Overview

Nutrien is the world’s largest crop nutrient company, formed in 2018 via the merger between Potash and Agrium. The company offers crop inputs like potash, nitrogen, phosphate, and sulfate products; and financial solutions. It also distributes crop nutrients, crop protection products, seeds, and merchandise products through roughly 2,000 retail locations in the United States, Canada, South America, and Australia.

The company has a network of six potash mines with available capacity to help meet rising global demand and remains the largest agricultural retailer in North America and Australia. Its retail centers sell fertilizers, crop chemicals, and seeds directly to farmers. In the highly fragmented farm retail industry, it is trying to rollup acquisitions to expand its retail base.

The company is also investing in its online retail, which should allow Nutrien to better showcase its proprietary products and benefit margins over the long term. The retail segment accounts for roughly 60% of gross profit in mid-cycle conditions and generates steady cash flows.

Vertical integration, Nutrien produces all three primary crop nutrients including more than 20% market share in potash. Its Canadian mines mostly sit on the lower half of the cost curve and have historically generated profits even when prices are at levels below the marginal cost of production.

The company produces and distributes over 25 million tonnes of potash, nitrogen and phosphate products for agricultural, industrial and feed customers world-wide. Combined with the leading agriculture retail network that services over 500,000 grower accounts, it’s well positioned to meet the needs of a growing world where by 2050 10 billion people will need food.

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Numbers

Total Revenue: $28.5B
Net Income: $1.2B
Market Cap: $45.2B
Employees: 23,100

Our Take

The market leader is going to keep growing, slowly. Nutrien’s financials show that money is still too cheap. It has $11 billion in total debt (mostly taken as a result of the merger) on roughly $4 billion in EBITA. While there is plenty of competition in the industry, it’s close to impossible to organically reach the level where Nutrien is currently positioned. Unless the high debt load weighs the company down, it will continue to be the company to beat.

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