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Nutrien earned $0.61 per share this quarter, which was lower than the $0.74 Wall Street analysts had predicted. While the company sold record amounts of potash, a key mineral used in fertilizer, lower market prices for those products weighed on the total profit.
Despite the miss, the company is finding ways to make more money from the things it can control. Its retail business is selling more of its own proprietary seeds and chemicals, which earn higher profits than selling other brands. Management also finished a review of its phosphate business, part of a broader plan to focus on its most profitable mines and stores. The stock rose about 3 percent today as the market looked past the earnings miss toward these efficiency gains.
See the full quarter, and how our tracked metrics did
Source: Company earnings report
Nutrien decided to indefinitely shut down its nitrogen operations at the Point Lisas facility in Trinidad. The plant has struggled with a shortage of natural gas, the essential raw material used to produce nitrogen fertilizer.
Closing the facility helps the company stop spending money on a site that cannot run at full capacity. While this reduces the company's total production, it should improve its overall cash flow by cutting out an underperforming part of the business. This move fits into management's recent strategy of closing less efficient sites to focus on its lowest-cost operations in North America.
Source: Business Wire
The Federal Reserve raised interest rates by 0.25 percent on Wednesday, marking the first hike in three years. While the central bank signaled that future increases may be limited, the decision to tighten credit comes as inflation remains above the official 2 percent target.
For a company like Nutrien, higher interest rates matter because they often translate into higher borrowing costs for the farmers who buy its seeds and fertilizer. When it costs more for farmers to finance their seasonal operations, they may pull back on spending for premium products or services, which can squeeze Nutrien's retail profits.
Source: Barrons
National Bank set a price target of $77 for the stock. This is roughly in line with the average analyst target of $76 across the industry. Since the stock is already trading near this level, the move suggests analysts see the business as fairly valued for now, with little immediate room for the price to climb based on current expectations.
Source: National Bank
Management has struggled to set a predictable bar, missing analyst targets in five of the last eight quarters as volatile fertilizer prices make the business difficult to forecast.
| Expectation | |
|---|---|
| EPS | $0.74 |
| Revenue | $5.66B |