By Kim Chipman

Shares of Nutrien Ltd. fell to the lowest level in more than three years after the world’s largest fertilizer maker cut its outlook for 2024 retail profit amid an industry downturn.

Nutrien reported mixed results in its latest earnings report on Wednesday. While second-quarter net income beat the average analyst estimate amid higher fertilizer sales, profit tumbled 13% from the same period a year ago.

Shares of the Canadian company dropped as much as 4.5% in intraday trading in Toronto, touching C$61.75, the lowest since January 2021. 

“A lack of earnings growth and limited prospects for higher fertilizer prices will continue to weigh on sentiment,” Mizuho Securities analyst Edlain Rodriguez said in cutting Nutrien’s target price. 

Nutrien named Mark Thompson to be its new chief financial officer starting Aug. 26. Thompson, who has been with the company since 2011 and is currently chief commercial officer, will replace Pedro Farah as part of Nutrien’s succession plan, the crop nutrient producer said in a statement.

The leadership change comes as the fertilizer industry faces lower grain prices that threaten to make crop nutrients less affordable for farmers. Nutrien and its rivals have contended with extreme market volatility over the last few years. Russia’s 2022 invasion of Ukraine roiled global supply chains and pushed prices — and Nutrien earnings — to record highs. Yet demand then tumbled as growers and retailers eschewed the sticker shock.

Nutrien on Wednesday reduced its full-year outlook for adjusted retail earnings before interest, taxes, depreciation and amortization to a range of $1.5 billion to $1.7 billion, below the average analyst estimate. The company blamed the cut on continuing market woes in Brazil as well as crop plantings in North America that delayed nutrient purchases. 

Chief Executive Officer Ken Seitz said in a call with analysts that while retail businesses in North America and Australia have performed well this year, Brazil continues to be challenging and the company is speeding up a plan focused on cutting costs further.  

The Brazilian market has been a sore spot after fears of a supply shortage due to disruptions in Eastern Europe led to a surplus of crop nutrient inventories in the South American country. Surging interest rates made the situation even more difficult to manage. Farmers have been opting for just-in-time purchases and a pesticide glut will take the rest of this year and possibly into 2025 to be resolved, Seitz told Bloomberg in June.

The company said it expects demand for crop inputs in North America to remain healthy in the current quarter as farmers seek the biggest harvests possible. Yet the potential bumper crops are sending grain prices lower and putting farmer profitability at risk. 

“The ag complex is under pressure due to declining crop prices that will impact farmers’ income and incentivize them to minimize expenses instead of maximizing yield,” Mizuho’s Rodriguez said.

© 2024 Bloomberg L.P.