S&P drops Nutrien outlook to stable

S&P said it revised its outlook for Nutrien Ltd. to stable from positive and affirmed its BBB issuer and unsecured debt ratings.

“The outlook revision reflects continued weakening in fertilizer prices, which will lead to lower cash flow generation than previously expected. Nutrien generated record EBITDA of close to $12 billion in 2022 amid extremely high potash and nitrogen prices stemming largely from the Russia-Ukraine conflict. While we assumed prices would not stay at the elevated levels and gradually subside, the decline this year has been steeper than previously envisioned primarily due to cautious buying from farmers.

“Average net realized prices for potash and nitrogen declined by 50% in the first half of 2023 relative to the same period last year, pressured by the inventory drawdown in offshore markets, a sharp decline in European gas prices (key input in nitrogen production), and overall weaker industrial demand,” S&P said in a statement.

Additionally, the agency noted exports from Russia and Belarus were higher than initially expected, which means Nutrien’s forecasted cash flows will be weaker than it had expected.

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