuracy of our market outlook expectations for 2022 and in the future; assumptions with respect to our ability to repurchase shares under our share repurchase program, including existing and future market conditions and compliance with respect to applicable securities laws and regulations and stock exchange policies; our expectations regarding the impacts, direct and indirect, of the COVID-19 pandemic on our business, customers, business partners, employees, supply chain, other stakeholders and the overall global economy; our expectations regarding the impacts, direct and indirect, of the conflict between
Events or circumstances that could cause actual results to differ materially from those in the forward-looking statements include, but are not limited to: general global economic, market and business conditions; failure to complete announced and future acquisitions or divestitures at all or on the expected terms and within the expected timeline; climate change and weather conditions, including impacts from regional flooding and/or drought conditions; crop planted acreage, yield and prices; the supply and demand and price levels for our products; governmental and regulatory requirements and actions by governmental authorities, including changes in government policy (including tariffs, trade restrictions and climate change initiatives), government ownership requirements, changes in environmental, tax and other laws or regulations and the interpretation thereof; political risks, including civil unrest, actions by armed groups or conflict and malicious acts including terrorism; the occurrence of a major environmental or safety incident; innovation and cybersecurity risks related to our systems, including our costs of addressing or mitigating such risks; counterparty and sovereign risk; delays in completion of turnarounds at our major facilities; interruptions of or constraints in availability of key inputs, including natural gas and sulfur; any significant impairment of the carrying amount of certain assets; risks related to reputational loss; certain complications that may arise in our mining processes; the ability to attract, engage and retain skilled employees and strikes or other forms of work stoppages; the COVID-19 pandemic, including variants of the COVID-19 virus and the efficiency and distribution of vaccines, and its resulting effects on economic conditions, restrictions imposed by public health authorities or governments, including government-imposed vaccine mandates, fiscal and monetary responses by governments and financial institutions and disruptions to global supply chains; the conflict between
The purpose of our adjusted net earnings per share, adjusted EBITDA (consolidated and by segment) and sustaining capital expenditures guidance ranges are to assist readers in understanding our expected and targeted financial results, and this information may not be appropriate for other purposes.
The forward-looking statements in this document are made as of the date hereof and
Terms and Definitions
For the definitions of certain financial and non-financial terms used in this document, as well as a list of abbreviated company names and sources, see the “Terms & Definitions” section of our 2021 Annual Report. All references to per share amounts pertain to diluted net earnings (loss) per share, “n/m” indicates information that is not meaningful, and all financial amounts are stated in millions of US dollars, unless otherwise noted.
About
Selected financial data for download can be found in our data tool at www.nutrien.com/investors/interactive-datatool
Such data is not incorporated by reference herein.
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Appendix A - Selected Additional Financial Data
Selected Retail Measures |
Three Months Ended |
|
Six Months Ended |
|||||
|
2022 |
|
2021 |
|
2022 |
|
2021 |
|
Proprietary products margin as a percentage of product line margin (%) |
|
|
|
|
|
|
|
|
Crop nutrients |
22 |
|
24 |
|
20 |
|
23 |
|
Crop protection products |
39 |
|
43 |
|
39 |
|
42 |
|
Seed |
46 |
|
46 |
|
44 |
|
43 |
|
All products |
28 |
|
29 |
|
26 |
|
27 |
|
Crop nutrients sales volumes (tonnes – thousands) |
|
|
|
|
|
|
|
|
|
3,978 |
|
5,020 |
|
5,220 |
|
6,617 |
|
International |
1,017 |
|
1,132 |
|
1,950 |
|
1,935 |
|
Total |
4,995 |
|
6,152 |
|
7,170 |
|
8,552 |
|
Crop nutrients selling price per tonne |
|
|
|
|
|
|
|
|
|
940 |
|
506 |
|
923 |
|
494 |
|
International |
795 |
|
445 |
|
676 |
|
408 |
|
Total |
911 |
|
495 |
|
856 |
|
475 |
|
Crop nutrients gross margin per tonne |
|
|
|
|
|
|
|
|
|
202 |
|
127 |
|
198 |
|
123 |
|
International |
105 |
|
57 |
|
86 |
|
54 |
|
Total |
182 |
|
114 |
|
168 |
|
108 |
|
|
|
|
|
|
|
|
|
|
Financial performance measures |
|
|
|
|
2022 |
|
2021 |
|
Retail adjusted EBITDA margin (%) 1, 2 |
|
12 |
|
10 |
||||
Retail adjusted EBITDA per US selling location (thousands of US dollars) 1, 2, 3 |
|
1,897 |
|
1,267 |
||||
Retail adjusted average working capital to sales (%) 1, 4 |
|
|
|
15 |
|
12 |
||
Retail adjusted average working capital to sales excluding Nutrien Financial (%) 1, 4 |
|
1 |
|
‐ |
||||
Nutrien Financial adjusted net interest margin (%) 1, 4 |
|
|
|
|
7.0 |
|
6.2 |
|
Retail cash operating coverage ratio (%) 1, 4 |
|
|
|
|
54 |
|
60 |
|
Retail normalized comparable store sales (%) 4 |
|
|
|
|
(3) |
|
1 |
|
1 Rolling four quarters ended |
||||||||
2 These are supplementary financial measures. See the “Other Financial Measures" section. |
||||||||
3 Excluding acquisitions. |
||||||||
4 These are non-IFRS financial measures. See the "Non-IFRS Financial Measures" section. |
Nutrien Financial |
As at |
As at
|
||||||||||||||
(millions of US dollars) |
Current |
<31 days
|
31–90 days
|
>90 days
|
Gross
|
Allowance 1 |
Net Receivables |
Net Receivables |
||||||||
|
3,342 |
201 |
70 |
67 |
3,680 |
(35) |
3,645 |
1,488 |
||||||||
International |
642 |
53 |
13 |
53 |
761 |
(2) |
759 |
662 |
||||||||
Nutrien Financial receivables |
3,984 |
254 |
83 |
120 |
4,441 |
(37) |
4,404 |
2,150 |
||||||||
1 Bad debt expense on the above receivables for the six months ended |
Selected Nitrogen Measures |
Three Months Ended |
|
Six Months Ended |
|||||
|
2022 |
|
2021 |
|
2022 |
|
2021 |
|
Sales volumes (tonnes – thousands) |
|
|
|
|
|
|
|
|
Fertilizer |
1,453 |
|
1,825 |
|
2,546 |
|
3,130 |
|
Industrial and feed |
1,142 |
|
1,141 |
|
2,314 |
|
2,239 |
|
Net sales (millions of US dollars) |
|
|
|
|
|
|
|
|
Fertilizer |
1,120 |
|
638 |
|
1,894 |
|
970 |
|
Industrial and feed |
760 |
|
344 |
|
1,448 |
|
585 |
|
Net selling price per tonne |
|
|
|
|
|
|
|
|
Fertilizer |
771 |
|
350 |
|
744 |
|
310 |
|
Industrial and feed |
666 |
|
302 |
|
626 |
|
261 |
Production Measures |
Three Months Ended |
|
Six Months Ended |
|||||
|
2022 |
|
2021 |
|
2022 |
|
2021 |
|
Potash production (Product tonnes – thousands) |
3,621 |
|
3,414 |
|
7,324 |
|
6,950 |
|
Potash shutdown weeks 1 |
5 |
|
4 |
|
5 |
|
4 |
|
Ammonia production – total 2 |
1,473 |
|
1,492 |
|
2,876 |
|
2,941 |
|
Ammonia production – adjusted 2, 3 |
1,048 |
|
954 |
|
2,006 |
|
2,007 |
|
Ammonia operating rate (%) 3 |
96 |
|
87 |
|
92 |
|
92 |
|
P2O5 production (P2O5 tonnes – thousands) |
350 |
|
347 |
|
728 |
|
725 |
|
P2O5 operating rate (%) |
82 |
|
82 |
|
86 |
|
86 |
|
1 Represents weeks of full production shutdown, including inventory adjustments and unplanned events, excluding the impact of any periods of reduced operating rates, planned routine annual maintenance shutdowns and announced workforce reductions. |
||||||||
2 All figures are provided on a gross production basis in thousands of product tonnes. |
||||||||
3 Excludes Trinidad and Joffre. |
Appendix B - Non-IFRS Financial Measures
We use both IFRS measures and certain non-IFRS financial measures to assess performance. Non-IFRS financial measures are financial measures disclosed by a company that (a) depict historical or expected future financial performance, financial position or cash flow of a company, (b) with respect to their composition, exclude amounts that are included in, or include amounts that are excluded from, the composition of the most directly comparable financial measure disclosed in the primary financial statements of the company, (c) are not disclosed in the financial statements of the company and (d) are not a ratio, fraction, percentage or similar representation. Non-IFRS ratios are financial measures disclosed by a company that are in the form of a ratio, fraction, percentage or similar representation that has a non-IFRS financial measure as one or more of its components, and that are not disclosed in the financial statements of the company.
These non-IFRS financial measures and non-IFRS ratios are not standardized financial measures under IFRS and, therefore, are unlikely to be comparable to similar financial measures presented by other companies. Management believes these non-IFRS financial measures and non-IFRS ratios provide transparent and useful supplemental information to help investors evaluate our financial performance, financial condition and liquidity using the same measures as management. These non-IFRS financial measures and non-IFRS ratios should not be considered as a substitute for, or superior to, measures of financial performance prepared in accordance with IFRS.
The following section outlines our non-IFRS financial measures and non-IFRS ratios, their compositions, and why management uses each measure. It also includes reconciliations to the most directly comparable IFRS measures. Except as otherwise described herein, our non-IFRS financial measures and non-IFRS ratios are calculated on a consistent basis from period to period and are adjusted for specific items in each period, as applicable. As additional non-recurring or unusual items arise in the future, we generally exclude these items in our calculations.
Adjusted EBITDA (Consolidated)
Most directly comparable IFRS financial measure: Net earnings (loss).
Definition: Adjusted EBITDA is calculated as net earnings (loss) before finance costs, income taxes, depreciation and amortization, share-based compensation and certain foreign exchange gain/loss (net of related derivatives). We also adjust this measure for the following other income and expenses that are excluded when management evaluates the performance of our day-to-day operations: integration and restructuring related costs, impairment or reversal of impairment of assets, COVID-19 related expenses, gain or loss on disposal of certain businesses and investments, and IFRS adoption transition adjustments.
Why we use the measure and why it is useful to investors: It is not impacted by long-term investment and financing decisions, but rather focuses on the performance of our day-to-day operations. It provides a measure of our ability to service debt and to meet other payment obligations, and as a component of employee remuneration calculations.
|
Three Months Ended |
|
Six Months Ended |
|||||
(millions of US dollars) |
2022 |
|
2021 |
|
2022 |
|
2021 |
|
Net earnings |
3,601 |
|
1,113 |
|
4,986 |
|
1,246 |
|
Finance costs |
130 |
|
125 |
|
239 |
|
245 |
|
Income tax expense |
1,214 |
|
381 |
|
1,719 |
|
406 |
|
Depreciation and amortization |
505 |
|
485 |
|
966 |
|
965 |
|
EBITDA 1 |
5,450 |
|
2,104 |
|
7,910 |
|
2,862 |
|
Share-based compensation (recovery) expense |
(52) |
|
38 |
|
83 |
|
61 |
|
Foreign exchange loss (gain), net of related derivatives |
31 |
|
(2) |
|
56 |
|
‐ |
|
Integration and restructuring related costs |
11 |
|
29 |
|
20 |
|
39 |
|
(Reversal) impairment of assets |
(450) |
|
1 |
|
(450) |
|
5 |
|
COVID-19 related expenses 2 |
3 |
|
9 |
|
8 |
|
18 |
|
Gain on disposal of investment |
‐ |
|
‐ |
|
(19) |
|
‐ |
|
Cloud computing transition adjustment 3 |
‐ |
|
36 |
|
‐ |
|
36 |
|
Adjusted EBITDA |
4,993 |
|
2,215 |
|
7,608 |
|
3,021 |
|
1 EBITDA is calculated as net earnings (loss) before finance costs, income taxes, and depreciation and amortization. |
||||||||
2 COVID-19 related expenses primarily consist of increased cleaning and sanitization costs, the purchase of personal protective equipment, discretionary supplemental employee costs, and costs related to construction delays from access limitations and other government restrictions. |
||||||||
3 Cloud computing transition adjustment relates to cloud computing costs in prior years that no longer qualify for capitalization based on an agenda decision issued by the IFRS Interpretations Committee in |
Adjusted Net Earnings and Adjusted Net Earnings Per Share
Most directly comparable IFRS financial measure: Net earnings (loss) and net earnings (loss) per share.
Definition: Adjusted net earnings and related per share information are calculated as net earnings (loss) before share-based compensation and certain foreign exchange gain/loss (net of related derivatives), net of tax. We also adjust this measure for the following other income and expenses (net of tax) that are excluded when management evaluates the performance of our day-to-day operations: certain integration and restructuring related costs, impairment or reversal of impairment of assets, COVID-19 related expenses (including those recorded under finance costs), gain or loss on disposal of certain businesses and investments, IFRS adoption transition adjustments and gain/loss on early extinguishment of debt. We generally apply the annual forecasted effective tax rate to our adjustments during the year and, at year-end, we apply the actual effective tax rate. If the effective tax rate is significantly different from our forecasted effective tax rate due to adjustments or discrete tax impacts, we apply a tax rate that excludes those items. For material adjustments, we apply a tax rate specific to the adjustment.
Why we use the measure and why it is useful to investors: Focuses on the performance of our day-to-day operations and is used as a component of employee remuneration calculations.
|
Three Months Ended
|
|
Six Months Ended
|
|||||||||
|
|
|
|
|
Per |
|
|
|
|
|
Per |
|
(millions of US dollars, except as otherwise |
Increases |
|
|
|
Diluted |
|
Increases |
|
|
|
Diluted |
|
noted) |
(Decreases) |
|
Post-Tax |
|
Share |
|
(Decreases) |
|
Post-Tax |
|
Share |
|
Net earnings attributable to equity holders of |
|
|
3,593 |
|
6.51 |
|
|
|
4,971 |
|
8.99 |
|
Adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
Share-based compensation (recovery) expense |
(52) |
|
(39) |
|
(0.07) |
|
83 |
|
62 |
|
0.11 |
|
Foreign exchange loss, net of related derivatives |
31 |
|
23 |
|
0.04 |
|
56 |
|
42 |
|
0.07 |
|
Integration and restructuring related costs |
11 |
|
8 |
|
0.01 |
|
20 |
|
15 |
|
0.02 |
|
Impairment reversal of assets |
(450) |
|
(354) |
|
(0.64) |
|
(450) |
|
(354) |
|
(0.64) |
|
COVID-19 related expenses |
3 |
|
2 |
|
‐ |
|
8 |
|
6 |
|
0.01 |
|
Gain on disposal of investment |
‐ |
|
‐ |
|
‐ |
|
(19) |
|
(14) |
|
(0.03) |
|
Adjusted net earnings |
|
|
3,233 |
|
5.85 |
|
|
|
4,728 |
|
8.53 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
Six Months Ended
|
|||||||||
|
|
|
|
|
Per |
|
|
|
|
|
Per |
|
(millions of US dollars, except as otherwise |
Increases |
|
|
|
Diluted |
|
Increases |
|
|
|
Diluted |
|
noted) |
(Decreases) |
|
Post-Tax |
|
Share |
|
(Decreases) |
|
Post-Tax |
|
Share |
|
Net earnings attributable to equity holders of |
|
|
1,108 |
|
1.94 |
|
|
|
1,235 |
|
2.16 |
|
Adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
Share-based compensation expense |
38 |
|
29 |
|
0.05 |
|
61 |
|
46 |
|
0.08 |
|
Foreign exchange gain, net of related derivatives |
(2) |
|
(2) |
|
‐ |
|
‐ |
|
‐ |
|
‐ |
|
Integration and restructuring related costs |
29 |
|
22 |
|
0.03 |
|
39 |
|
30 |
|
0.05 |
|
Impairment of assets |
1 |
|
1 |
|
‐ |
|
5 |
|
4 |
|
0.01 |
|
COVID-19 related expenses |
9 |
|
7 |
|
0.01 |
|
18 |
|
14 |
|
0.02 |
|
Cloud computing transition adjustment |
36 |
|
27 |
|
0.05 |
|
36 |
|
27 |
|
0.05 |
|
Adjusted net earnings |
|
|
1,192 |
|
2.08 |
|
|
|
1,356 |
|
2.37 |
Adjusted EBITDA (Consolidated) and Adjusted Net Earnings Per Share Guidance
Adjusted EBITDA and adjusted net earnings per share guidance are forward-looking non-IFRS financial measures. We do not provide a reconciliation of such forward-looking measures to the most directly comparable financial measures calculated and presented in accordance with IFRS because a meaningful or accurate calculation of reconciling items and the information is not available without unreasonable effort due to unknown variables, including the timing and amount of certain reconciling items, and the uncertainty related to future results. These unknown variables may include unpredictable transactions of significant value that may be inherently difficult to determine without unreasonable efforts. The probable significance of such unavailable information, which could be material to future results, cannot be addressed. Guidance for adjusted EBITDA and adjusted net earnings per share excludes certain items such as, but not limited to, the impacts of share-based compensation, certain foreign exchange gain/loss (net of related derivatives), integration and restructuring related costs, impairment or reversal of impairment of assets, COVID-19 related expenses (including those recorded under finance costs), gain or loss on disposal of certain businesses and investments, IFRS adoption transition adjustments, and gain/loss on early extinguishment of debt.
Free Cash Flow and Free Cash Flow Including Changes in
Most directly comparable IFRS financial measure: Cash provided by (used in) operating activities.
Definition: Free cash flow is calculated as cash provided by (used in) operating activities less sustaining capital expenditures and before changes in non-cash operating working capital. Free cash flow including non-cash operating working capital is calculated as cash provided by operating activities less sustaining capital expenditures.
Why we use the measure and why it is useful to investors: For evaluation of liquidity and financial strength. These are also useful as indicators of our ability to service debt, meet other payment obligations and make strategic investments. These do not represent residual cash flow available for discretionary expenditures.
|
Three Months Ended |
|
Six Months Ended |
|||||
(millions of US dollars) |
2022 |
|
2021 |
|
2022 |
|
2021 |
|
Cash provided by operating activities |
2,558 |
|
1,966 |
|
2,496 |
|
1,814 |
|
Sustaining capital expenditures |
(256) |
|
(304) |
|
(450) |
|
(468) |
|
Free cash flow including changes in non-cash operating working capital |
2,302 |
|
1,662 |
|
2,046 |
|
1,346 |
|
Changes in non-cash operating working capital |
(1,111) |
|
249 |
|
(3,181) |
|
(543) |
|
Free cash flow |
3,413 |
|
1,413 |
|
5,227 |
|
1,889 |
Gross Margin Excluding Depreciation and Amortization Per Tonne - Manufactured
Most directly comparable IFRS financial measure: Gross margin.
Definition: Gross margin per tonne less depreciation and amortization per tonne for manufactured products. Reconciliations are provided in the “Segment Results” section.
Why we use the measure and why it is useful to investors: Focuses on the performance of our day-to-day operations, which excludes the effects of items that primarily reflect the impact of long-term investment and financing decisions.
Potash Controllable Cash Cost of Product Manufactured (“COPM”) Per Tonne
Most directly comparable IFRS financial measure: Cost of goods sold (“COGS”) for the Potash segment.
Definition: Total Potash COGS excluding depreciation and amortization expense included in COPM, royalties, natural gas costs and carbon taxes, change in inventory, and other adjustments, divided by potash production tonnes.
Why we use the measure and why it is useful to investors: To assess operational performance. In 2022, we replaced Potash cash COPM with this new financial measure. Potash controllable cash COPM excludes the effects of production from other periods and the impacts of our long-term investment decisions. Potash controllable cash COPM also excludes royalties and natural gas costs and carbon taxes, which management does not consider controllable, as they are primarily driven by regulatory and market conditions.
|
Three Months Ended |
|
Six Months Ended |
|||||
(millions of US dollars, except as otherwise noted) |
2022 |
|
2021 |
|
2022 |
|
2021 |
|
Total COGS – Potash |
399 |
|
317 |
|
704 |
|
608 |
|
Change in inventory |
(5) |
|
(11) |
|
72 |
|
16 |
|
Other adjustments 1 |
(9) |
|
(2) |
|
(24) |
|
(6) |
|
COPM |
385 |
|
304 |
|
752 |
|
618 |
|
Depreciation and amortization in COPM |
(114) |
|
(103) |
|
(233) |
|
(214) |
|
Royalties in COPM |
(63) |
|
(19) |
|
(108) |
|
(36) |
|
Natural gas costs and carbon taxes in COPM |
(19) |
|
(11) |
|
(36) |
|
(23) |
|
Controllable cash COPM |
189 |
|
171 |
|
375 |
|
345 |
|
Production tonnes (tonnes – thousands) |
3,621 |
|
3,414 |
|
7,324 |
|
6,950 |
|
Potash controllable cash COPM per tonne |
52 |
|
50 |
|
51 |
|
50 |
|
1 Other adjustments include unallocated production overhead that is recognized as part of cost of goods sold but is not included in the measurement of inventory and changes in inventory balances. |
Ammonia Controllable Cash COPM Per Tonne
Most directly comparable IFRS financial measure: Total manufactured COGS for the Nitrogen segment.
Definition: Total Nitrogen COGS excluding depreciation and amortization expense included in COGS, cash COGS for products other than ammonia, other adjustments, and natural gas and steam costs, divided by net ammonia production tonnes.
Why we use the measure and why it is useful to investors: To assess operational performance. Ammonia controllable cash COPM excludes the effects of production from other periods, the costs of natural gas and steam, and long-term investment decisions, supporting a focus on the performance of our day-to-day operations.
|
Three Months Ended |
|
Six Months Ended |
|||||
(millions of US dollars, except as otherwise noted) |
2022 |
|
2021 |
|
2022 |
|
2021 |
|
Total Manufactured COGS – Nitrogen |
839 |
|
597 |
|
1,479 |
|
1,037 |
|
Total Other COGS – Nitrogen |
332 |
|
166 |
|
573 |
|
336 |
|
Total COGS – Nitrogen |
1,171 |
|
763 |
|
2,052 |
|
1,373 |
|
Depreciation and amortization in COGS |
(115) |
|
(134) |
|
(217) |
|
(242) |
|
Cash COGS for products other than ammonia |
(748) |
|
(448) |
|
(1,272) |
|
(841) |
|
Ammonia |
|
|
|
|
|
|
|
|
Total cash COGS before other adjustments |
308 |
|
181 |
|
563 |
|
290 |
|
Other adjustments 1 |
(78) |
|
(27) |
|
(114) |
|
(30) |
|
Total cash COPM |
230 |
|
154 |
|
449 |
|
260 |
|
Natural gas and steam costs |
(195) |
|
(118) |
|
(376) |
|
(192) |
|
Controllable cash COPM |
35 |
|
36 |
|
73 |
|
68 |
|
Production tonnes (net tonnes 2 – thousands) |
606 |
|
703 |
|
1,280 |
|
1,305 |
|
Ammonia controllable cash COPM per tonne |
58 |
|
51 |
|
57 |
|
51 |
|
1 Other adjustments include unallocated production overhead that is recognized as part of cost of goods sold but is not included in the measurement of inventory and changes in inventory balances. |
||||||||
2 Ammonia tonnes available for sale, as not upgraded to other Nitrogen products. |
Definition: Retail adjusted average working capital divided by Retail adjusted sales for the last four rolling quarters. We exclude in our calculations the sales and working capital of certain acquisitions during the first year following the acquisition. We also look at this metric excluding Nutrien Financial revenue and working capital.
Why we use the measure and why it is useful to investors: To evaluate operational efficiency. A lower or higher percentage represents increased or decreased efficiency, respectively. The metric excluding Nutrien Financial shows the impact that the working capital of Nutrien Financial has on the ratio.
|
Rolling four quarters ended |
|||||||||
(millions of US dollars, except as otherwise noted) |
Q3 2021 |
|
Q4 2021 |
|
Q1 2022 |
|
Q2 2022 |
|
Average/Total |
|
Current assets |
8,945 |
|
9,924 |
|
12,392 |
|
12,487 |
|
|
|
Current liabilities |
(5,062) |
|
(7,828) |
|
(9,223) |
|
(9,177) |
|
|
|
Working capital |
3,883 |
|
2,096 |
|
3,169 |
|
3,310 |
|
3,115 |
|
Working capital from certain recent acquisitions |
‐ |
|
‐ |
|
‐ |
|
‐ |
|
|
|
Adjusted working capital |
3,883 |
|
2,096 |
|
3,169 |
|
3,310 |
|
3,115 |
|
Nutrien Financial working capital |
(2,820) |
|
(2,150) |
|
(2,274) |
|
(4,404) |
|
|
|
Adjusted working capital excluding Nutrien Financial |
1,063 |
|
(54) |
|
895 |
|
(1,094) |
|
203 |
|
|
|
|
|
|
|
|
|
|
|
|
Sales |
3,347 |
|
3,878 |
|
3,861 |
|
9,422 |
|
|
|
Sales from certain recent acquisitions |
‐ |
|
‐ |
|
‐ |
|
‐ |
|
|
|
Adjusted sales |
3,347 |
|
3,878 |
|
3,861 |
|
9,422 |
|
20,508 |
|
Nutrien Financial revenue |
(54) |
|
(51) |
|
(49) |
|
(91) |
|
|
|
Adjusted sales excluding Nutrien Financial |
3,293 |
|
3,827 |
|
3,812 |
|
9,331 |
|
20,263 |
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted average working capital to sales (%) |
|
15 |
||||||||
Adjusted average working capital to sales excluding Nutrien Financial (%) |
|
1 |
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
Rolling four quarters ended |
|||||||||
(millions of US dollars, except as otherwise noted) |
Q3 2020 |
|
Q4 2020 |
|
Q1 2021 |
|
Q2 2021 |
|
Average/Total |
|
Current assets |
7,324 |
|
8,013 |
|
9,160 |
|
9,300 |
|
|
|
Current liabilities |
(4,108) |
|
(6,856) |
|
(7,530) |
|
(7,952) |
|
|
|
Working capital |
3,216 |
|
1,157 |
|
1,630 |
|
1,348 |
|
1,838 |
|
Working capital from certain recent acquisitions |
‐ |
|
‐ |
|
‐ |
|
‐ |
|
|
|
Adjusted working capital |
3,216 |
|
1,157 |
|
1,630 |
|
1,348 |
|
1,838 |
|
Nutrien Financial working capital |
(1,711) |
|
(1,392) |
|
(1,221) |
|
(3,072) |
|
|
|
Adjusted working capital excluding Nutrien Financial |
1,505 |
|
(235) |
|
409 |
|
(1,724) |
|
(11) |
|
|
|
|
|
|
|
|
|
|
|
|
Sales |
2,742 |
|
2,618 |
|
2,972 |
|
7,537 |
|
|
|
Sales from certain recent acquisitions |
‐ |
|
‐ |
|
‐ |
|
‐ |
|
|
|
Adjusted sales |
2,742 |
|
2,618 |
|
2,972 |
|
7,537 |
|
15,869 |
|
Nutrien Financial revenue |
(36) |
|
(37) |
|
(25) |
|
(59) |
|
|
|
Adjusted sales excluding Nutrien Financial |
2,706 |
|
2,581 |
|
2,947 |
|
7,478 |
|
15,712 |
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted average working capital to sales (%) |
|
12 |
||||||||
Adjusted average working capital to sales excluding Nutrien Financial (%) |
|
‐ |
Nutrien Financial Adjusted Net Interest Margin
Definition: Nutrien Financial revenue less deemed interest expense divided by average Nutrien Financial receivables outstanding for the last four rolling quarters.
Why we use the measure and why it is useful to investors: Used by credit rating agencies and other users to evaluate financial performance of Nutrien Financial.
|
Rolling four quarters ended |
|||||||||
(millions of US dollars, except as otherwise noted) |
Q3 2021 |
|
Q4 2021 |
|
Q1 2022 |
|
Q2 2022 |
|
Total/Average |
|
Nutrien Financial revenue |
54 |
|
51 |
|
49 |
|
91 |
|
|
|
Deemed interest expense 1 |
(10) |
|
(12) |
|
(6) |
|
(12) |
|
|
|
Net interest |
44 |
|
39 |
|
43 |
|
79 |
|
205 |
|
|
|
|
|
|
|
|
|
|
|
|
Average Nutrien Financial receivables |
2,820 |
|
2,150 |
|
2,274 |
|
4,404 |
|
2,912 |
|
Nutrien Financial adjusted net interest margin (%) |
|
|
|
|
|
|
|
|
7.0 |
|
1 Average borrowing rate applied to the notional debt required to fund the portfolio of receivables from customers monitored and serviced by Nutrien Financial. |
||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
Rolling four quarters ended |
|||||||||
(millions of US dollars, except as otherwise noted) |
Q3 2020 |
|
Q4 2020 |
|
Q1 2021 |
|
Q2 2021 |
|
Total/Average |
|
Nutrien Financial revenue |
36 |
|
37 |
|
25 |
|
59 |
|
|
|
Deemed interest expense 1 |
(15) |
|
(14) |
|
(6) |
|
(8) |
|
|
|
Net interest |
21 |
|
23 |
|
19 |
|
51 |
|
114 |
|
|
|
|
|
|
|
|
|
|
|
|
Average Nutrien Financial receivables |
1,711 |
|
1,392 |
|
1,221 |
|
3,072 |
|
1,849 |
|
Nutrien Financial adjusted net interest margin (%) |
|
|
|
|
|
|
|
|
6.2 |
|
1 Average borrowing rate applied to the notional debt required to fund the portfolio of receivables from customers monitored and serviced by Nutrien Financial. |
Retail Cash Operating Coverage Ratio
Definition: Retail selling, general and administrative, and other expenses, excluding depreciation and amortization expense, divided by Retail gross margin excluding depreciation and amortization expense in cost of goods sold, for the last four rolling quarters.
Why we use the measure and why it is useful to investors: To understand the costs and underlying economics of our Retail operations and to assess our Retail operating performance and ability to generate free cash flow.
|
Rolling four quarters ended |
|||||||||
(millions of US dollars, except as otherwise noted) |
Q3 2021 |
|
Q4 2021 |
|
Q1 2022 |
|
Q2 2022 |
|
Total |
|
Selling expenses |
746 |
|
848 |
|
722 |
|
1,013 |
|
3,329 |
|
General and administrative expenses |
45 |
|
43 |
|
45 |
|
54 |
|
187 |
|
Other expenses (income) |
17 |
|
20 |
|
(12) |
|
21 |
|
46 |
|
Operating expenses |
808 |
|
911 |
|
755 |
|
1,088 |
|
3,562 |
|
Depreciation and amortization in operating expenses |
(180) |
|
(173) |
|
(167) |
|
(171) |
|
(691) |
|
Operating expenses excluding depreciation and amortization |
628 |
|
738 |
|
588 |
|
917 |
|
2,871 |
|
|
|
|
|
|
|
|
|
|
|
|
Gross margin |
917 |
|
1,173 |
|
845 |
|
2,340 |
|
5,275 |
|
Depreciation and amortization in cost of goods sold |
2 |
|
5 |
|
2 |
|
4 |
|
13 |
|
Gross margin excluding depreciation and amortization |
919 |
|
1,178 |
|
847 |
|
2,344 |
|
5,288 |
|
Cash operating coverage ratio (%) |
|
|
|
|
|
|
|
|
54 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Rolling four quarters ended |
|||||||||
(millions of US dollars, except as otherwise noted) |
Q3 2020 |
|
Q4 2020 |
|
Q1 2021 |
|
Q2 2021 |
|
Total |
|
Selling expenses |
669 |
|
727 |
|
667 |
|
863 |
|
2,926 |
|
General and administrative expenses |
34 |
|
33 |
|
39 |
|
41 |
|
147 |
|
Other expenses (income) |
(12) |
|
8 |
|
15 |
|
34 |
|
45 |
|
Operating expenses |
691 |
|
768 |
|
721 |
|
938 |
|
3,118 |
|
Depreciation and amortization in operating expenses |
(167) |
|
(177) |
|
(175) |
|
(166) |
|
(685) |
|
Operating expenses excluding depreciation and amortization |
524 |
|
591 |
|
546 |
|
772 |
|
2,433 |
|
|
|
|
|
|
|
|
|
|
|
|
Gross margin |
683 |
|
885 |
|
652 |
|
1,858 |
|
4,078 |
|
Depreciation and amortization in cost of goods sold |
3 |
|
3 |
|
2 |
|
3 |
|
11 |
|
Gross margin excluding depreciation and amortization |
686 |
|
888 |
|
654 |
|
1,861 |
|
4,089 |
|
Cash operating coverage ratio (%) |
|
|
|
|
|
|
|
|
60 |
Retail Normalized Comparable Store Sales
Most directly comparable IFRS financial measure: Retail sales from comparable base as a component of total Retail sales.
Definition: Prior year comparable store sales adjusted for published potash, nitrogen and phosphate benchmark prices and foreign exchange rates used in the current year. We retain sales of closed locations in the comparable base if the closed location is in close proximity to an existing location, unless we plan to exit the market area or are unable to economically or logistically serve it. We do not adjust for temporary closures, expansions or renovations of stores.
Why we use the measure and why it is useful to investors: To evaluate sales growth by adjusting for fluctuations in commodity prices and foreign exchange rates. Includes locations we have owned for more than 12 months.
|
Six Months Ended |
|||
(millions of US dollars, except as otherwise noted) |
2022 |
|
2021 |
|
Sales from comparable base |
|
|
|
|
Prior period |
10,509 |
|
9,425 |
|
Adjustments 1 |
(57) |
|
‐ |
|
Revised prior period |
10,452 |
|
9,425 |
|
Current period |
13,230 |
|
10,405 |
|
Comparable store sales (%) |
27 |
|
10 |
|
Prior period normalized for benchmark prices and foreign exchange rates |
13,706 |
|
10,351 |
|
Normalized comparable store sales (%) |
(3) |
|
1 |
|
1 Adjustments relate to prior period sales related to closed locations or businesses that no longer exist in the current period in order to provide a comparable base in our calculation. |
Appendix C – Other Financial Measures
Supplementary Financial Measures
Supplementary financial measures are financial measures disclosed by a company that (a) are, or are intended to be, disclosed on a periodic basis to depict the historical or expected future financial performance, financial position or cash flow of a company, (b) are not disclosed in the financial statements of the company, (c) are not non-IFRS financial measures, and (d) are not non-IFRS ratios.
The following section provides an explanation of the composition of those supplementary financial measures if not previously provided.
Retail adjusted EBITDA margin: Retail adjusted EBITDA divided by Retail sales for the last four rolling quarters.
Sustaining capital expenditures: Represents capital expenditures that are required to sustain operations at existing levels and include major repairs and maintenance, and plant turnarounds.
Retail adjusted EBITDA per US selling location: Calculated as total Retail US adjusted EBITDA for the last four rolling quarters, representing the organic EBITDA component, which excludes acquisitions in those quarters, divided by the number of US locations that have generated sales in the last four rolling quarters, adjusted for acquired locations in those quarters.
Shareholder returns (cash used for dividends and share repurchases): Calculated as dividends paid to
Condensed Consolidated Financial Statements
Unaudited in millions of US dollars except as otherwise noted
Condensed Consolidated Statements of Earnings
|
|
Three Months Ended |
|
Six Months Ended |
||||
|
|
|
|
|
||||
|
Note |
2022 |
|
2021 |
|
2022 |
|
2021 |
SALES |
2 |
14,506 |
|
9,763 |
|
22,163 |
|
14,421 |
Freight, transportation and distribution |
|
221 |
|
222 |
|
424 |
|
433 |
Cost of goods sold |
|
8,286 |
|
6,659 |
|
12,483 |
|
9,950 |
GROSS MARGIN |
|
5,999 |
|
2,882 |
|
9,256 |
|
4,038 |
Selling expenses |
|
1,017 |
|
865 |
|
1,744 |
|
1,538 |
General and administrative expenses |
|
140 |
|
116 |
|
266 |
|
219 |
Provincial mining taxes |
|
362 |
|
107 |
|
611 |
|
165 |
Share-based compensation (recovery) expense |
|
(52) |
|
38 |
|
83 |
|
61 |
(Reversal) impairment of assets |
3 |
(450) |
|
1 |
|
(450) |
|
5 |
Other expenses |
4 |
37 |
|
136 |
|
58 |
|
153 |
EARNINGS BEFORE FINANCE COSTS AND INCOME TAXES |
4,945 |
|
1,619 |
|
6,944 |
|
1,897 |
|
Finance costs |
|
130 |
|
125 |
|
239 |
|
245 |
EARNINGS BEFORE INCOME TAXES |
|
4,815 |
|
1,494 |
|
6,705 |
|
1,652 |
Income tax expense |
5 |
1,214 |
|
381 |
|
1,719 |
|
406 |
NET EARNINGS |
|
3,601 |
|
1,113 |
|
4,986 |
|
1,246 |
Attributable to |
|
|
|
|
|
|
|
|
Equity holders of |
|
3,593 |
|
1,108 |
|
4,971 |
|
1,235 |
Non-controlling interest |
|
8 |
|
5 |
|
15 |
|
11 |
NET EARNINGS |
|
3,601 |
|
1,113 |
|
4,986 |
|
1,246 |
|
|
|
|
|
|
|
|
|
NET EARNINGS PER SHARE ATTRIBUTABLE TO EQUITY HOLDERS OF NUTRIEN ("EPS") |
||||||||
Basic |
|
6.53 |
|
1.94 |
|
9.02 |
|
2.17 |
Diluted |
|
6.51 |
|
1.94 |
|
8.99 |
|
2.16 |
Weighted average shares outstanding for basic EPS |
|
550,048,000 |
|
570,352,000 |
|
551,335,000 |
|
570,007,000 |
Weighted average shares outstanding for diluted EPS |
|
551,659,000 |
|
571,972,000 |
|
553,198,000 |
|
571,453,000 |
Condensed Consolidated Statements of Comprehensive Income
|
Three Months Ended |
|
Six Months Ended |
|||||
|
|
|
|
|||||
(Net of related income taxes) |
2022 |
|
2021 |
|
2022 |
|
2021 |
|
NET EARNINGS |
3,601 |
|
1,113 |
|
4,986 |
|
1,246 |
|
Other comprehensive (loss) income |
|
|
|
|
|
|
|
|
Items that will not be reclassified to net earnings: |
|
|
|
|
|
|
|
|
Net actuarial gain on defined benefit plans |
‐ |
|
‐ |
|
1 |
|
‐ |
|
Net fair value (loss) gain on investments |
(38) |
|
22 |
|
(7) |
|
70 |
|
Items that have been or may be subsequently reclassified to net earnings: |
|
|
|
|
|
|
|
|
(Loss) gain on currency translation of foreign operations |
(209) |
|
25 |
|
(81) |
|
(5) |
|
Other |
5 |
|
14 |
|
21 |
|
20 |
|
OTHER COMPREHENSIVE (LOSS) INCOME |
(242) |
|
61 |
|
(66) |
|
85 |
|
COMPREHENSIVE INCOME |
3,359 |
|
1,174 |
|
4,920 |
|
1,331 |
|
Attributable to |
|
|
|
|
|
|
|
|
Equity holders of |
3,352 |
|
1,170 |
|
4,906 |
|
1,321 |
|
Non-controlling interest |
7 |
|
4 |
|
14 |
|
10 |
|
COMPREHENSIVE INCOME |
3,359 |
|
1,174 |
|
4,920 |
|
1,331 |
|
|
|
|
|
|
|
|
|
|
(See Notes to the Condensed Consolidated Financial Statements) |
Condensed Consolidated Statements of Cash Flows
|
|
Three Months Ended |
|
Six Months Ended |
||||
|
|
|
|
|
||||
|
Note |
2022 |
|
2021 |
|
2022 |
|
2021 |
|
|
|
|
Note 1 |
|
|
|
Note 1 |
OPERATING ACTIVITIES |
|
|
|
|
|
|
|
|
Net earnings |
|
3,601 |
|
1,113 |
|
4,986 |
|
1,246 |
Adjustments for: |
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
505 |
|
485 |
|
966 |
|
965 |
Share-based compensation (recovery) expense |
|
(52) |
|
38 |
|
83 |
|
61 |
(Reversal) impairment of assets |
3 |
(450) |
|
1 |
|
(450) |
|
5 |
Recovery of deferred income tax |
|
(53) |
|
(20) |
|
(8) |
|
(10) |
Gain on disposal of investment |
|
‐ |
|
‐ |
|
(19) |
|
‐ |
Cloud computing transition adjustment |
4 |
‐ |
|
36 |
|
‐ |
|
36 |
Other long-term assets, liabilities and miscellaneous |
|
118 |
|
64 |
|
119 |
|
54 |
Cash from operations before working capital changes |
|
3,669 |
|
1,717 |
|
5,677 |
|
2,357 |
Changes in non-cash operating working capital: |
|
|
|
|
|
|
|
|
Receivables |
|
(3,933) |
|
(2,443) |
|
(4,842) |
|
(2,835) |
Inventories |
|
1,748 |
|
1,848 |
|
(861) |
|
63 |
Prepaid expenses and other current assets |
|
340 |
|
310 |
|
1,062 |
|
998 |
Payables and accrued charges |
|
734 |
|
534 |
|
1,460 |
|
1,231 |
CASH PROVIDED BY OPERATING ACTIVITIES |
|
2,558 |
|
1,966 |
|
2,496 |
|
1,814 |
INVESTING ACTIVITIES |
|
|
|
|
|
|
|
|
Capital expenditures 1 |
|
(477) |
|
(448) |
|
(828) |
|
(746) |
Business acquisitions, net of cash acquired |
|
(27) |
|
(19) |
|
(68) |
|
(40) |
Other |
|
(4) |
|
(29) |
|
30 |
|
(38) |
Net changes in non-cash working capital |
|
(9) |
|
65 |
|
(108) |
|
5 |
CASH USED IN INVESTING ACTIVITIES |
|
(517) |
|
(431) |
|
(974) |
|
(819) |
FINANCING ACTIVITIES |
|
|
|
|
|
|
|
|
Transaction costs related to debt |
|
‐ |
|
(7) |
|
‐ |
|
(7) |
(Repayment of) proceeds from short-term debt, net |
|
(604) |
|
(104) |
|
850 |
|
(3) |
Proceeds from long-term debt |
|
41 |
|
8 |
|
41 |
|
8 |
Repayment of long-term debt |
|
(26) |
|
(5) |
|
(28) |
|
(5) |
Repayment of principal portion of lease liabilities |
|
(94) |
|
(86) |
|
(173) |
|
(164) |
Dividends paid to |
7 |
(264) |
|
(263) |
|
(521) |
|
(518) |
Repurchase of common shares |
7 |
(964) |
|
(1) |
|
(1,606) |
|
(2) |
Issuance of common shares |
|
38 |
|
21 |
|
164 |
|
63 |
Other |
|
(5) |
|
(12) |
|
(17) |
|
(12) |
CASH USED IN FINANCING ACTIVITIES |
|
(1,878) |
|
(449) |
|
(1,290) |
|
(640) |
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS |
|
(29) |
|
(4) |
|
(20) |
|
(15) |
INCREASE IN CASH AND CASH EQUIVALENTS |
|
134 |
|
1,082 |
|
212 |
|
340 |
CASH AND CASH EQUIVALENTS – BEGINNING OF PERIOD |
|
577 |
|
712 |
|
499 |
|
1,454 |
CASH AND CASH EQUIVALENTS – END OF PERIOD |
|
711 |
|
1,794 |
|
711 |
|
1,794 |
Cash and cash equivalents comprised of: |
|
|
|
|
|
|
|
|
Cash |
|
628 |
|
1,580 |
|
628 |
|
1,580 |
Short-term investments |
|
83 |
|
214 |
|
83 |
|
214 |
|
|
711 |
|
1,794 |
|
711 |
|
1,794 |
SUPPLEMENTAL CASH FLOWS INFORMATION |
|
|
|
|
|
|
|
|
Interest paid |
|
150 |
|
162 |
|
200 |
|
238 |
Income taxes paid |
|
396 |
|
105 |
|
1,185 |
|
144 |
Total cash outflow for leases |
|
121 |
|
111 |
|
228 |
|
208 |
1 Includes additions to property, plant and equipment and intangible assets for the three months ended |
||||||||
|
||||||||
(See Notes to the Condensed Consolidated Financial Statements) |
Condensed Consolidated Statements of Changes in Shareholders’ Equity
|
|
|
|
|
|
|
Accumulated Other Comprehensive |
|
|
|
|
|
|
|
||||||
|
|
|
|
|
|
|
(Loss) Income ("AOCI") |
|
|
|
|
|
|
|
||||||
|
|
|
|
|
|
|
Loss on |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Currency |
|
|
|
|
|
|
|
Equity |
|
|
|
|
|
|
Number of |
|
|
|
|
|
Translation |
|
|
|
|
|
|
|
Holders |
|
Non- |
|
|
|
|
Common |
|
Share |
|
Contributed |
|
of Foreign |
|
|
|
Total |
|
Retained |
|
of |
|
Controlling |
|
Total |
|
|
Shares |
|
Capital |
|
Surplus |
|
Operations |
|
Other |
|
AOCI |
|
Earnings |
|
|
|
Interest |
|
Equity |
|
BALANCE – |
569,260,406 |
|
15,673 |
|
205 |
|
(62) |
|
(57) |
|
(119) |
|
6,606 |
|
22,365 |
|
38 |
|
22,403 |
|
Net earnings |
‐ |
|
‐ |
|
‐ |
|
‐ |
|
‐ |
|
‐ |
|
1,235 |
|
1,235 |
|
11 |
|
1,246 |
|
Other comprehensive (loss) income |
‐ |
|
‐ |
|
‐ |
|
(4) |
|
90 |
|
86 |
|
‐ |
|
86 |
|
(1) |
|
85 |
|
Shares repurchased (Note 7) |
(32,728) |
|
(1) |
|
(1) |
|
‐ |
|
‐ |
|
‐ |
|
‐ |
|
(2) |
|
‐ |
|
(2) |
|
Dividends declared |
‐ |
|
‐ |
|
‐ |
|
‐ |
|
‐ |
|
‐ |
|
(526) |
|
(526) |
|
‐ |
|
(526) |
|
Non-controlling interest transactions |
‐ |
|
‐ |
|
‐ |
|
‐ |
|
‐ |
|
‐ |
|
‐ |
|
‐ |
|
(12) |
|
(12) |
|
Effect of share-based compensation including issuance of common shares |
1,427,381 |
|
74 |
|
(3) |
|
‐ |
|
‐ |
|
‐ |
|
‐ |
|
71 |
|
‐ |
|
71 |
|
Transfer of net gain on cash flow hedges |
‐ |
|
‐ |
|
‐ |
|
‐ |
|
(11) |
|
(11) |
|
‐ |
|
(11) |
|
‐ |
|
(11) |
|
BALANCE – |
570,655,059 |
|
15,746 |
|
201 |
|
(66) |
|
22 |
|
(44) |
|
7,315 |
|
23,218 |
|
36 |
|
23,254 |
|
BALANCE – |
557,492,516 |
|
15,457 |
|
149 |
|
(176) |
|
30 |
|
(146) |
|
8,192 |
|
23,652 |
|
47 |
|
23,699 |
|
Net earnings |
‐ |
|
‐ |
|
‐ |
|
‐ |
|
‐ |
|
‐ |
|
4,971 |
|
4,971 |
|
15 |
|
4,986 |
|
Other comprehensive (loss) income |
‐ |
|
‐ |
|
‐ |
|
(80) |
|
15 |
|
(65) |
|
‐ |
|
(65) |
|
(1) |
|
(66) |
|
Shares repurchased (Note 7) |
(19,360,408) |
|
(539) |
|
(22) |
|
‐ |
|
‐ |
|
‐ |
|
(1,075) |
|
(1,636) |
|
‐ |
|
(1,636) |
|
Dividends declared |
‐ |
|
‐ |
|
‐ |
|
‐ |
|
‐ |
|
‐ |
|
(526) |
|
(526) |
|
‐ |
|
(526) |
|
Non-controlling interest transactions |
‐ |
|
‐ |
|
‐ |
|
‐ |
|
‐ |
|
‐ |
|
‐ |
|
‐ |
|
(17) |
|
(17) |
|
Effect of share-based compensation including issuance of common shares |
2,994,221 |
|
197 |
|
(22) |
|
‐ |
|
‐ |
|
‐ |
|
‐ |
|
175 |
|
‐ |
|
175 |
|
Transfer of net gain on cash flow hedges |
‐ |
|
‐ |
|
‐ |
|
‐ |
|
(2) |
|
(2) |
|
‐ |
|
(2) |
|
‐ |
|
(2) |
|
Transfer of net actuarial gain on defined benefit plans |
‐ |
|
‐ |
|
‐ |
|
‐ |
|
(1) |
|
(1) |
|
1 |
|
‐ |
|
‐ |
|
‐ |
|
BALANCE – |
541,126,329 |
|
15,115 |
|
105 |
|
(256) |
|
42 |
|
(214) |
|
11,563 |
|
26,569 |
|
44 |
|
26,613 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(See Notes to the Condensed Consolidated Financial Statements) |
Condensed Consolidated Balance Sheets
|
|
|
|
|
||
As at |
Note |
2022 |
|
2021 |
|
2021 |
ASSETS |
|
|
|
|
|
|
Current assets |
|
|
|
|
|
|
Cash and cash equivalents |
|
711 |
|
1,794 |
|
499 |
Receivables |
|
10,171 |
|
6,683 |
|
5,366 |
Inventories |
|
7,160 |
|
4,876 |
|
6,328 |
Prepaid expenses and other current assets |
|
615 |
|
524 |
|
1,653 |
|
|
18,657 |
|
13,877 |
|
13,846 |
Non-current assets |
|
|
|
|
|
|
Property, plant and equipment |
|
20,492 |
|
19,592 |
|
20,016 |
|
|
12,213 |
|
12,211 |
|
12,220 |
Other intangible assets |
|
2,283 |
|
2,393 |
|
2,340 |
Investments |
|
731 |
|
619 |
|
703 |
Other assets |
|
859 |
|
664 |
|
829 |
TOTAL ASSETS |
|
55,235 |
|
49,356 |
|
49,954 |
LIABILITIES |
|
|
|
|
|
|
Current liabilities |
|
|
|
|
|
|
Short-term debt |
|
2,403 |
|
210 |
|
1,560 |
Current portion of long-term debt |
|
1,028 |
|
32 |
|
545 |
Current portion of lease liabilities |
|
303 |
|
276 |
|
286 |
Payables and accrued charges |
|
11,682 |
|
9,367 |
|
10,052 |
|
|
15,416 |
|
9,885 |
|
12,443 |
Non-current liabilities |
|
|
|
|
|
|
Long-term debt |
|
7,056 |
|
10,029 |
|
7,521 |
Lease liabilities |
|
913 |
|
900 |
|
934 |
Deferred income tax liabilities |
5 |
3,253 |
|
3,118 |
|
3,165 |
Pension and other post-retirement benefit liabilities |
|
422 |
|
458 |
|
419 |
Asset retirement obligations and accrued environmental costs |
|
1,376 |
|
1,559 |
|
1,566 |
Other non-current liabilities |
|
186 |
|
153 |
|
207 |
TOTAL LIABILITIES |
|
28,622 |
|
26,102 |
|
26,255 |
SHAREHOLDERS’ EQUITY |
|
|
|
|
|
|
Share capital |
7 |
15,115 |
|
15,746 |
|
15,457 |
Contributed surplus |
|
105 |
|
201 |
|
149 |
Accumulated other comprehensive loss |
|
(214) |
|
(44) |
|
(146) |
Retained earnings |
|
11,563 |
|
7,315 |
|
8,192 |
Equity holders of |
|
26,569 |
|
23,218 |
|
23,652 |
Non-controlling interest |
|
44 |
|
36 |
|
47 |
TOTAL SHAREHOLDERS’ EQUITY |
|
26,613 |
|
23,254 |
|
23,699 |
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY |
|
55,235 |
|
49,356 |
|
49,954 |
|
|
|
|
|
|
|
(See Notes to the Condensed Consolidated Financial Statements) |
Notes to the Condensed Consolidated Financial Statements
As at and for the Three and Six Months Ended
NOTE 1 BASIS OF PRESENTATION
These unaudited interim condensed consolidated financial statements (“interim financial statements”) are based on International Financial Reporting Standards (“IFRS”) as issued by the
Certain immaterial 2021 figures have been reclassified in the condensed consolidated statements of cash flows and segment note.
In management’s opinion, the interim financial statements include all adjustments necessary to fairly present such information in all material respects. Interim results are not necessarily indicative of the results expected for any other interim period or the fiscal year.
These interim financial statements were authorized by the audit committee of the Board of Directors for issue on
NOTE 2 SEGMENT INFORMATION
The Company has four reportable operating segments: Nutrien Ag Solutions (“Retail”), Potash, Nitrogen and Phosphate. The Retail segment distributes crop nutrients, crop protection products, seed and merchandise, and it provides services directly to growers through a network of farm centers in
|
|
Three Months Ended |
|||||||||||||
|
|
|
|
|
|
|
|
|
|
Corporate |
|
|
|
|
|
|
|
Retail |
|
Potash |
|
Nitrogen |
|
Phosphate |
|
and Others |
|
Eliminations |
|
Consolidated |
|
Sales |
– third party |
9,377 |
|
2,667 |
|
1,915 |
|
547 |
|
‐ |
|
‐ |
|
14,506 |
|
|
– intersegment |
45 |
|
78 |
|
446 |
|
98 |
|
‐ |
|
(667) |
|
‐ |
|
Sales |
– total |
9,422 |
|
2,745 |
|
2,361 |
|
645 |
|
‐ |
|
(667) |
|
14,506 |
|
Freight, transportation and |
|||||||||||||||
distribution |
‐ |
|
77 |
|
132 |
|
55 |
|
‐ |
|
(43) |
|
221 |
||
Net sales |
9,422 |
|
2,668 |
|
2,229 |
|
590 |
|
‐ |
|
(624) |
|
14,285 |
||
Cost of goods sold |
7,082 |
|
399 |
|
1,171 |
|
434 |
|
‐ |
|
(800) |
|
8,286 |
||
Gross margin |
2,340 |
|
2,269 |
|
1,058 |
|
156 |
|
‐ |
|
176 |
|
5,999 |
||
Selling expenses |
1,013 |
|
3 |
|
7 |
|
2 |
|
(2) |
|
(6) |
|
1,017 |
||
General and administrative |
|||||||||||||||
expenses |
54 |
|
2 |
|
4 |
|
3 |
|
77 |
|
‐ |
|
140 |
||
Provincial mining taxes |
‐ |
|
362 |
|
‐ |
|
‐ |
|
‐ |
|
‐ |
|
362 |
||
Share-based compensation recovery |
‐ |
|
‐ |
|
‐ |
|
‐ |
|
(52) |
|
‐ |
|
(52) |
||
Impairment reversal of assets |
‐ |
|
‐ |
|
‐ |
|
(450) |
|
‐ |
|
‐ |
|
(450) |
||
Other expenses (income) |
21 |
|
5 |
|
(54) |
|
8 |
|
48 |
|
9 |
|
37 |
||
Earnings (loss) before finance costs |
|||||||||||||||
and income taxes |
1,252 |
|
1,897 |
|
1,101 |
|
593 |
|
(71) |
|
173 |
|
4,945 |
||
Depreciation and amortization |
175 |
|
130 |
|
139 |
|
41 |
|
20 |
|
‐ |
|
505 |
||
EBITDA 1 |
1,427 |
|
2,027 |
|
1,240 |
|
634 |
|
(51) |
|
173 |
|
5,450 |
||
Integration and restructuring related |
|||||||||||||||
costs |
‐ |
|
‐ |
|
‐ |
|
‐ |
|
11 |
|
‐ |
|
11 |
||
Share-based compensation recovery |
‐ |
|
‐ |
|
‐ |
|
‐ |
|
(52) |
|
‐ |
|
(52) |
||
Impairment reversal of assets |
‐ |
|
‐ |
|
‐ |
|
(450) |
|
‐ |
|
‐ |
|
(450) |
||
COVID-19 related expenses |
‐ |
|
‐ |
|
‐ |
|
‐ |
|
3 |
|
‐ |
|
3 |
||
Foreign exchange loss, net of |
|||||||||||||||
related derivatives |
‐ |
|
‐ |
|
‐ |
|
‐ |
|
31 |
|
‐ |
|
31 |
||
Adjusted EBITDA |
1,427 |
|
2,027 |
|
1,240 |
|
184 |
|
(58) |
|
173 |
|
4,993 |
||
Assets – at June 30, 2022 |
24,825 |
|
14,777 |
|
11,726 |
|
2,396 |
|
2,562 |
|
(1,051) |
|
55,235 |
||
1 EBITDA is calculated as net earnings (loss) before finance costs, income taxes, and depreciation and amortization. |
|
|
Three Months Ended June 30, 2021 |
|||||||||||||
|
|
|
|
|
|
|
|
|
|
Corporate |
|
|
|
|
|
|
|
Retail |
|
Potash |
|
Nitrogen |
|
Phosphate |
|
and Others |
|
Eliminations |
|
Consolidated |
|
Sales |
– third party |
7,522 |
|
844 |
|
1,008 |
|
389 |
|
‐ |
|
‐ |
|
9,763 |
|
|
– intersegment |
15 |
|
61 |
|
307 |
|
60 |
|
‐ |
|
(443) |
|
‐ |
|
Sales |
– total |
7,537 |
|
905 |
|
1,315 |
|
449 |
|
‐ |
|
(443) |
|
9,763 |
|
Freight, transportation and |
|||||||||||||||
distribution |
‐ |
|
88 |
|
136 |
|
46 |
|
‐ |
|
(48) |
|
222 |
||
Net sales |
7,537 |
|
817 |
|
1,179 |
|
403 |
|
‐ |
|
(395) |
|
9,541 |
||
Cost of goods sold |
5,679 |
|
317 |
|
763 |
|
319 |
|
‐ |
|
(419) |
|
6,659 |
||
Gross margin |
1,858 |
|
500 |
|
416 |
|
84 |
|
‐ |
|
24 |
|
2,882 |
||
Selling expenses |
863 |
|
2 |
|
8 |
|
1 |
|
(9) |
|
‐ |
|
865 |
||
General and administrative expenses |
41 |
|
3 |
|
3 |
|
3 |
|
66 |
|
‐ |
|
116 |
||
Provincial mining taxes |
‐ |
|
107 |
|
‐ |
|
‐ |
|
‐ |
|
‐ |
|
107 |
||
Share-based compensation expense |
‐ |
|
‐ |
|
‐ |
|
‐ |
|
38 |
|
‐ |
|
38 |
||
Impairment of assets |
‐ |
|
‐ |
|
1 |
|
‐ |
|
‐ |
|
‐ |
|
1 |
||
Other expenses |
34 |
|
11 |
|
5 |
|
3 |
|
83 |
|
‐ |
|
136 |
||
Earnings (loss) before finance costs |
|||||||||||||||
and income taxes |
920 |
|
377 |
|
399 |
|
77 |
|
(178) |
|
24 |
|
1,619 |
||
Depreciation and amortization |
169 |
|
116 |
|
155 |
|
35 |
|
10 |
|
‐ |
|
485 |
||
EBITDA |
1,089 |
|
493 |
|
554 |
|
112 |
|
(168) |
|
24 |
|
2,104 |
||
Integration and restructuring related |
|||||||||||||||
costs |
7 |
|
‐ |
|
‐ |
|
‐ |
|
22 |
|
‐ |
|
29 |
||
Share-based compensation expense |
‐ |
|
‐ |
|
‐ |
|
‐ |
|
38 |
|
‐ |
|
38 |
||
Impairment of assets |
‐ |
|
‐ |
|
1 |
|
‐ |
|
‐ |
|
‐ |
|
1 |
||
COVID-19 related expenses |
‐ |
|
‐ |
|
‐ |
|
‐ |
|
9 |
|
‐ |
|
9 |
||
Foreign exchange gain, net of related |
|||||||||||||||
derivatives |
‐ |
|
‐ |
|
‐ |
|
‐ |
|
(2) |
|
‐ |
|
(2) |
||
Cloud computing transition |
|||||||||||||||
adjustment |
1 |
|
2 |
|
‐ |
|
‐ |
|
33 |
|
‐ |
|
36 |
||
Adjusted EBITDA |
1,097 |
|
495 |
|
555 |
|
112 |
|
(68) |
|
24 |
|
2,215 |
||
Assets – at December 31, 2021 |
22,387 |
|
13,148 |
|
11,093 |
|
1,699 |
|
2,266 |
|
(639) |
|
49,954 |
|
|
Six Months Ended June 30, 2022 |
|||||||||||||
|
|
|
|
|
|
|
|
|
|
Corporate |
|
|
|
|
|
|
|
Retail |
|
Potash |
|
Nitrogen |
|
Phosphate |
|
and Others |
|
Eliminations |
|
Consolidated |
|
Sales |
– third party |
13,210 |
|
4,377 |
|
3,412 |
|
1,164 |
|
‐ |
|
‐ |
|
22,163 |
|
|
– intersegment |
73 |
|
312 |
|
785 |
|
177 |
|
‐ |
|
(1,347) |
|
‐ |
|
Sales |
– total |
13,283 |
|
4,689 |
|
4,197 |
|
1,341 |
|
‐ |
|
(1,347) |
|
22,163 |
|
Freight, transportation and |
|||||||||||||||
distribution |
‐ |
|
171 |
|
227 |
|
116 |
|
‐ |
|
(90) |
|
424 |
||
Net sales |
13,283 |
|
4,518 |
|
3,970 |
|
1,225 |
|
‐ |
|
(1,257) |
|
21,739 |
||
Cost of goods sold |
10,098 |
|
704 |
|
2,052 |
|
862 |
|
‐ |
|
(1,233) |
|
12,483 |
||
Gross margin |
3,185 |
|
3,814 |
|
1,918 |
|
363 |
|
‐ |
|
(24) |
|
9,256 |
||
Selling expenses |
1,735 |
|
6 |
|
15 |
|
4 |
|
(4) |
|
(12) |
|
1,744 |
||
General and administrative expenses |
99 |
|
4 |
|
10 |
|
6 |
|
147 |
|
‐ |
|
266 |
||
Provincial mining taxes |
‐ |
|
611 |
|
‐ |
|
‐ |
|
‐ |
|
‐ |
|
611 |
||
Share-based compensation expense |
‐ |
|
‐ |
|
‐ |
|
‐ |
|
83 |
|
‐ |
|
83 |
||
Impairment reversal of assets |
‐ |
|
‐ |
|
‐ |
|
(450) |
|
‐ |
|
‐ |
|
(450) |
||
Other expenses (income) |
9 |
|
2 |
|
(80) |
|
12 |
|
101 |
|
14 |
|
58 |
||
Earnings (loss) before finance costs |
|||||||||||||||
and income taxes |
1,342 |
|
3,191 |
|
1,973 |
|
791 |
|
(327) |
|
(26) |
|
6,944 |
||
Depreciation and amortization |
344 |
|
242 |
|
262 |
|
82 |
|
36 |
|
‐ |
|
966 |
||
EBITDA |
1,686 |
|
3,433 |
|
2,235 |
|
873 |
|
(291) |
|
(26) |
|
7,910 |
||
Integration and restructuring related |
|||||||||||||||
costs |
‐ |
|
‐ |
|
‐ |
|
‐ |
|
20 |
|
‐ |
|
20 |
||
Share-based compensation expense |
‐ |
|
‐ |
|
‐ |
|
‐ |
|
83 |
|
‐ |
|
83 |
||
Impairment reversal of assets |
‐ |
|
‐ |
|
‐ |
|
(450) |
|
‐ |
|
‐ |
|
(450) |
||
COVID-19 related expenses |
‐ |
|
‐ |
|
‐ |
|
‐ |
|
8 |
|
‐ |
|
8 |
||
Foreign exchange loss, net of related |
|||||||||||||||
derivatives |
‐ |
|
‐ |
|
‐ |
|
‐ |
|
56 |
|
‐ |
|
56 |
||
Gain on disposal of investment |
(19) |
|
‐ |
|
‐ |
|
‐ |
|
‐ |
|
‐ |
|
(19) |
||
Adjusted EBITDA |
1,667 |
|
3,433 |
|
2,235 |
|
423 |
|
(124) |
|
(26) |
|
7,608 |
||
Assets – at June 30, 2022 |
24,825 |
|
14,777 |
|
11,726 |
|
2,396 |
|
2,562 |
|
(1,051) |
|
55,235 |
|
|
Six Months Ended June 30, 2021 |
|||||||||||||
|
|
|
|
|
|
|
|
|
|
Corporate |
|
|
|
|
|
|
|
Retail |
|
Potash |
|
Nitrogen |
|
Phosphate |
|
and Others |
|
Eliminations |
|
Consolidated |
|
Sales |
– third party |
10,482 |
|
1,475 |
|
1,703 |
|
761 |
|
‐ |
|
‐ |
|
14,421 |
|
|
– intersegment |
27 |
|
151 |
|
467 |
|
132 |
|
‐ |
|
(777) |
|
‐ |
|
Sales |
– total |
10,509 |
|
1,626 |
|
2,170 |
|
893 |
|
‐ |
|
(777) |
|
14,421 |
|
Freight, transportation and |
|||||||||||||||
|
‐ |
|
198 |
|
231 |
|
105 |
|
‐ |
|
(101) |
|
433 |
||
Net sales |
10,509 |
|
1,428 |
|
1,939 |
|
788 |
|
‐ |
|
(676) |
|
13,988 |
||
Cost of goods sold |
7,999 |
|
608 |
|
1,373 |
|
638 |
|
‐ |
|
(668) |
|
9,950 |
||
Gross margin |
2,510 |
|
820 |
|
566 |
|
150 |
|
‐ |
|
(8) |
|
4,038 |
||
Selling expenses |
1,530 |
|
5 |
|
15 |
|
3 |
|
(15) |
|
‐ |
|
1,538 |
||
General and administrative expenses |
80 |
|
5 |
|
5 |
|
5 |
|
124 |
|
‐ |
|
219 |
||
Provincial mining taxes |
‐ |
|
165 |
|
‐ |
|
‐ |
|
‐ |
|
‐ |
|
165 |
||
Share-based compensation expense |
‐ |
|
‐ |
|
‐ |
|
‐ |
|
61 |
|
‐ |
|
61 |
||
Impairment of assets |
‐ |
|
‐ |
|
5 |
|
‐ |
|
‐ |
|
‐ |
|
5 |
||
Other expenses (income) |
49 |
|
12 |
|
(25) |
|
6 |
|
111 |
|
‐ |
|
153 |
||
Earnings (loss) before finance costs | |||||||||||||||
and income taxes |
851 |
|
633 |
|
566 |
|
136 |
|
(281) |
|
(8) |
|
1,897 |
||
Depreciation and amortization |
346 |
|
240 |
|
284 |
|
73 |
|
22 |
|
‐ |
|
965 |
||
EBITDA |
1,197 |
|
873 |
|
850 |
|
209 |
|
(259) |
|
(8) |
|
2,862 |
||
Integration and restructuring related |
|||||||||||||||
costs |
8 |
|
‐ |
|
‐ |
|
‐ |
|
31 |
|
‐ |
|
39 |
||
Share-based compensation expense |
‐ |
|
‐ |
|
‐ |
|
‐ |
|
61 |
|
‐ |
|
61 |
||
Impairment of assets |
‐ |
|
‐ |
|
5 |
|
‐ |
|
‐ |
|
‐ |
|
5 |
||
COVID-19 related expenses |
‐ |
|
‐ |
|
‐ |
|
‐ |
|
18 |
|
‐ |
|
18 |
||
Cloud computing transition |
|||||||||||||||
adjustment |
1 |
|
2 |
|
‐ |
|
‐ |
|
33 |
|
‐ |
|
36 |
||
Adjusted EBITDA |
1,206 |
|
875 |
|
855 |
|
209 |
|
(116) |
|
(8) |
|
3,021 |
||
Assets – at December 31, 2021 |
22,387 |
|
13,148 |
|
11,093 |
|
1,699 |
|
2,266 |
|
(639) |
|
49,954 |
Presented below is revenue from contracts with customers disaggregated by product line or geographic location for each reportable segment.
|
Three Months Ended |
|
Six Months Ended |
|||||
|
June 30 |
|
June 30 |
|||||
|
2022 |
|
2021 |
|
2022 |
|
2021 |
|
Retail sales by product line |
|
|
|
|
|
|
|
|
Crop nutrients |
4,548 |
|
3,045 |
|
6,135 |
|
4,061 |
|
Crop protection products |
2,983 |
|
2,666 |
|
4,370 |
|
3,751 |
|
Seed |
1,269 |
|
1,216 |
|
1,727 |
|
1,679 |
|
Merchandise |
280 |
|
268 |
|
514 |
|
498 |
|
Nutrien Financial |
91 |
|
59 |
|
140 |
|
84 |
|
Services and other 1 |
310 |
|
320 |
|
485 |
|
485 |
|
Nutrien Financial elimination 1,2 |
(59) |
|
(37) |
|
(88) |
|
(49) |
|
|
9,422 |
|
7,537 |
|
13,283 |
|
10,509 |
|
Potash sales by geography |
|
|
|
|
|
|
|
|
Manufactured product |
|
|
|
|
|
|
|
|
|
757 |
|
414 |
|
1,684 |
|
856 |
|
Offshore 3 |
1,988 |
|
491 |
|
3,005 |
|
770 |
|
|
2,745 |
|
905 |
|
4,689 |
|
1,626 |
|
Nitrogen sales by product line |
|
|
|
|
|
|
|
|
Manufactured product |
|
|
|
|
|
|
|
|
Ammonia |
786 |
|
405 |
|
1,377 |
|
593 |
|
Urea |
637 |
|
372 |
|
1,121 |
|
646 |
|
Solutions, nitrates and sulfates |
578 |
|
329 |
|
1,052 |
|
526 |
|
Other nitrogen and purchased products |
360 |
|
209 |
|
647 |
|
405 |
|
|
2,361 |
|
1,315 |
|
4,197 |
|
2,170 |
|
Phosphate sales by product line |
|
|
|
|
|
|
|
|
Manufactured product |
|
|
|
|
|
|
|
|
Fertilizer |
358 |
|
258 |
|
790 |
|
530 |
|
Industrial and feed |
204 |
|
133 |
|
388 |
|
259 |
|
Other phosphate and purchased products |
83 |
|
58 |
|
163 |
|
104 |
|
|
645 |
|
449 |
|
1,341 |
|
893 |
|
1 Certain immaterial 2021 figures have been reclassified. |
||||||||
2 Represents elimination for the interest and service fees charged by Nutrien Financial to Retail branches. |
||||||||
3 Relates to |
NOTE 3 IMPAIRMENT OF ASSETS
Phosphate Impairment Reversal
In the three months ended June 30, 2022, we revised our pricing forecasts to reflect the current macroeconomic environment. This resulted in a review of our previously impaired Phosphate cash-generating units (“CGUs”).
In 2020, we recorded an impairment of assets relating to property, plant and equipment of
Aurora CGU |
|
|
Segment |
|
Phosphate |
Impairment reversal indicator |
|
Higher forecasted global prices |
Valuation methodology |
|
Fair value less costs of disposal ("FVLCD") |
Fair value hierarchy |
|
Level 3 |
Valuation technique |
|
Five-year DCF1 plus terminal year to end of mine life |
Key assumptions |
|
|
End of mine life (proven and probable reserves) (year) |
|
2050 |
Long-term growth rate (%) |
|
2.0 |
Post-tax discount rate (%) 2 |
|
10.4 |
1 Discounted Cash Flow |
|
|
2 Post-tax discount rate used in the previous measurement was |
|
|
|
|
As at |
Aurora CGU |
|
June 30, 2022 |
Recoverable amount |
|
2,900 |
Carrying amount |
|
1,200 |
The recoverable amount estimate is most sensitive to the following key assumptions: our internal sales and input price forecasts, which consider projections from independent third-party data sources, discount rate, and expected mine life. We used key assumptions that were based on historical data and estimates of future results from internal sources, external price benchmarks, and mineral reserve technical reports, as well as industry and market trends. For our Aurora CGU, there were no reasonably possible changes in key assumptions that would result in a substantial change in the reversal amount.
In 2017 and 2020, we recorded an impairment of assets at our White Springs CGU relating to property, plant and equipment of
Goodwill Impairment Indicators
During the six months ended June 30, 2022, North American central banks continued to increase their benchmark borrowing rates and have forecasted additional near-term increases. Benchmark borrowing rates are used as the risk-free rate which, is a component of determining our discount rate for impairment testing. As a result of these increases, we revised our discount rate to 8.0 percent (previous annual impairment analysis – 7.4 percent) and this triggered an impairment test to be performed for our Retail –
|
|
2021 Impairment |
|
As at |
Retail - |
|
Analysis |
|
June 30, 2022 |
Carrying amount of goodwill (billions) |
|
6.9 |
|
6.9 |
Excess carrying amount over recoverable amount (billions) |
|
1.5 |
|
0.8 |
Excess carrying amount over recoverable amount (percent) |
|
12 |
|
7 |
The following table indicates the percentages by which key assumptions would need to change individually for the estimated recoverable amount to be equal to the carrying amount:
|
|
|
Change Required for |
|||
|
Value Used in Impairment |
|
Carrying Amount to Equal |
|||
Key Assumptions |
Model |
|
Recoverable Amount |
|||
Terminal growth rate (%) |
2.5 |
|
percentage point decrease |
0.6 |
||
Forecasted EBITDA over forecast period (in billions of US dollars) |
7.5 |
|
percent decrease |
5.0 |
||
Discount rate (%) |
8.0 |
|
percentage point increase |
0.4 |
NOTE 4 OTHER EXPENSES (INCOME)
|
Three Months Ended |
|
Six Months Ended |
|||||
|
June 30 |
|
June 30 |
|||||
|
2022 |
|
2021 |
|
2022 |
|
2021 |
|
Integration and restructuring related costs |
11 |
|
29 |
|
20 |
|
39 |
|
Foreign exchange loss, net of related derivatives |
31 |
|
1 |
|
56 |
|
3 |
|
Earnings of equity-accounted investees |
(77) |
|
(2) |
|
(118) |
|
(22) |
|
Bad debt expense |
14 |
|
13 |
|
14 |
|
15 |
|
COVID-19 related expenses |
3 |
|
9 |
|
8 |
|
18 |
|
Gain on disposal of investment |
‐ |
|
‐ |
|
(19) |
|
‐ |
|
Cloud computing transition adjustment |
‐ |
|
36 |
|
‐ |
|
36 |
|
Other expenses |
55 |
|
50 |
|
97 |
|
64 |
|
37 |
|
136 |
|
58 |
|
153 |
NOTE 5 INCOME TAXES
A separate estimated average annual effective income tax rate was determined for each taxing jurisdiction and applied individually to the interim period pre-tax earnings for each jurisdiction.
|
Three Months Ended |
|
Six Months Ended |
|||||
|
June 30 |
|
June 30 |
|||||
|
2022 |
|
2021 |
|
2022 |
|
2021 |
|
Income tax expense |
1,214 |
|
381 |
|
1,719 |
|
406 |
|
Actual effective tax rate on earnings (%) |
25 |
|
26 |
|
26 |
|
25 |
|
Actual effective tax rate including discrete items (%) |
25 |
|
26 |
|
25 |
|
25 |
|
Discrete tax adjustments that impacted the tax rate |
12 |
|
(3) |
|
20 |
|
(3) |
Income tax balances within the condensed consolidated balance sheets were comprised of the following:
Income Tax Assets and Liabilities |
Balance Sheet Location |
As at June 30, 2022 |
As at December 31, 2021 |
|||
Income tax assets |
|
|
|
|||
Current |
Receivables |
252 |
223 |
|||
Non-current |
Other assets |
132 |
166 |
|||
Deferred income tax assets |
Other assets |
355 |
262 |
|||
Total income tax assets |
|
739 |
651 |
|||
Income tax liabilities |
|
|
|
|||
Current |
Payables and accrued charges |
1,132 |
606 |
|||
Non-current |
Other non-current liabilities |
52 |
44 |
|||
Deferred income tax liabilities |
Deferred income tax liabilities |
3,253 |
3,165 |
|||
Total income tax liabilities |
|
4,437 |
3,815 |
NOTE 6 FINANCIAL INSTRUMENTS
Fair Value
Estimated fair values for financial instruments are designed to approximate amounts for which the instruments could be exchanged in a current arm’s-length transaction between knowledgeable, willing parties. The valuation policies and procedures for financial reporting purposes are determined by our finance department. There have been no changes to our valuation methods presented in Note 10 of the 2021 annual consolidated financial statements and those valuation methods have been applied in these interim financial statements.
The following table presents our fair value hierarchy for financial instruments carried at fair value on a recurring basis or measured at amortized cost:
|
June 30, 2022 |
|
December 31, 2021 |
|||||||||||||
|
Carrying |
|
|
|
|
|
|
|
Carrying |
|
|
|
|
|
|
|
Financial assets (liabilities) measured at |
Amount |
|
Level 1 |
|
Level 2 |
|
Level 3 |
|
Amount |
|
Level 1 |
|
Level 2 |
|
Level 3 |
|
Fair value on a recurring basis 1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents |
711 |
|
‐ |
|
711 |
|
‐ |
|
499 |
|
‐ |
|
499 |
|
‐ |
|
Derivative instrument assets |
34 |
|
‐ |
|
34 |
|
‐ |
|
19 |
|
‐ |
|
19 |
|
‐ |
|
Other current financial assets - marketable securities 2 |
133 |
|
18 |
|
115 |
|
‐ |
|
134 |
|
19 |
|
115 |
|
‐ |
|
Investments at FVTOCI 3 |
237 |
|
227 |
|
‐ |
|
10 |
|
244 |
|
234 |
|
‐ |
|
10 |
|
Derivative instrument liabilities |
(24) |
|
‐ |
|
(24) |
|
‐ |
|
(20) |
|
‐ |
|
(20) |
|
‐ |
|
Amortized cost |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current portion of long-term debt |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Notes and debentures |
(999) |
|
‐ |
|
(995) |
|
‐ |
|
(500) |
|
(506) |
|
‐ |
|
‐ |
|
Fixed and floating rate debt |
(29) |
|
‐ |
|
(29) |
|
‐ |
|
(45) |
|
‐ |
|
(45) |
|
‐ |
|
Long-term debt |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Notes and debentures |
(6,921) |
|
(931) |
|
(5,683) |
|
‐ |
|
(7,424) |
|
(4,021) |
|
(4,709) |
|
‐ |
|
Fixed and floating rate debt |
(135) |
|
‐ |
|
(135) |
|
‐ |
|
(97) |
|
‐ |
|
(97) |
|
‐ |
|
1 During the periods ended June 30, 2022 and December 31, 2021, there were no transfers between levelling for financial instruments measured at fair value on a recurring basis. |
||||||||||||||||
2 Marketable securities consist of equity and fixed income securities. We determine the fair value of equity securities based on the bid price of identical instruments in active markets. We value fixed income securities using quoted prices of instruments with similar terms and credit risk. |
||||||||||||||||
3 Investments at fair value through other comprehensive income ("FVTOCI") is primarily comprised of shares in Sinofert Holdings Ltd. |
NOTE 7 SHARE CAPITAL
Share Repurchase Programs
|
|
|
|
|
Maximum |
|
Maximum |
|
Number of |
|
|
Commencement |
|
|
|
Shares for |
|
Shares for |
|
Shares |
|
|
Date |
|
Expiry |
|
Repurchase |
|
Repurchase (%) |
|
Repurchased |
|
2020 Normal Course Issuer Bid |
February 27, 2020 |
|
February 26, 2021 |
|
28,572,458 |
|
5 |
|
710,100 |
|
2021 Normal Course Issuer Bid |
March 1, 2021 |
|
February 28, 2022 |
|
28,468,448 |
|
5 |
|
22,186,395 |
|
2022 Normal Course Issuer Bid 1 |
March 1, 2022 |
|
February 28, 2023 |
|
55,111,110 |
|
10 |
|
13,156,167 |
|
1 The 2022 normal course issuer bid will expire earlier than the date above if we acquire the maximum number of common shares allowable or otherwise decide not to make any further repurchases. |
Purchases under the normal course issuer bids were, or may be, made through open market purchases at market prices as well as by other means permitted by applicable securities laws, including private agreements.
The following table summarizes our share repurchase activities during the period:
|
Three Months Ended |
|
Six Months Ended |
|||||
|
June 30 |
|
June 30 |
|||||
|
2022 |
|
2021 |
|
2022 |
|
2021 |
|
Number of common shares repurchased for cancellation |
11,712,173 |
|
17,750 |
|
19,360,408 |
|
32,728 |
|
Average price per share (US dollars) |
89.51 |
|
52.88 |
|
84.48 |
|
52.90 |
|
Total cost |
1,049 |
|
1 |
|
1,636 |
|
2 |
As of August 2, 2022, an additional 2,205,645 common shares were repurchased for cancellation at a cost of
Dividends Declared
We declared a dividend per share of
NOTE 8 SEASONALITY
Seasonality in our business results from increased demand for products during planting season. Crop input sales are generally higher in spring and fall application seasons. Crop input inventories are normally accumulated leading up to each application season. The results of this seasonality have a corresponding effect on receivables from customers and rebates receivables, inventories, prepaid expenses and other current assets and trade payables. Our short-term debt also fluctuates during the year to meet working capital needs. Our cash collections generally occur after the application season is complete, while customer prepayments made to us are typically concentrated in December and January and inventory prepayments paid to our suppliers are typically concentrated in the period from November to January. Feed and industrial sales are more evenly distributed throughout the year.
NOTE 9 RELATED PARTY TRANSACTIONS
We sell potash outside
As at |
June 30, 2022 |
|
December 31, 2021 |
|
Receivables from |
1,805 |
|
828 |
NOTE 10 SUBSEQUENT EVENTS
On July 20, 2022,
Subsequent to June 30, 2022, and in addition to the
View source version on businesswire.com: https://www.businesswire.com/news/home/20220729005481/en/
Investor Relations:
Vice President, Investor Relations
(306) 933-8545
Investors@nutrien.com
Media Relations:
Vice President, Brand & Culture Communications
(403) 797-3015
Contact us at: www.nutrien.com
Source:
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