Nutrien considers divestments in Latin America following losses – Reuters

Nutrien, the world’s largest producer of potash fertilizer, is reevaluating its operations in South America, contemplating divestments in Argentina, Chile, and Uruguay. This move aims to streamline its operations following significant losses in the region. The company, which differentiated its Brazilian operations from the rest of its Latin American business, has seen a series of high-level departures, including at least eight senior executives or managers since April 2023. These changes have not been officially announced but have been shared by sources close to the situation.

The company’s South American challenges are part of a broader struggle within the fertilizer industry, which has faced market volatility since the Russian invasion of Ukraine in 2022. This volatility led to a price spike followed by a collapse in 2023, as global supplies stabilized and farmers reduced purchases. Nutrien recognized a $465 million impairment on its South American acquisitions, reflecting the decreased value of its fertilizer inventory. Despite these setbacks, Nutrien is exploring adjustments to its business model in response to these macroeconomic conditions.

Nutrien’s expansion in Brazil, which began shortly after its creation from the merger of Potash Corp of Saskatchewan and Agrium Inc in 2018, initially aimed to increase farm retail sales significantly. However, the company faced challenges in integrating software and managing supplies, which hindered its ability to deliver orders on time and maintain relationships with local farmers. These issues, combined with strategic decisions to centralize inventories and renovate stores, have not yielded the expected benefits.

The departures of the Latin America CEO, Andre Dias, in April 2023, and the region’s CFO, Luis Cerresi, in December, signal a significant shift in leadership amidst these operational challenges. Following Dias’s exit, Nutrien halted its acquisition spree in Brazil and suspended the construction of new fertilizer plants.

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Nutrien’s troubles in South America mirror the broader difficulties faced by the industry in Brazil, where the entire sector reportedly incurred substantial losses last year. The company is now looking for partnerships to utilize more capacity at its blending plants in Brazil, which are currently operating below maximum capacity. This strategy may include producing fertilizers for third parties as part of Nutrien’s adjustments to improve its financial performance in the face of ongoing macroeconomic challenges.

Source: Reuters