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Nutrien forecasts 2020 profit below estimate on weak potash demand

(Reuters) - Canadian fertilizer maker Nutrien Ltd on Tuesday reported a smaller-than-expected quarterly profit and forecast full-year earnings below analysts’ estimates on weak global demand for fertilizers and lower potash prices.

FILE PHOTO: A power substation is seen at Nutrien's Cory potash mine near Saskatoon, Saskatchewan, Canada August 12, 2019. REUTERS/Nayan Sthankiya

Nutrien said it expects adjusted earnings of $1.90 per share to $2.60 per share, below analysts’ expectations of $2.73 per share.

Demand for fertilizers has been hit by a combination of factors including the impact of a drawn-out U.S.-China trade war and an extremely cold winter in North America that has delayed planting.

That had forced Nutrien to substantially cut back on potash production and extend the shutdown of its Vanscoy mine in Canada through the end of January.

The company, however, said the recent progress in trade relations between the world’s two largest economies has led to positive sentiment among U.S. growers as agricultural exports to China are expected to improve significantly both in the short and medium term.

The company reported a net loss from continuing operations of $48 million, or 8 cents per share, in the fourth quarter ended Dec. 31, compared with a profit of $296 million, or 48 cents per share, a year earlier.

Nutrien said it recorded charges of $128 million, primarily related to the rebranding of the Australian retail business after the Ruralco acquisition.

Excluding items, the company earned 9 cents per share, missing profit expectations of 26 cents per share, according to IBES data from Refinitiv.

Nutrien said earnings before interest, tax, depreciation and amortization from potash were down 62% as it had to shut its Rocanville, Saskatchewan mine, due to a week-long rail strike.

The world’s largest potash producer by capacity forecast annual potash sales volume of 12.3 million tons to 12.7 million tons. The figures are higher than 11.5 million tons sold in 2019.

The company said despite improved agricultural fundamentals in most of its key markets, it continues to monitor the possible impact of the coronavirus, drought conditions in Australia and the African Swine Fever.

The company’s sales fell 8.5% to $3.44 billion in the quarter.

Reporting by Arundhati Sarkar in Bengaluru; Editing by Anil D’Silva

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