1-5
Corporate Overview
6-8
CEO Letter
9-84
Management’s
Discussion & Analysis
12-27
Strategy
28
Our Integrated Approach
to Strategy & Risk
29
Governance Oversight
30-55
Operating Segment
Performance & Outlook
56-58
Enterprise Risk
Management
59-84
Financial Overview
85-87
Two Year Highlights & Terms
88-154
Financials & Notes
155-158
Other Information
About this report:
You can find this report and additional
information on Nutrien on our website
at nutrien.com.
While we include certain non-
financial performance in this report,
more detailed information on our
Sustainability strategy and performance
is provided on our website at
nutrien.com/sustainability.
All financial data in this report is stated
in US dollars unless otherwise noted.
The Corporate Overview and CEO Letter contain certain non-IFRS financial measures
which do not have a standard meaning under IFRS, including:
• Combined historical results of PotashCorp and Agrium for the year ended
December 31, 2017
(cid:129) EBITDA, Adjusted EBITDA and Potash adjusted EBITDA
(cid:129) Adjusted net earnings (and the related per share amounts)
(cid:129) Free cash flow
(cid:129) Adjusted net debt
(cid:129) Potash cash cost of product manufactured
See the “Non-IFRS Financial Measures” section which begins on page 77 for a
description of and further information on these measures, and reconciliation to the
most directly comparable measures under IFRS.
See page 87 for the definitions of financial and non-financial terms used in this
annual report.
See pages 157 and 158 for a list of abbreviations and terms used in the annual report.
Grow Our World
From the Ground Up
At Nutrien, we never stop growing, because our world
never does. Each and every day, farmers across the
globe are challenged to produce more nutritious food,
and to do so in a manner that sustains
the world’s finite resources.
That is why we are raising expectations on what an
agriculture company can be. Supported by a premier
retail distribution network and world-class crop
nutrient production, our vision is to be the leading
global integrated ag solutions provider.
With each nutrient, each solution, each day, we
are focused on creating long-term value for all our
stakeholders. That is how Nutrien is helping to
grow our world from the ground up.
An additional
2 billion
people to feed
by 2050
Demand for
protein expected
to increase
~50%
over the
next 30 years
Arable land
per capita
expected to
_25%
from
2020 to 2050
Nutrien will help growers meet this challenge
in a sustainable manner.
Source: FAOSTAT, Nutrien
NUTRIEN 2018 1 ANNUAL REPORT
Why Invest in Nutrien?
Significant Opportunity to Grow the Company
and Create Value for Our Shareholders
Demand is growing for
our crop inputs, services
and agricultural solutions
Integrated platform
is unique within
the agriculture sector
The world’s population is expected to approach
Nutrien operates the largest global agricultural Retail
10 billion by 2050 and growers will face mounting
network, creating a strong relationship with and channel
pressure to produce more and better-quality food
to the grower. We leverage this position with our world-
on limited arable land, while minimizing impacts on
class production assets to deliver crop inputs to the
the environment.
grower with unparalleled efficiency.
Global crop input expenditures
have grown at an annual rate of 6.5
percent over the past 15 years.
3 million tonnes of crop nutrients
sold to North American Retail from
our production facilities in 2018.
NUTRIEN 2018 2 ANNUAL REPORT
Diversified portfolio provides
stability and multiple avenues
for growth
Well positioned
to enhance
shareholder returns
Our Retail business unit offers a stable earnings base and
We have means to enhance shareholder returns, including
expansion opportunities through acquisition and organic
the realization of Merger synergies, deployment of cash
growth. The scale of our crop nutrient business provides
from completing our required equity divestitures, stable
opportunity to lower operating costs and grow volumes
and growing Retail earnings, and significant leverage to
as global demand continues to rise.
improving crop nutrient markets.
Adjusted EBITDA growth of 32
percent in 2018 supported by growth
across all business units.
$2.8 billion in dividends paid and
share repurchases in 2018.
NUTRIEN 2018 3 ANNUAL REPORT
2018 Financial & Operating Highlights
Growing, Performing, Optimizing
At Nutrien, we are growing our business – efficiently and sustainably – to create
value for our stakeholders. In 2018, we executed on integration and strategic
business priorities, grew adjusted net earnings and significantly increased cash
returned to shareholders. We are at the beginning of our journey, and have
competitive advantages to grow our position as an industry leader.
Find out more at nutrien.com
NUTRIEN 2018 4 ANNUAL REPORT
Financial & Operating Summary
Year ended December 31
(in millions of US dollars unless otherwise noted)
FINANCIAL PERFORMANCE
Sales
Gross Margin
EBITDA
Adjusted EBITDA
Retail EBITDA
Potash EBITDA
Potash Adjusted EBITDA
Nitrogen EBITDA
Phosphate and Sulfate EBITDA
Earnings per Share from Continuing Operations
Adjusted Net Earnings per Share
STRATEGIC INITIATIVES
Annual Run-Rate Synergies
Free Cash Flow
Dividend Payout/Free Cash Flow
Adjusted Net Debt1/Adjusted EBITDA
Working Capital Ratio
NON-FINANCIAL PERFORMANCE
Lost-Time Injury Frequency 2
Total Employees
Employee Turnover Rate
Community Investment
Environmental Incidents
2018
Nutrien
2017
Nutrien
Change (%)
$
19,636
$
18,169
5,392
2,006
3,944
1,206
(203)
1,606
1,162
308
(0.05)
2.69
521
1,975
48%
1.6x
1.40
0.34
20,300
15.6%
17
22
$
$
$
4,151
2,412
2,987
1,145
1,083
1,083
812
(75)
n/a
n/a
–
1,293
63%
3.1x
1.38
0.33
20,745
11.1%
16
35
$
$
$
+ 8
+30
-17
+32
+ 5
n/l
+48
+43
n/l
n/l
n/l
n/l
+53
-15
-42
+1
–
-2
+4.5
+6
-37
1 This non-IFRS measure has been reconciled in note 25 to the financial statements for 2018. In 2017, it consists of the combined historical long-term debt of
$8,108 million plus current portion of long-term debt of $11 million and short-term debt of $1,597 million less cash and cash equivalents of $582 million as
disclosed on page 78.
2 Frequency based for every 200,000 hours worked.
n/l – not a logical variance change.
n/a – not applicable.
NUTRIEN 2018 5 ANNUAL REPORT
Delivering on our Strategy
Letter from the President & CEO
This letter marks a very productive first year for Nutrien. We moved quickly in
2018 to come together as one organization and deliver on our strategic priorities.
Our efforts were focused on achieving our synergy targets, maximizing value
from required equity divestitures and ensuring a disciplined approach to capital
allocation. We also spent considerable effort to ensure we have a strong team and
culture in place to deliver on our strategic plan. We accomplished a lot in our first
year, and as a leader in the agricultural industry, Nutrien will continue to reach
higher every day.
Delivering on Our Strategy
By 2050, nearly 10 billion people will live on our planet.
This creates a tremendous opportunity as well as a
responsibility to help grow more food while minimizing
our footprint. Our vision to be the leading global
integrated ag solutions provider will drive the focus we
need to help meet this challenge now and into the future.
Combining the world’s largest crop nutrient production
with the premier agricultural retail network provides us
with significant competitive advantages. We have a
unique relationship with the grower, with multiple
touchpoints that provide us with the insights and data that
can help our customers make more profitable decisions.
Our cost-advantaged crop nutrient production and
proprietary products generate strong margins and
significant leverage to positive long-term agriculture
fundamentals. We will enhance this position by striving to
develop a superior channel to the customer that enables
a lowest cost, highest margin path to market.
Our results in 2018 illustrated the benefits of our
leading integrated business model, the realization of
Merger synergies and our leverage to improving market
conditions. Adjusted EBITDA totaled $3.9 billion in 2018,
Chuck Magro, President and Chief Executive Officer – Nutrien.
NUTRIEN 2018 6 ANNUAL REPORT
which was 32 percent above 2017 adjusted EBITDA.
sustaining capital spend. Our Potash cash cost of product
We delivered stronger margins and volumes on
manufactured per tonne was reduced by approximately
wholesale fertilizer sales and achieved record Retail
9 percent in 2018 and our Ammonia operating rates
earnings, despite some challenges in grower economics
increased by 6 percentage points. Cost-reduction efforts
and weather conditions. Earnings from our Potash and
across our Retail network in 2018 improved our annual
Nitrogen business units rose significantly due to higher
cash operating coverage ratio and supported EBITDA
prices, increased volumes and lower costs. We expect
margins that were stable in a year with challenging
crop nutrient fundamentals will remain strong in 2019,
weather during the spring and fall application seasons
and we are well positioned to benefit as the world’s
and uncertainties created by the US-China trade dispute.
largest producer.
Nothing we do is more important than operating in a
safe and sustainable manner. We moved quickly to
We will provide new long-term targets for our business
units in 2019 as we continue to drive operational
excellence into all our processes.
ensure we have the right people, culture and processes in
Strategically allocating capital is vital to delivering value
place to reflect our deep commitment to safety, the
to our shareholders. In 2018, we generated $2.0 billion in
environment and governance. Most importantly, we
free cash flow and received $5.3 billion in net proceeds
improved upon our safety culture and delivered strong
from the sale of equity investments. This strong position
performance this year. Safety is a core value at Nutrien
allowed us to return $2.8 billion to shareholders through
and we will continue to strive to do more to ensure that
dividends paid and share repurchases, while continuing to
all our employees go home safe every day. We also
invest in growth and maintaining a strong investment-
launched our new sustainability strategy with a focus on
grade credit rating. With our unique competitive position
advancing sustainable agricultural practices and
and strategy, growing free cash flow and strong balance
minimizing our footprint. Through innovative solutions,
sheet, Nutrien is well positioned to provide shareholders
we have an opportunity to enhance our environmental,
with superior long-term returns.
social and economic performance from the ground to
the grower.
We remain focused on investing in growth and
innovation within our Retail business unit. We acquired
We demonstrated success in driving integration and
53 locations in 2018 and have 10 greenfield facilities in
optimization across all business units this year. At the
various stages of completion. We launched our award-
onset of the Merger, we set a target of $500 million in
winning integrated digital platform and made two
annual run-rate synergies within the first two years. We
strategic acquisitions that will greatly enhance and
were able to achieve that goal within the first 12 months
accelerate our digital capabilities and interaction with our
and also increased our run-rate synergy target by
customers. We acquired a proprietary products company
20 percent to $600 million, which we expect to reach by
in Brazil and see significant opportunity to build out our
the end of 2019. You can see the value the Merger is
Retail network in this large and growing agriculture
creating by lowering production costs, increasing
market over the next three to five years.
volumes through our integrated platform and reducing
“Combining the world’s largest crop nutrient production with the premier
agricultural retail network provides us with significant competitive advantages.”
NUTRIEN 2018 7 ANNUAL REPORT
“Our Purpose is to grow our world from the ground up. It speaks to many facets of
our business and our culture.”
Engaging our employees is instrumental to our strategy
are a part of this industry leading organization. Our Board
and will be key to ensuring we are prepared to respond
of Directors also deserves our thanks for their invaluable
to opportunities and challenges. In 2018, we focused our
guidance and oversight through this process and to
efforts on establishing a foundational people program to
Jochen Tilk for his strong leadership in the formation
support this belief while infusing our purpose driven
of Nutrien.
culture into the organization.
On behalf of all at Nutrien, we look forward to delivering
Our Purpose is to grow our world from the ground up.
upon our commitments in 2019 with purpose, and
It speaks to many facets of our business and our culture.
demonstrating the strength and value that this
Everything we do starts with the ground: from the
organization expects to provide to all our stakeholders.
minerals we mine, to the fields we walk alongside
growers. We built this company from the ground up, and
it’s our responsibility to keep it growing sustainably, safely
and by ensuring all our key stakeholders grow right along
with us.
Thank You,
I would also like to express my appreciation for the
dedication, hard work and leadership of all employees in
2018 as we took our first steps as Nutrien. Integration is
Chuck Magro
President & Chief Executive Officer
hard work, but ultimately brings opportunities to all who
February 20, 2019
2018 Performance
~200M
Number of People
Our Products Help
to Feed Each Year
1.28
Total Recordable
Injury Frequency
>3x
Increase in Returns
to Shareholders
from 2017
32%
2018 Adjusted
EBITDA Growth
NUTRIEN 2018 8 ANNUAL REPORT
Management’s Discussion & Analysis
of Financial Condition and Results of Operations
February 20, 2019
On January 1, 2018, PotashCorp and Agrium completed a merger of equals creating the world’s
largest provider of crop inputs and services. The new company, Nutrien Ltd., will play a critical role
in helping growers increase food production in a sustainable manner.
The following management’s discussion and analysis (MD&A) is the responsibility of management and dated as of
February 20, 2019. The Board of Directors of Nutrien carries out its responsibility for review of this disclosure
principally through its audit committee, comprised exclusively of independent directors. The audit committee
reviews and, prior to its publication, recommends to the Board of Directors for approval of this disclosure. The Board
of Directors has approved this disclosure. The term “Nutrien” refers to Nutrien Ltd. and the terms “we,” “us,” “our,”
“Nutrien” and “the Company” refer to Nutrien and, as applicable, Nutrien and its direct and indirect subsidiaries as a
group, including, for greater clarity, Potash Corporation of Saskatchewan Inc. (PotashCorp or PCS) and Agrium Inc.
(Agrium). This MD&A is based on the Company’s audited consolidated financial statements for the year ended
December 31, 2018 (financial statements) prepared in accordance with International Financial Reporting Standards
as issued by the International Accounting Standards Board (IFRS) unless otherwise stated.
This MD&A contains certain non-IFRS financial measures which do not have a standard meaning under IFRS
including:
(cid:129) Combined historical results of PotashCorp and Agrium
for the year ended December 31, 2017
(cid:129) EBITDA, Adjusted EBITDA and Potash adjusted EBITDA
(cid:129) Adjusted net earnings (and the related per share amounts)
(cid:129) Free cash flow
(cid:129) Gross margin excluding depreciation and amortization per
tonne
(cid:129) Potash cash cost of product manufactured
(cid:129) Urea controllable cash cost of product
manufactured
(cid:129) Retail normalized comparable store sales
(cid:129) Retail average working capital to sales
(cid:129) Retail cash operating coverage ratio
(cid:129) Adjusted net debt
See the “Non-IFRS Financial Measures” section which begins on page 77 for a description of and further information
on these measures and reconciliation to the most directly comparable measures under IFRS.
Also see the cautionary statement on forward-looking information on page 76.
All references to per share amounts pertain to diluted net earnings (loss) per share. Financial data in this annual report
are stated in US dollars unless otherwise noted.
See page 87 for the definitions of financial and non-financial terms used in this annual report.
See pages 157 and 158 for a list of abbreviations and terms used in the annual report.
Additional information relating to Nutrien (which, except as otherwise noted, is not incorporated by reference herein),
including our first quarter 2018 unaudited interim report, second quarter 2018 unaudited interim report, third quarter
2018 unaudited interim report, and the Annual Information Form for the year ended December 31, 2018, can be found
on SEDAR at www.sedar.com and on EDGAR at www.sec.gov. The Company is a foreign private issuer under the rules
and regulations of the US Securities and Exchange Commission (the SEC).
Grey shading has been used throughout this MD&A to emphasize required regulatory and IFRS comparative figures,
which are amounts previously reported by PotashCorp as it is the continuing reporting entity for accounting purposes.
The information contained on or accessible from our website or any other website is not incorporated by reference into
this Management’s Discussion and Analysis of Financial Condition and Results of Operations or any other report or
document we file with or furnish to applicable Canadian or US securities regulatory authorities.
12 Strategy
28 Our Integrated Approach
to Strategy & Risk
29 Governance Oversight
30 Operating Segment
Performance & Outlook
31-37 Retail
38-43 Potash
44-49 Nitrogen
50-55 Phosphate & Sulfate
56 Enterprise Risk Management
59 Financial Overview
Nutrien’s Global Footprint
This is Nutrien. A global agriculture company with operations and investments in
14 countries. Our integrated platform combines the world’s premier Ag Retail
network with some of the highest quality, lowest cost production assets. With this
position, we are able to efficiently supply crop inputs and services to major growing
regions of the world.
NUTRIEN 2018 10 ANNUAL REPORT
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NUTRIEN 2018 11 ANNUAL REPORT
Nutrien’s Strategy is
Delivering Value
It begins with our people and our portfolio of assets. We have more than 20,000
employees worldwide helping grow our world from the ground up. To enable the
global achievement of Nutrien’s strategy, we must attract, develop and engage
employees who live our values and principles.
We have a world-class integrated portfolio of assets that
and by backward integrating across the agricultural value
provides opportunity to reduce cost, grow earnings and
chain with leading production assets and a solutions
deliver supply chain synergies that create value for the
offering that is unique within our industry.
grower and our shareholders.
As a leading diversified company in the agricultural space,
We unlock this potential by building a unique relationship
our strategy focuses on creating value through the cycle
with the grower by establishing the best channel to the
and a platform for long-term growth.
customer for reliably and effectively serving their needs,
Strategic Road Map
Basic Beliefs
Strategy and Risk
Governance
Key external
and internal factors
that inform our
strategic choices
Integrated approach
that considers risk
throughout our strategic
planning activities
Process and oversight
to ensure we deliver
sustained value
to all stakeholders
Learn more on page 13
Learn more on pages 14-28
Learn more on page 29
NUTRIEN 2018 12 ANNUAL REPORT
Basic Beliefs Provide Foundation
for Our Strategic Choices
Our strategic process starts with a view of the core drivers for our business: how
these factors will shape the future of our industry and how we are positioned to
create value for our stakeholders today and in the future.
Basic Beliefs
Ag markets will
remain cyclical
with favorable
long-term
demand drivers.
Innovation and
technology
development
must focus on
adding value for
the grower.
Integrating
production and
distribution
provides
efficiencies and
market access.
Leading
sustainability
practices will
create competitive
advantages and
make a global
difference.
Talent acquisition
and people
development
are critical to
sustaining long-
term success.
How We Are Positioned
We have a unique
opportunity to
benefit from
recovering
agriculture and
fertilizer markets
and generate
superior returns
through the cycle.
We have the
resources and
relationship with
the grower to best
develop innovative
products and
solutions.
The scale of
our production
and distribution
footprint is
unmatched in the
ag space, providing
the opportunity
to generate
significant cost
savings across our
supply chain.
Sustainability is
integrated across
our value chain
to reduce our
environmental
footprint and
make a meaningful
contribution to
society and the
economy.
Fostering our
purpose driven
culture will create
a long-term
competitive
advantage.
NUTRIEN 2018 13 ANNUAL REPORT
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Our Strategic Approach
Our vision is to be the leading global integrated Ag solutions provider
Our Strategy
Build the Channel
Enhance the Content
How We Compete
Build a Unique
Relationship with
the Grower
Create the
Best Channel
to the Customer
Own Leading
Production Assets
& Proprietary
Offerings
Our Key Actions
Focus on
Sustainability
& Safety
Drive
Integration &
Optimization
Strategically
Allocate
Capital
Invest in
Growth &
Innovation
Engage
Employees
NUTRIEN 2018 14 ANNUAL REPORT
Our Strategy = Channel + Content
Our relationship with the grower, channel to the customer, and extensive product
and service offering provide Nutrien with very distinct and valuable competitive
advantages—this is how we and our customers succeed on a daily basis.
How We Compete
Build a Unique Relationship with
the Grower
Own Leading Production Assets and
Proprietary Offerings
We are the leading retailer of crop inputs and services
Nutrien is the world’s largest producer of crop nutrients
across key global agricultural markets, primarily in
with approximately 27 million tonnes of annual sales. We
North America, Australia and South America. With more
have distinct scale, market and cost advantages across
than 1,700 Retail locations and 500,000 grower accounts
our portfolio that provide a significant competitive
worldwide, we interact with growers on a daily basis.
advantage.
This relationship provides valuable insight to help us
anticipate the needs of our end-customer.
Create the Best Channel to the Customer
Nutrien creates value through integration of our supply
chain and market approach—as demonstrated by our
integrated footprint in North America. Nutrien has the
premier North American storage and distribution network
with more than 2,100 distribution points. We are focused
on having the systems, processes, and people in place to
connect our business from site to customer.
We also produce a range of high-quality proprietary crop
protection, seed and crop nutrient products that generate
higher margins for our Retail business unit. Having access
to such a large offering allows Nutrien to provide
meaningful solutions and yield-enhancement
opportunities to our customers.
NUTRIEN 2018 15 ANNUAL REPORT
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Our Integrated Platform Provides Advantages
We leverage our extensive distribution system to efficiently move our crop nutrients
and proprietary products to our world-class retail network. Providing products
and solutions direct to the grower strengthens our partnership with our customer.
#1
Largest Potash
Producer
>1,700
Proprietary Products
Available
6.2 Mmt
of Storage Capacity
Outside of Facilities
>1,700
Retail Locations
Globally
>500,000
Grower Accounts
3RD
Largest Nitrogen
Producer by Capacity
25%
of Retail Total Gross
Margin is Proprietary
Product Sales
~15,000
Railcars
>17,000
Total
Products Available
to Growers
>50%
of Customer Sales
Linked to
Nutrien Ag Solutions
Digital Platform
NUTRIEN 2018 16 ANNUAL REPORT
Creating Value through Our Key Actions
Nutrien’s key actions drive each and every employee’s deliverables on a daily basis.
We set priorities for each of these areas to ensure we can define and measure our
performance. Our strategy and performance are supported by governance
oversight and risk management by our leaders and Board of Directors.
Sustainability & Safety
is foundational to everything we do
18-19
Drive Integration & Optimization
to unlock potential and improve existing
asset base
20-21
Strategically Allocate Capital
to maximize long-term shareholder returns
22-23
Invest in Growth & Innovation
to identify and pursue long-term
value-enhancing opportunities
24-25
Engage Employees
to ensure we can deliver on our priorities
26-27
NUTRIEN 2018 17 ANNUAL REPORT
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Sustainability & Safety
Feeding a growing population is one of the world’s greatest opportunities and
one of its greatest challenges. Nutrien is well positioned to make meaningful
contributions to many of the United Nations Sustainable Development Goals
(SDGs), most notably Goal 2: “End hunger, achieve food security and improved
nutrition and promote sustainable agriculture”.
In 2018, we began the development of a new Nutrien sustainability strategy to advance resilient agricultural practices
and strengthen sustainable food production. Through innovative solutions, we aim to balance environmental, social and
economic factors in our business and across our value chain.
In 2018, we built on the following core foundations:
Ethics and Human Rights
Safety
Environment
Ethical behavior is the basis of our
With safety as a core value in
We believe it’s critical to minimize the
core values. Acting with integrity
Nutrien, our priority is that everyone
impact our operations and products
helps us attract and retain talent,
goes home safe, every day. Our
have on the environment with
and reinforces our relationships
safety culture is ingrained in
comprehensive stewardship programs
with stakeholders. We are committed
everything we do; it extends to the
at our sites and with key stakeholders.
to the 10 principles of the United
care and protection of our people,
Nations Global Compact, and
the environment, our products and
we take our role to protect
communities. As committed safety
human rights seriously while
leaders, we are guided by three
following all laws and regulations
principles: do it safely or not at all;
related to anti-discrimination and
there is always time to do it safely;
equal employment.
and care for each other’s safety and
health. We strive for zero life-altering
injuries to employees and a reduction
in our recordable injury rates.
We also work closely with our
growers to help them sustainably
intensify production with investments
in digital technology, innovative
product lines such as Environmentally
Smart Nitrogen (ESN®) and science-
based management plans such as 4R
Nutrient Stewardship initiatives. Our
priority is to continually improve upon
our environmental performance.
NUTRIEN 2018 18 ANNUAL REPORT
Sustainability Priorities
(cid:129) Sustainable Agriculture:
(cid:129) Environmental Footprint:
(cid:129) Diversity and Inclusion:
Lead the next wave of innovation
Protect the planet and minimize
Champion diversity and
and sustainability in agriculture.
our environmental impact.
inclusive growth in the
agriculture industry.
Stakeholder Engagement
Nutrien has a comprehensive
approach to stakeholder
engagement. Ongoing, two-way
stakeholder dialog across a variety
of channels helps us focus and refine
our efforts to minimize negative
impacts and maximize positive
outcomes. We are committed to
ensuring that our sustainability
priorities match those that matter
most to our stakeholders. In 2018,
we engaged with our stakeholders
to help determine our priority
sustainability topics. Three external
sustainability-specialty companies
help grow our world. In 2018, we
held independent reviews, focus
invested $17 million dollars in
groups and interviews to ensure our
communities and partnered with
stakeholders could speak openly and
over 2,500 non-profit organizations.
help shape our strategy.
A few highlights in 2018 were
Community Relations
We don’t just operate in
continuing our support of Shock
Trauma Air Rescue Services (STARS)
in Saskatchewan by funding a new
communities, we are a part of them.
H145 helicopter and supporting
It’s important to us that we develop
youth education programs such as
meaningful partnerships to
Caring for our Watersheds.
strengthen, support and enhance
our communities. Through
volunteering, outreach, investment
and employment opportunities, we
In September 2018, a Company-wide
Employee Volunteer Program was
implemented allowing employees
one day off to help grow our world.
2018 was a year of stakeholder engagement, process alignment and strategic planning. We are working on targets and initiatives to
improve our social, economic and environmental impact. Details, including more about our priorities, will be available in Nutrien’s
first sustainability report in 2019.
2018 Performance
Find out more at nutrien.com/sustainability
$17M
Invested
in Communities
0.07
Total Environmental
Incidents Frequency*
0.34
Lost-Time
Injury Frequency*
>600K
Students Reached
Through Ag Education
* Frequency based for every 200,000 hours worked.
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Drive Integration & Optimization
Delivering sustained value to all our stakeholders requires a constant focus on
being a low-cost supplier to the markets we serve. Integrating and optimizing our
extensive production and distribution channel ensures that our customers receive
top quality products and services in a reliable and timely manner.
Drive Integration
At the onset of the Merger, we committed to delivering $500 million in annual run-rate synergies by the end of 2019.
We were able to accelerate the rate of synergy capture and achieve this target within the first 12 months after the
Merger. We also raised our target to $600 million by the end of 2019. The increased synergy target is indicative of the
tremendous value that has been created by combining the two legacy companies.
NUTRIEN 2018 20 ANNUAL REPORT
Integration and Optimization Priorities
(cid:129) Realize $600 million run-rate
(cid:129) Continue to improve
• Deliver higher year-over-
synergy target by the end of
capacity utilization and
year normalized
2019 and drive further
reduce cash costs across our
comparable store sales
integration opportunities
nutrient production assets.
and EBITDA margin in our
across the organization in the
near and long term.
Retail operations.
Optimization
Our focus extends beyond the synergies realized through the Merger. Optimizing our organizational cost structure is
also about operational excellence and defining what matters to our bottom line and what we can control. By focusing
on these and other factors, Nutrien expects to reduce the cost to produce and sell our products and services, and
thereby deliver industry leading results.
In 2018, our Potash business unit
Our Nitrogen business unit
Retail continues to drive margin
continued to reduce cash cost of
in 2018 also achieved significant
improvement by focusing on
product manufactured (COPM)
improvements in cost and utilization
proprietary product growth and
through Merger synergies and
rates as a result of Merger synergies
reducing overall operating cash
rebalancing our overall portfolio to
as well as innovation and process
costs. The consolidation of Retail
increase production from our lower
improvements. Across all three
acquisitions also allows for cost
cost mines.
nutrients, we are continuing to
synergies as more customers are
share and capitalize on maintenance
served effectively by centralized
practices to reduce capital spending
supportive operations. These efforts
and improve the reliability of
have contributed to the
our facilities.
improvement in our cash operating
coverage ratio and stability in
EBITDA margins, while supporting
record EBITDA in 2018.
2018 Performance
$60
Potash Cash Cost
of Product
Manufactured
per Tonne
$72
Urea Controllable
Cash Cost of Product
Manufactured
per Tonne
92%
Ammonia
Operating Rate
(excludes Trinidad and Joffre)
10%
Retail
EBITDA Margin
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Strategically Allocate Capital
We maintain a disciplined approach to capital allocation, with our priorities being:
invest in growth of the business, return cash to shareholders, and maintain a strong
investment-grade rating.
The diversity of our asset base and stability of Retail
In 2018, Nutrien generated $2.0 billion of free cash flow
earnings provides significant advantages for deploying
and received $5.3 billion in net cash proceeds from the
capital through the agriculture commodity cycle. During
sale of equity interests in Israel Chemicals Ltd., Arab
low points of the cycle, we expect to focus on growing
Potash Company and Sociedad Quimica y Minera de
our crop nutrient production, share repurchases and
Chile S.A. due to regulatory requirements to dispose
transformational opportunities. At the high points of the
of these investments in connection with the Merger.
cycle, we expect to shift to paying down debt and
The strength of our diversified earnings and receipt of
focusing on organic growth opportunities. The stability
substantial value for our equity investments allowed us
of Retail allows us to keep growing this business unit
to provide meaningful returns to our shareholders and
and our dividend throughout the cycle.
invest in our organization.
NUTRIEN 2018 22 ANNUAL REPORT
Capital Allocation Priorities
(cid:129) Continue to invest in Nutrien
(cid:129) Provide a stable and growing
(cid:129) Maintain investment-grade
earnings growth,
dividend in a targeted range of
credit rating.
predominantly in Retail.
40-60 percent of free cash flow
after sustaining capital through
the cycle.
Our goal is to provide shareholders a stable and growing
projects, and the purchases of Agrichem in Brazil and
dividend underpinned by growth in our Retail business
Waypoint and Agrible in the US.
unit. We increased the amount of dividends paid by
approximately 17 percent in 2018 compared to the
combined amount paid by our legacy companies in 2017.
Sustaining the performance of our assets is critical to the
success of our company and ensuring timely and reliable
product to our customers. The appropriate level of spend
In 2018, we also repurchased for cancellation 36 million
requires thoughtful analysis based on historical data
shares for $1.8 billion. At the end of 2018, the existing
and industry expertise to provide the best return for risk
share repurchase program was extended to 8 percent
mitigation and to deliver optimal operational performance
from 5 percent of outstanding common shares, and as
of our assets. In 2018, Nutrien spent $1.1 billion on
of February 20, 2019, another 6 million shares have been
sustaining capital, similar to the investment level in 2017.
repurchased for $297 million. We will continue to
evaluate allocation of capital to further share repurchase
programs in 2019.
In the process of prudent capital allocation decisions, it is
important that Nutrien maintain its balance sheet strength
and sustain its investment-grade rating. This was achieved
Our focus on Retail growth was supported by
in 2018 and we were able to improve upon various debt
approximately $600 million invested into US and
ratios by the end of the year.
Australian Retail acquisitions, global Retail greenfield
2018 Performance
58%
of Capital Deployment
to Dividends and
Share Repurchases
$2.8B
1.6x
in Dividends and Share
Repurchases
Adjusted Net Debt /
Adjusted EBITDA Ratio
$1.1B
in Sustaining Capital
Expenditures
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Invest in Growth & Innovation
Growth and Innovation Priorities
(cid:129) Continue to grow US and
(cid:129) Enhance our digital omni-
(cid:129) Evaluate nitrogen
Australian Retail footprint and
channel offering and our
brownfield projects in
develop Retail network in Brazil.
proprietary crop input product
North America.
technologies.
Investing in growth and innovation is intended to support not only continual
earnings progression, but the long-term viability of our company and benefit
all our stakeholders. We remain committed to prudently identifying and
pursuing long-term, value-enhancing opportunities while executing on them
in a timely manner.
Growth
Nutrien remains focused on investing in its world-class
We are evaluating debottlenecking and brownfield
Retail distribution network in North America, Australia and
projects across our North American nitrogen network
Brazil. We believe the US provides the best opportunity
that could increase total capacity and our capability to
for growth through acquisitions along with the highest
produce higher-margin products. Despite the recent
margins and synergy realization. Australia remains a
increase in global nitrogen prices and natural gas price
market with opportunities for additional acquisitions and
advantages in North America, we do not believe
proprietary product expansion.
greenfield nitrogen projects would be currently
Brazil represents a new focus for Retail growth as a major
economically viable.
global player in the production of food and purchase of
With approximately 5 million tonnes of incremental
crop inputs and services. We expect to invest capital in
potash operational capability in Saskatchewan, we can
Brazil in order to achieve a meaningful presence and
bring on additional tonnes with minimal capital as global
provide Brazilian growers with the latest in yield-
demand grows.
enhancing products, agronomic advice and digital tools.
NUTRIEN 2018 24 ANNUAL REPORT
Innovation
We are focused on developing new
e-commerce capabilities, allowing
past five years, we have also invested
products, services and tools that meet
both customers and crop consultants
in other agricultural technology
the needs of our customers in their
to place online orders for crop
companies, vastly increasing our
challenge to feed a growing planet.
protection products, together with
portfolio of innovative products and
actionable crop plans and tailored
options for our customers.
Our user-friendly Nutrien Ag
Solutions’ digital platforms and
agronomic insights.
eKonomics tools provide our
We have invested in more than
customers with industry leading data
1,700 proprietary products that
and analytics, helping them make
include patented technology in
informed decisions to improve yields
and returns. Nutrien Ag Solutions
micronutrients, crop protection and
seed. Loveland Products® is one of
We are also providing financial
services to growers under Nutrien
Financial™ and Ag Resource
Management™ (ARM™). These
provide specialized lending to US
customers, some of which is backed
award winning integrated digital
our key crop protection proprietary
by grower collateral. The
customer portal includes account
management, weather data and
brands available to growers, as well
as Dyna-Gro® and Proven™ – highly
combination of the two lending
platforms provides complementary
interpretation, and commodity
valuable seed options for growers of
credit options, helping growers make
data. In 2019, we will be adding
corn, soybeans, cotton and canola in
timely purchases of required crop
other valuable applications such as
North America and Australia. Over the
inputs.
2018 Performance
~$400M
of Expected Annual
Revenue Acquired
(related to purchased
retail locations)
AGRICHEM
120
Crop Protection
Acquisition in Brazil
New Product Launches
and Registrations
>50%
of Customer Sales
Linked to
Digital Platform
NUTRIEN 2018 25 ANNUAL REPORT
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Engage Employees
Nutrien’s People Strategy is to attract, develop and engage skilled employees who
live our values and principles. In 2018, we focused on establishing our foundational
people program to enable the continued growth of the business and infuse
Nutrien’s purpose driven culture into the organization.
Managing Performance
Employee Engagement
In 2018, we designed and
As a new organization, we are
implemented a performance
greatly interested in hearing the
management system which
voices of our employees and
measures both achievements and
understanding their experience with
behavior. This system provides
Nutrien. One way we plan to do this
accountability for results on
is through a global employee
measurable goals as well as ensures
engagement survey to be conducted
our culture and values are guiding
in 2019. The results of the survey will
day-to-day behavior of our
be used to provide a Company-wide
employees and leaders.
perspective on engagement and
Talent Attraction and
Sourcing
In 2018, Nutrien established its
experience and will allow us to
prioritize organizational efforts.
Purpose Driven Culture
Growing Our Diverse
Workforce
We recognize that having a
diverse workforce enhances
our organizational strength and
better reflects our customers
and stakeholders. In 2018, we
established a robust Diversity &
Inclusion strategy that focuses on
increasing gender diversity and
match-to-market representation
of visible minorities, including
Indigenous peoples in Canada.
Within the strategy, the organization
is committed to increasing inclusive
Talent Attraction & Sourcing group,
Nutrien articulated its greater purpose
practices and sense of belonging for
which specializes in Strategic Talent
as one of its first orders of business. It
our employees.
Outreach and Delivery. Using a
candidate-centric approach, this
group targets and attracts job
seekers into Nutrien roles and
establishes diverse candidate pools.
unifies the organization and provides
meaning to employees and their
work. Purpose is at the foundation of
Nutrien’s culture and is supported by
two of our core values of safety and
integrity, as well as our engagement
principles of innovation, performance,
inclusion and community.
Developing Our Employees
In 2018, Nutrien established its
Strategic Talent Management
process to manage organizational
risk and succession in critical roles –
a process stewarded by our
Executive Leadership Team.
NUTRIEN 2018 26 ANNUAL REPORT
Employee Engagement Priorities
(cid:129) Achieve progress
(cid:129) Become more
(cid:129) Maintain at least
(cid:129) Maintain an
toward our
diversity priority
of increasing the
representation of
women in senior
leadership to
20 percent or
more by 2022.
representative of
our local markets
in our employment
of protected
groups and visible
minorities.
92 percent
acceptance rate
of all Nutrien
employment
offers, increasing
to 95 percent
acceptance by
2023.
annual voluntary
resignation rate,
globally, below
9.5 percent.
(cid:129) By 2023, achieve
an employee
engagement
survey score of
no less than
75 percent.
Our Purpose
2018 Performance
17%
of Senior Leaders
are Women
92%
Acceptance Rate of all
Nutrien Employment
Offers
<1.5%
Voluntary Resignation
Rate of Senior Leaders
85%
of North American
Senior Leaders
Trained in Leading
Purpose Driven Culture
NUTRIEN 2018 27 ANNUAL REPORT
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Our Integrated Approach
to Strategy & Risk
Enterprise Risk Management at Nutrien is integrated into our strategic and
business planning activities, with a focus on managing our key business risks and
facilitating informed risk taking. By fostering a risk-aware culture in decision
making at all levels of the Company, Nutrien is positioned to better manage risk
and identify opportunities to enhance value.
Our strategic and risk management processes are
Team in understanding the principal risks to our business
integrated with a view to ensuring we understand and
and strategy and implementing measures to manage
benefit from the relationship between strategy, risk, and
those risks, while achieving an appropriate balance
value creation. By considering risk throughout our
between risk and return.
strategic and business planning activities, we seek to align
our strategy with our vision, and effectively manage the
embedded business risks that could impact the
achievement of our strategy.
In 2018, Nutrien undertook a top-down, bottom-up
approach with our Executive Leadership Team and
management in each of our business units to review and
refine our risk profile. Through this process, we identified
Our approach to risk management is governed by our
and evaluated the most significant risks and developed an
Board of Directors, including through our Board
approach to monitor mitigation and changes over time.
Committees, which oversee our Executive Leadership
See page 56 for a discussion of our Key Risks.
NUTRIEN 2018 28 ANNUAL REPORT
Governance Oversight
Corporate governance at Nutrien is key to long-term success and ensuring that our
basic beliefs, strategy and enterprise risk management, are aligned and carried out
with a view to acting in the best interests of all our stakeholders and are consistent
with our core values. Our Board of Directors is comprised of directors with a vast
array of relevant experience and education, skills and leadership that is applied in
the strategic decision-making process.
In 2018, the Board played a critical role in developing the
and other key issues to be effective members of our
initial strategic road map for Nutrien and establishing the
Board. Over the course of 2018, our directors continued
governance structure and policies that will support our
to advance their knowledge of our business, industry,
key strategic actions that deliver value to all stakeholders.
regulatory environment, as well as other topical areas of
Diversity is a core belief at Nutrien, and this is demonstrated
by 33 percent of the Board being comprised of women.
interest to enhance their effectiveness as directors and
stewards of Nutrien.
This diversity is invaluable and brings new and progressive
To increase alignment with shareholders’ interests, all
perspectives and well-rounded skills to our Board. Nutrien
non-executive directors are expected to hold three times
formally adopted a Board Diversity Policy in January 2018
their annual retainer in common shares and/or Nutrien
to help fulfill its diversity objectives. The policy provides
deferred share units (DSUs) within five years of joining the
that, although the selection of candidates for appointment
Board. We believe it is important that our senior leadership
to the Board will be based on merit, Board vacancy
have an ownership mentality in Nutrien as well, with
decisions will have regard for the appropriate level of
mandatory equity ownership required, with the CEO
diversity, including gender diversity. The Board Diversity
expected to hold five times base salary.
Policy includes a target that women comprise not less
than 30 percent of our directors.
For a more comprehensive view of Nutrien’s corporate
governance practices, please refer to our Meeting and
It is imperative that directors understand our business,
Management Proxy Circular on our website:
including its size, complexity and risk profile, and stay
current with corporate governance, regulatory, industry
nutrien.com/investors
NUTRIEN 2018 29 ANNUAL REPORT
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Operating Segment Performance & Outlook
We report our results in four operating segments:
Retail, Potash, Nitrogen and Phosphate and Sulfate.
• Our reporting structure reflects how we manage
our business.
(cid:129) EBITDA is the primary profit measure used to
evaluate performance and allocate resources in all
operating segments.
(cid:129) Net sales (sales revenues less freight,
transportation and distribution expenses) is the
primary revenue measure used in planning and
forecasting in the Potash, Nitrogen and Phosphate
and Sulfate operating segments.
31-37 Retail
38-43 Potash
44-49 Nitrogen
50-55 Phosphate & Sulfate
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5%
EBITDA Growth
in 2018
25%
Percentage of Total
Gross Margin Related
to Proprietary Products
in 2018
59%
Cash Operating
Coverage Ratio
in 2018
53
Retail Locations
Acquired
in 2018
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Retail Operating Environment
Overview
Today’s grower relies heavily on the expertise of the
a timely manner. Retailers deal with numerous vendors
agricultural retailer to provide yield enhancing solutions
of crop inputs—so the scale of the retailer can provide
through all crop inputs, agronomic advice, application
procurement savings. The numerous challenges that
services, data analysis, and financing. Agricultural retail
growers face on a daily basis creates the opportunity
is comprised of a distribution network serving growers
for the retailer to be a business partner with the grower,
within a local region. The network of retail facilities
and to provide meaningful support and guidance while
allows for logistical and working capital efficiencies,
improving economic and crop productivity.
while providing products and services to the grower in
Competitive Landscape
The retail landscape in most developed agriculture
In North America and Australia, we compete with large
markets is comprised of numerous competitors of differing
national retailers, co-operatives and smaller independent
size and ownership structure. It is a fragmented market
operations. In Brazil, the market is characterized by smaller
and continues to require scale to be able to meet evolving
independent owners and represents an opportunity for
grower needs. Growers want more services and solutions,
larger retailers, including Nutrien, to provide a significant
rooted in analytics, delivered in a shorter time window
improvement in grower performance.
than ever before.
Key Success Factors
Meeting the needs of the grower requires the capability
majority of products and services are required in a very
to deliver a wide range of bulk products in a timely and
short application window, it is critical that the retail
cost-effective manner. The ability to provide application
network is able to deliver when the grower is in the field.
services, agronomic advice, technology and financial
Strong relationships with suppliers of crop input products
services further enhances the relationship with the
and prudent working capital management are crucial to
grower. This requires significant scale and investment
the success of the retail operations.
supported by the latest in agricultural technology. As the
24 Corn
16 Wheat
15 Soybean
8 Canola
7 Cotton
30 All Other
NUTRIEN 2018 32 ANNUAL REPORT
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Our Business
Our Nutrien Ag Solutions© and Landmark© Retail
We have approximately 3,300 agronomists and field
businesses provide complete agricultural solutions,
experts working directly with growers, helping them
including nutrients, crop protection products, seed,
optimize crop yields and maximize economic returns
services and agronomic advice to growers. As the world’s
on their farms. Our experts help growers implement
largest retail distributor of crop inputs, we operate more
sustainable management practices based on a thorough
than 1,700 Retail facilities across the US, Canada, Australia
understanding of soils, climate conditions and crop
and key areas of Latin America. Our operations service
requirements, and utilizing our portfolio of leading
more than 100 crops globally, with corn, soybeans,
products and services.
wheat and canola being the majority of our business.
Products & Services
Purpose for the Grower
Crop Nutrients Crop nutrients are the essential fertilizers of potash, nitrogen, phosphate, sulfates and micronutrients
that allow plants to grow and provide meaningful nutrition to our planet.
Crop Protection
Products
Crop protection products are a broad spectrum of herbicides, fungicides, insecticides and adjuvants
products that help growers minimize yield losses from weeds, diseases and insects.
Seed
Merchandise
Service and
Other
We provide the seed and seed-related information and analysis our customers require. We sell seed
brands from top global suppliers as well as our proprietary seed products that include licensed traits
best suited for the grower’s specific geography.
Merchandise includes a variety of products in Australia and Canada, including most notably fencing,
feed supplements, livestock-related animal health products, storage and irrigation equipment. It also
includes the fuel and equipment businesses in Canada.
This includes services, such as product application, soil and leaf testing, crop scouting and precision
agriculture services under our ECHELON® platform and financial services. We maintain a large fleet
of application equipment and other rolling stock to ensure timely and optimal applications of both
nutrients and crop protection products in a safe and effective manner for our growers.
We also manufacture and sell several advanced
farmers and ranchers with a portfolio of useful and
proprietary crop protection products and nutritionals
under the Loveland Products® brand, seed products
under the brand names Dyna-Gro® and Proven™, and
animal health products under the Dalgety® brand. These
competitive choices to successfully grow and protect
their crops and livestock. The crop protection products
also provide meaningfully higher margins than vendor
brand offerings as we procure and blend the products
leading crop input and animal health products provide
at seven formulation facilities across the globe.
NUTRIEN 2018 33 ANNUAL REPORT
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In 2018, Nutrien Ag Solutions created an award-
Our digital omni-channel will allow our customers and
winning integrated digital platform for customers and
crop consultants to interact easily and cohesively, while
our crop consultants to harness technology and help
using information and analytics directly tied to a product
growers achieve the best outcomes on their farms.
purchase interface and an account management tool.
The customer portal was launched with industry leading
The value of this customer portal is demonstrated with
tools such as customer account management, weather
customers representing over 50 percent of our historical
data, and interpretation and commodity data—all on one
sales now signed up at the end of 2018.
digital platform.
In 2019, we will be focused on adding other valuable
applications such as e-commerce capabilities, allowing
We are also expanding the financial services we
offer to our customers through Nutrien Financial™ and
ARM™. We are currently in the process of expanding
both customers and crop consultants to place online
our lending capabilities while minimizing collection risk.
orders for crop protection products. Developing tools
This will further support our customers’ annual crop
for crop planning and digital agronomy will be a key focus,
input purchases.
with actionable crop plans and tailored agronomic insights
tied to the purchase of specific products and services.
Standard Retail Facility Operations
NUTRIEN 2018 34 ANNUAL REPORT
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2018 Market Conditions
Market Outlook
US/China trade restrictions pressured crop prices
We expect increased acreage of input intensive crops
while weather issues impacted spring and fall
such as corn and cotton to support North American
application seasons.
crop input expenditure in 2019.
Global grain and oilseed prices were mixed in 2018,
North American grower economics continue to be
influenced primarily by Chinese trade restrictions on US
challenged as a result of the impact of record corn and
soybeans, broad market volatility from political uncertainty
soybean yields and the US-China trade dispute on crop
and historically high yields. Robust demand for corn and
prices and demand. However, given current prices and
other grains helped support year-over-year price
supply/demand fundamentals, we expect two to four
increases, while soybean prices declined. Farmers in key
million acres of increased US corn and cotton in place
growing regions continued to plant large crop acreage
of soybeans, which is supportive of fertilizer, seed and
and make decisions to maximize yields. Due to a strong
crop protection demand.
demand environment, global grain stocks decreased year-
over-year, including a 13 percent decline in US stocks.
Global and US grains stocks-to-use is now the lowest
since 2014.
The poor fall application season is expected to lead to
a significant proportion of pre-plant field work to be
done in the spring. We expect this to lead to higher-than-
normal spring nitrogen demand, which tends to be
North American planting was delayed due to cold and
particularly supportive to urea and UAN. Potash and
wet weather in the spring, resulting in a condensed
phosphate demand is also expected to be supported by
application season and a shift in Retail sales into the
the short fall application window and high nutrient
second quarter. Crop conditions improved through the
removal as a result of record yields.
growing season, supporting above trend yields, increased
production and reduced need for crop protection
products. With one of the wettest fall seasons in the US
in over 100 years, growers applied lower volumes of fall
fertilizer and crop protection products.
Globally, weather will be an important factor as dryness is
currently prevalent in Brazil, while conditions in Argentina
have been relatively favorable. Soybean growers in both
countries have benefited from the US-China trade dispute
and higher prices, particularly on a local currency basis.
In 2018, Australia weather was extremely dry with multi-
The soil moisture conditions in Australia have improved,
decade low rainfalls. Crop input demand remained relatively
but precipitation during the winter crop growing season
strong despite the severe drought conditions.
will be critical to 2019 crop production.
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Sales
Crop nutrients 1,2
Crop protection
products
Seed
Merchandise
Services and other
Cost of goods sold
Gross margin
Expenses 3
EBIT
Depreciation and
amortization
Retail Financial Performance
Dollars (millions)
Nutrien
2018
Nutrien
2017
%
Change
PCS
2017
%
Change
Nutrien
2018
Gross Margin Dollars (millions)
PCS
%
Nutrien
2017
Change
2017
%
Change
Gross Margin (percentage)
PCS
Nutrien
2017
2017
Nutrien
2018
$ 4,577 $ 4,121
11
$
– n/m
$ 923 $ 848
9
$
– n/m
1,155
333
103
521
1,185
325
106
482
(3)
2
(3)
8
– n/m
– n/m
– n/m
– n/m
$ 3,035 $ 2,946
3
$
– n/m
4,862
1,687
734
810
4,937
1,628
683
734
(2)
4
7
10
12,670 12,103
(9,157)
(9,635)
5
5
3,035
(2,328)
2,946
3
(2,090) 11
707
856
(17)
– n/m
– n/m
– n/m
– n/m
– n/m
– n/m
– n/m
– n/m
– n/m
499
289
73
– n/m
20
24
20
14
64
21
24
20
16
66
–
–
–
–
–
EBITDA
$ 1,206 $ 1,145
5
$
– n/m
1 Sales tonnes were 10,689,000 tonnes (2017 (Nutrien) – 10,202,000 tonnes),
average per tonne prices were $428 (2017 (Nutrien) – $404) and average
margin per tonne was $86 (2017 (Nutrien) – $83).
Includes intersegment sales. See note 4 to the financial statements.
Includes selling expenses of $2,303 million (2017 (Nutrien) – $2,007 million).
2
3
The most significant contributors to the change in EBITDA were as follows (direction of arrows refers to impact on EBITDA and Š
means no impact):
a
_
a
a
a
a
a
Sales volumes
Sales prices
Gross margin
Selling expenses _
2018 vs 2017 (Nutrien)
2018 vs 2017 (PotashCorp)
Crop nutrient volumes were up across all geographic locations with
much of the increase coming from Australia and North America
acquisitions.
PotashCorp did not have
Retail operations prior to the
Merger.
Crop protection volumes decreased mainly due to adverse weather
in North America and Australia.
Strong cotton seed volumes in the US more than offset lower seed
volumes in Australia caused by dry weather.
Merchandise sales increased in Canada primarily due to higher fuel
sales and in Australia primarily due to increased animal health
volumes.
Services and other sales increased primarily due to higher livestock
sales and wool commissions in Australia.
Crop nutrients prices were higher in all geographic locations
consistent with higher global benchmark prices.
Crop nutrient gross margin was higher primarily due to increased
volumes in all geographic locations. Gross margin percentage was
flat due to the increase in selling prices being offset by rising costs.
Expenses were up due to higher depreciation and amortization
discussed below and increased payroll from acquisitions.
Depreciation and
amortization
Š
Expense was higher primarily due to the PPA adjustments as a
result of the Merger and from recently acquired businesses.
NUTRIEN 2018 36 ANNUAL REPORT
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SELECTED RETAIL FINANCIAL PERFORMANCE MEASURES
Comparable store sales
Normalized comparable store sales
Average working capital to sales
Cash operating coverage ratio
Nutrien
2018
Nutrien
2017 1
%
Change
1%
(1%)
21%
59%
0%
2%
17%
60%
n/m
n/m
26
(2)
PCS
2017
n/a
n/a
n/a
n/a
1 2017 average working capital to sales and cash operating coverage ratio are from Agrium’s 2017 Annual Report.
n/m = not meaningful
n/a = not available
Normalized comparable store sales decreased due primarily to US and Australia weather-related impacts to fertilizer and crop
protection sales volumes more than offsetting sales volume growth in Canada and South America.
NUTRIEN 2018 37 ANNUAL REPORT
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48%
Adjusted EBITDA
Growth in 2018
$205
$60
Average Realized
Net Selling Price per Tonne
in 2018
Cash Cost of Product
Manufactured
per Tonne in 2018
1.3MMT
Increase in
Potash Sales
in 2018
K
Potash Operating Environment
Overview
Potassium chloride (KCl), commonly called potash, is
used in more advanced agricultural markets such as the
mined from ore deposits located deep underground or
US and Brazil. Standard product is more commonly used in
extracted from specific salt lakes or seas. Potash is sold
major Asian markets.
into the agricultural market primarily as solid granular
or standard products. Granular product has a larger and
more uniformly shaped particle that can be easily blended
with solid nitrogen and phosphate fertilizers; it is typically
Potassium plays an important role in the growth and
development of plants by improving root and stem
strength, water utilization and disease resistance, thereby
enhancing taste, color and texture of food.
Competitive Landscape
Potash is found in significant quantity and quality in a
major crop nutrient businesses. Trade typically accounts
limited number of countries. Canada has the largest
for approximately three-quarters of demand for potash,
known global reserves and approximately 35 percent
which results in a globally diversified marketplace.
of global production capability. More than 70 percent
of the world’s potash capacity is held by the six largest
producers. Our primary competitors are located in
Belarus, Canada, Germany, Israel, Jordan and Russia.
The demand growth rate for potash has outpaced that
of other primary nutrients, reaching over 4 percent
CAGR between 2013-2018. This growth is driven by
the biological requirement of higher yielding crops and
Most major potash consuming countries in Asia and Latin
improving soil fertility practices, particularly in emerging
America have limited or no indigenous production
markets where potash has been historically under-applied
capability and rely on imports to meet their needs. This is
and crop yields lag.
an important difference between potash and the other
Key Success Factors
Securing access to high-quality deposits in a country
advantage to producers with the capability to expand
with both political stability and infrastructure availability
production from existing facilities.
can present significant challenges to building new potash
capacity. In addition, the extensive time and cost of
building greenfield capacity provides a significant
The most recent greenfield projects are estimated to have a
cost of $2,300 to $2,700 per tonne of capacity with a seven-
year timeline to commercial production.
NUTRIEN 2018 39 ANNUAL REPORT
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Our Business
Nutrien is the world’s largest producer of potash
to ensure our mines run at optimal levels and to
with access to decades of low-cost reserves from our
undertake preventative maintenance to minimize safety
six potash mines in Saskatchewan. We have at least
risk and unscheduled downtime.
5 million tonnes of incremental operational capacity that
we can bring on with limited capital as global demand
grows. We also have the ability to add further brownfield
expansions in Saskatchewan that are much lower cost
than greenfield expansions. We have the most extensive
distribution network in North America, and our investment
in Canpotex provides low-cost marketing and logistics to
the approximately 40 international markets we serve.
In September 2018, Nutrien announced the launch of
the Potash Full Potential Program to drive a step change
in safety, productivity, lower cost, and increase flexibility
across our operations network in Saskatchewan. The
program is also establishing the digital operations
strategy for Potash and will leverage data, advanced
analytics, automation and many other new technologies
to accelerate results. We have commenced work at one
Nutrien’s potash mines represent some of the lowest cost
site and will extend the program across our network
and highest quality mines in the world. We take great care
through 2021.
Potash Production Process
NUTRIEN 2018 40 ANNUAL REPORT
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2018 Market Conditions
Market Outlook
Robust potash consumption in key consuming regions
Positive global agricultural developments and lower
resulted in the second consecutive year of record
inventories in key import regions could support
global potash demand.
another record year of shipments.
We estimate global potash shipments reached 66.5 million
Potash market fundamentals remain firm, supported by
tonnes in 2018, an increase of approximately 1.3 million
strong demand growth and tight availability. Canpotex
tonnes from 2017, which represents a three-year CAGR
and several other suppliers have all reported they are fully
of 3.3 percent and a five-year CAGR of 4.5 percent.
committed through early 2019. While we do expect that
North American and South American growers
replenished soil nutrients following record production
and elevated yields, while growers in China and Other
Asia improved soil fertility practices as a result of
product availability from greenfield plants will increase
during 2019, this is expected to be partially offset by
production curtailments and permanent mine closures
from other existing producers.
increased soil testing and improved agronomic practices.
We continue to observe positive agricultural developments
India continues to face political barriers to significantly
in the standard-grade markets, particularly in China,
growing potash demand; however, the agronomic need
where there has been a continuous shift to more
and willingness of farmers to improve yields persists.
potassium-intensive crops like fruits and vegetables. While
Supply from new projects in Canada and the Former
Soviet Union (FSU) region was slow to ramp up with less
than 1.4 million tonnes of new potash from greenfield
projects being produced in 2018. Limited new supply
the fertilizer subsidy policy in India and weaker palm oil
economics may pose some near-term risks on demand in
these regions, the long-term agronomic need for potash
is undeniable.
and strong global demand led to year-over-year price
High nutrient removal in 2018 related to expected
increases in spot markets of around 20 percent. Potash
record crop yields, combined with potash prices
contracts with customers in China and India were
remaining affordable relative to grower revenues, are
concluded in the second half of 2018 with $60 per tonne
expected to support continued strong consumption in
and $50 per tonne increases, respectively, reflecting tight
North American and Latin America. Along with lower
market fundamentals and higher spot market prices that
inventories in key import regions to begin the year, we
existed all year.
anticipate world potash shipments between 67 million
to 69 million tonnes in 2019.
NUTRIEN 2018 41 ANNUAL REPORT
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Potash Financial Performance
Dollars (millions)
Tonnes (thousands)
Average per Tonne
Nutrien
2018
Nutrien
2017
%
Change
PCS
2017
%
Change
Nutrien
2018
Nutrien
2017
%
Change
PCS
2017
%
Change
Nutrien
2018
Nutrien
2017
%
Change
PCS
2017
%
Change
Manufactured product 1
Net sales
North America
Offshore
$ 1,007 $ 881
1,167
1,657
14 $ 639
989
42
58
68
4,693 4,535
3 3,201 47
8,326 7,193 16 6,096 37
$ 214 $ 194 10
$ 199 $ 162 23
$ 200
7
$ 162 23
Cost of goods sold
2,664
(1,182)
2,048
(1,115)
Gross margin
1,482
933
Other 2
2
–
30
6
59
–
13,019 11,728 11 9,297 40
1,628
64
(824) 43
804
84
$ 205 $ 175 17
$ (91) $ (95)
$ 175 17
2
(4) $ (89)
$ 114 $ 80 43
$ 86 33
– n/m
Depreciation and amortization
$ 31 $ 29
7
$ 25 24
Gross margin
Impairments 3
Expenses 4
EBIT
Depreciation and
amortization
1,484
933
59
804
85
Gross margin excluding
depreciation and amortization
$ 145 $ 109 33
$ 111 31
(1,809)
(282)
– n/m
45
(195)
– n/m
(179) 58
(607)
738 n/m
625 n/m
404
345
17
232
74
EBITDA
$ (203) $ 1,083 n/m $ 857 n/m
Adjusted EBITDA
$ 1,606 $ 1,083
48 $ 857
87
1
Includes intersegment sales. See note 4 to the financial statements.
2 Includes other potash and purchased products and is comprised of
net sales of $3 million (2017 (Nutrien) – $9 million, 2017
(PotashCorp) –$5 million) less cost of goods sold of $1 million (2017
(Nutrien) – $9 million, 2017 (PotashCorp) – $5 million).
Impairment of property, plant and equipment of $1,809 million (2017
(Nutrien) – $NIL, 2017 (PotashCorp) – $NIL). See note 16 to the
financial statements.
Includes provincial mining and other taxes of $244 million (2017
(Nutrien) – $159 million, 2017 (PotashCorp) – $146 million).
3
4
n/m = not meaningful
The most significant contributors to the change in EBITDA were as follows (direction of arrows refers to impact on EBITDA and Š
means no impact):
2018 vs 2017 (Nutrien)
2018 vs 2017 (PotashCorp)
a
Offshore volumes were higher due to increased
demand and a higher Canpotex allocation.
a
Offshore volumes were higher due to increased
demand and a higher Canpotex allocation.
Volumes
a
North America volumes were up primarily due to
increased intercompany sales to Retail and lower
imports.
a
North America volumes were up primarily due to
lower imports.
a
Volumes were also higher as a result of the
Merger, specifically the addition of the Vanscoy
Potash mine and intercompany sales to Retail.
Net sales prices a
Selling prices were higher due to increased prices
in all major spot markets due to strong demand.
a
Selling prices were higher due to increased prices
in all major spot markets due to strong demand.
Cost per tonne a
Costs decreased due to our portfolio optimization
and results from our cost reduction strategy more
than offsetting increased depreciation related to
PPA adjustments as a result of the Merger.
_
Costs increased due to the addition of Agrium’s
operations and higher depreciation on the related
PPA adjustments as a result of the Merger.
NUTRIEN 2018 42 ANNUAL REPORT
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2018 vs 2017 (Nutrien)
2018 vs 2017 (PotashCorp)
Impairment of
property, plant and
equipment
_
A non-cash impairment of property, plant and
equipment was recorded as a result of the
decision to safely shut down our New Brunswick
operations due to the operations no longer being
part of our medium or long-term strategic plans.
See note 16 to the financial statements.
_
A non-cash impairment of property, plant and
equipment was recorded as a result of the
decision to safely shut down our New Brunswick
operations due to the operations no longer being
part of our medium or long-term strategic plans.
See note 16 to the financial statements.
Provincial mining
and other taxes
_
Under Saskatchewan provincial legislation, we are
subject to resource taxes, including the potash
production tax and the resource surcharge.
Provincial mining and other taxes increased
primarily due to stronger potash prices.
_
Provincial mining and other taxes increased
primarily due to stronger potash prices.
Depreciation and
amortization
Š
Expenses were higher due to PPA adjustments as
a result of the Merger and increased sales
volumes.
Š
Expenses were higher due to the addition of the
Vanscoy Potash mine, increased sales volumes
and PPA adjustments as a result of the Merger.
CANPOTEX SALES BY MARKET
(percentage of sales volumes)
Latin America
Other Asian markets 1
China
India
Other markets
1 All Asian markets except China and India.
Nutrien
2018
Nutrien
2017
%
Change
33
31
18
10
8
30
33
18
12
7
10
(6)
–
(17)
14
POTASH PRODUCTION
(million tonnes KCI)
Nameplate
Capacity 1
Operational Capability 2
2019
2018
Nutrien Production
2018
2017
Rocanville Potash
Allan Potash
Vanscoy Potash
Lanigan Potash
Cory Potash 3
Patience Lake Potash
6.5
4.0
3.0
3.8
3.0
0.3
5.4
2.8
2.2
2.1
1.0
0.3
5.2
2.6
2.7
2.0
0.8
0.3
5.22
2.41
2.24
1.96
0.81
0.20
4.86
1.83
2.42
1.82
0.99
0.30
Total
20.6
13.8
13.6
12.84 12.22
1 Represents estimates of capacity as at December 31, 2018. Estimates
based on capacity as per design specifications or Canpotex entitlements
once determined. In the case of Patience Lake, estimate reflects current
operational capability. Estimates for all other facilities do not necessarily
represent operational capability.
3
2 Estimated annual achievable production level at current staffing and
operational readiness (estimated at beginning of year). Estimate does
not include inventory-related shutdowns and unplanned downtime.
In November 2016, we announced operational changes at Cory Potash
to produce only white potash, with an expected operational capability
of approximately 0.8 million tonnes per year. In 2019, Cory Potash
commenced partial operation of the red mill. Additional operational
capability is achievable with increased staffing.
NUTRIEN 2018 43 ANNUAL REPORT
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43%
EBITDA growth
in 2018
$2.83
Average Natural Gas
Cost in Production per
MMBtu in 2018
$112
Gross Margin
per Tonne in 2018
(excluding depreciation
and amortization)
92%
Ammonia Operating
Rate in 2018
(excludes Trinidad and Joffre)
N
Nitrogen Operating Environment
Overview
Synthesized from hydrogen sources (primarily natural gas
Nitrogen is required by every living cell and is a
or coal), steam and air, ammonia (NH3) is a concentrated
fundamental building block of plant proteins that improve
source of nitrogen and the basic feedstock for all upgraded
crop yield and quality. Nitrogen is also used in a variety of
nitrogen products.
industrial products such as plastic resins, adhesives and
emissions control.
Competitive Landscape
Production of nitrogen is the most geographically
In recent years, a significant amount of new capacity
diverse of the three primary nutrients due to the
was built in locations with access to low-cost gas,
widespread availability of hydrogen sources. Ammonia
which displaced higher-cost exports from regions such
is primarily consumed close to the regions in which it is
as China and Europe. The US remains the largest importer
produced due to the high cost of transportation, whereas
of nitrogen and a key driver of global trade despite a
urea and nitrogen solutions are more widely transported
significant increase in domestic capacity and production
and traded. We compete with other producers in Canada,
over the past few years.
the US and a number of offshore suppliers.
Key Success Factors
Natural gas can represent up to 60 percent to 80 percent
imperative. Having reliable production assets located in
of the cash cost of producing a tonne of ammonia, and a
key consuming regions is also advantageous as the risk
low-cost and reliable source of feedstock is therefore
and cost of transportation is significantly reduced.
NUTRIEN 2018 45 ANNUAL REPORT
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Our Business
Nutrien has a total of 7.1 million mt of ammonia capacity
to import markets. In 2018, we signed new long-term
and the ability to produce and sell more than 11 million
gas contracts with the Government of Trinidad.
tonnes of total nitrogen products. Our asset base is
highly flexible, allowing us to optimize product mix and
profitability in response to changing market conditions.
Our nitrogen plants in Canada and the US have access
to low-cost natural gas and benefit from regional selling
advantages. We also operate a large-scale nitrogen facility
in Trinidad with gas costs indexed primarily to ammonia
prices, providing for greater margin stability and access
Approximately half of our nitrogen sales are agricultural
related and the remaining sold for industrial purposes.
A portion of our industrial sales are linked to natural gas
costs, reducing variability in margins. We are currently
reviewing a number of brownfield growth opportunities
across our Nitrogen system that could increase total
capacity and our upgraded product capability.
Nitrogen Production Process
NUTRIEN 2018 46 ANNUAL REPORT
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2018 Market Conditions
Market Outlook
Nitrogen prices were supported by limited new supply,
Strong demand and limited supply additions expected
production curtailments and higher feedstock prices.
to support prices.
Urea benchmark prices rose 20 to 25 percent in 2018 as
We expect that limited urea capacity additions, combined
export volumes from high-cost producing regions such
with further closures, will support further tightening of
as China and Europe declined significantly, more than
the urea supply/demand balance in 2019. Chinese urea
offsetting new capacity additions that have come online
export availability is expected to remain constrained
over the past few years. Chinese urea exports were
due to the impact of environmental regulations and its
2.4 million tonnes in 2018, down 2.3 million tonnes
relatively high cost inputs, which supports the global floor
compared to 2017. Chinese urea production has been
price for nitrogen. Coal prices have remained relatively
pressured by domestic environmental regulation—
stable entering 2019 and Chinese production levels are
resulting in shutdowns—as well as higher energy
in line with year ago levels. The US sanctions on Iran
feedstock costs. European nitrogen production costs also
also place significant uncertainty around Iran’s urea export
supported global prices as domestic natural gas prices
potential, which could tighten the global urea market and
increased by between 30 and 40 percent year-over-year.
provide support to urea prices.
Ammonia prices reached a two-year high supported by a
The ammonia market entered 2019 under pressure
balanced trade market. Growing ammonia requirements
as energy prices have softened and buyers anticipate
in key importing regions, such as China and Morocco, in
new supply, but the high-cost positions from European
addition to lower global export supply, offset the effect
suppliers will continue to establish the floor.
of lower import requirements in the US due to increased
domestic production.
Nitrogen demand is expected to increase by
approximately 2 percent in 2019. We expect a two to four
Approximately 70 percent of our nitrogen production
million acre increase in US corn and cotton acreage in
is located in North America where natural gas prices
2019, which will support robust US nitrogen consumption.
remained subdued in 2018 relative to the rest of the
Furthermore, we expect the poor fall application season
world. In 2018, Canadian AECO benchmark gas prices
will result in a higher than normal proportion of nitrogen
were $1.19/MMBtu and US NYMEX gas prices were
applications in the spring, supporting spring demand,
$3.09/MMBtu.
particularly for urea and UAN.
NUTRIEN 2018 47 ANNUAL REPORT
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Manufactured product 1
Net sales
Ammonia
Urea
Solutions and
nitrates
Cost of goods sold
Gross margin
Other 2
Gross margin
Expenses
EBIT
Depreciation and
amortization
Nitrogen Financial Performance
Dollars (millions)
Tonnes (thousands)
Average per Tonne
Nutrien
2018
Nutrien
2017
%
Change
PCS
2017
%
Change
Nutrien
2018
Nutrien
2017
%
Change
PCS
2017
%
Change
Nutrien
2018
Nutrien
2017
%
Change
PCS
2017
%
Change
$ 903 $ 911
672
895
(1) $ 584
33
55
302 196
3,330 3,404
3,003 2,641 14
(2) 2,205
51
1,166 158
421
53
3,925 3,808
10,258 9,853
3
4
2,946
6,317
33
62
644
594
2,442
(1,729)
2,177
(1,670)
8
12
4
41
40
507
48
555
41
(34) 38
713
67
780
(47)
733
1,307
87
(1,066) 62
241 196
15 347
256 205
(21) 124
521
41
235 212
429
291
47
203 111
Depreciation and amortization
Gross margin excluding
depreciation and amortization
$ 271 $ 267
1
$ 298 $ 254 17
$ 265
2
$ 259 15
$ 164 $ 156
5
$ 143 15
$ 238 $ 221
$(168) $(170)
8
(1) $(169)
$ 207 15
(1)
$ 70 $ 51 37
$ 42 $ 30 40
$ 38 84
$ 32 31
$ 112 $ 81 38
$ 70 60
EBITDA
$ 1,162 $ 812
43
$ 438 165
1
2
Includes intersegment sales. See note 4 to the financial statements.
Includes other nitrogen and purchased products and is comprised of
net sales of $417 million (2017 (Nutrien) – $462 million, 2017
(PotashCorp) – $33 million) less cost of goods sold of $350 million
(2017 (Nutrien) – $414 million, 2017 (PotashCorp) – $18 million).
The most significant contributors to the change in EBITDA were as follows (direction of arrows refers to impact on EBITDA and Š
means no impact):
2018 vs 2017 (Nutrien)
2018 vs 2017 (PotashCorp)
Volumes
Net sales prices
Total sales volumes were up in 2018 due to
higher reliability/utilization rates at our facilities,
and higher production of upgraded products
such as urea and UAN solutions, partly due to the
continued ramp up at our Borger urea facility.
Ammonia sales volumes were lower due primarily
to increased production of upgraded nitrogen
products, limiting excess ammonia available for
sale.
Our average price increased for all manufactured
product categories, reflecting the impact of
higher fertilizer benchmarks supported by tight
supply and continued demand growth.
Realized prices in parts of our industrial portfolio
(mainly ammonia and nitrates) were lower given
lower natural gas prices in Canada.
a
_
a
_
a
Volumes increased primarily as a result of the
Merger.
a
Our average price for all manufactured product
categories was higher, reflecting the impact of
higher fertilizer benchmarks supported by tight
supply and continued demand growth.
NUTRIEN 2018 48 ANNUAL REPORT
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Cost per tonne
Expenses
Depreciation and
amortization
Fertilizer
Industrial and feed
2018 vs 2017 (Nutrien)
2018 vs 2017 (PotashCorp)
Costs decreased due to lower natural gas costs,
higher utilization and from realized synergies,
which more than offset higher depreciation and
amortization related to PPA adjustments as a
result of the Merger.
Average natural gas costs, including our hedge
position, decreased 7 percent, principally as a
result of lower AECO index prices and a reduced
realized impact from gas derivatives, partly offset
by higher gas costs in Trinidad (contract prices
indexed primarily to Tampa ammonia prices).
There were no significant changes between 2017
and 2018.
Costs decreased due to lower natural gas costs
(discussed below) and higher operating rates
more than offsetting higher depreciation and
amortization related to PPA adjustments as a
result of the Merger.
Average natural gas costs, including our hedge
position, decreased 17 percent due to the
relatively lower-cost gas available at our Alberta
facilities acquired in the Merger, partially offset
by higher gas costs in Trinidad (contract prices
indexed primarily to Tampa ammonia prices).
Expenses were higher in 2018 due to the addition
of Agrium’s operations in the Merger.
a
a
_
Expense was higher in 2018 due to higher
volumes and the PPA adjustments as a result of
the Merger.
Š
Expense was higher in 2018 due to higher
volumes and the PPA adjustments as a result of
the Merger.
a
a
Š
Š
Sales Tonnes (thousands)
Average Net Sales Price per Tonne
Nutrien
2018
5,340
4,918
10,258
Nutrien
2017
5,093
4,760
9,853
PCS
2017
2,564
3,753
6,317
Nutrien
2018
$ 254
$ 220
Nutrien
2017
$ 226
$ 215
PCS
2017
$ 215
$ 201
$ 238
$ 221
$ 207
NITROGEN PRODUCTION
(million tonnes product)
Trinidad Nitrogen
Redwater Nitrogen
Augusta Nitrogen
Lima Nitrogen
Carseland Nitrogen
Joffre Nitrogen
Geismar Nitrogen
Fort Saskatchewan Nitrogen
Borger Nitrogen
Total
Annual
Capacity 3
Ammonia 1
Production
Nutrien 2018
Nutrien 2017
Annual
Capacity 3
Urea 2
Production
Nutrien 2018
Nutrien 2017
2.2
0.9
0.8
0.8
0.5
0.5
0.5
0.4
0.5
7.1
1.88
0.88
0.72
0.67
0.52
0.47
0.44
0.40
0.39
6.37
1.94
0.80
0.60
0.65
0.46
0.31
0.47
0.46
0.31
6.00
0.7
0.7
0.5
0.4
0.7
–
0.4
0.4
0.6
4.4
0.58
0.73
0.52
0.46
0.68
–
0.26
0.37
0.42
4.02
0.55
0.53
0.45
0.44
0.51
–
0.23
0.43
0.23
3.37
1 All figures are shown on a gross production basis.
2 Reflects capacity and production of urea liquor prior to final product upgrade. Urea liquor is used in the production of solid urea, UAN and DEF.
3 Annual capacity estimates include allowances for normal outages and planned maintenance shutdowns.
NUTRIEN 2018 49 ANNUAL REPORT
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$383M
EBITDA growth
in 2018
$416
Average Realized
Net Selling Price
per Tonne in 2018
$92
Gross Margin
per Tonne in 2018
(excluding depreciation
and amortization)
90%
Operating Rate
in 2018
(excludes Geismar)
P
Phosphate Operating Environment
Overview
Phosphate rock is mined from underground ore
Phosphoric acid can be combined with ammonia and
deposits and dissolved in a mixture of phosphoric and
granulated to produce solid fertilizers such as DAP
sulfuric acids. This results in the production of additional
and MAP, evaporated to produce merchant-grade
phosphoric acid, which is the feedstock for most fertilizer,
phosphoric acid (MGA), or further evaporated to produce
industrial and feed phosphate products.
superphosphoric acid (SPA), which is then converted into
liquid fertilizer. It is also widely used as an input for animal
feed and industrial products.
Competitive Landscape
Phosphate rock is found in significant quantity and quality
a major factor to consider when evaluating potential
in only a handful of geographic locations, and few with a
phosphate project developments. We compete with
progressive ethical and sustainability record.
producers primarily from China, Morocco, Russia, Saudi
There are a number of factors that can affect the viability
Arabia and the US.
of developing a rock deposit for mining. These include
Significant low-cost capacity has been commissioned
the quality of the deposit, government stability, access to
over the past few years, including most notably in
financing, environmental requirements and proximity to
Morocco and Saudi Arabia. This, in turn, has pressured
target markets. Given the concentration of deposits in
higher-cost supply in China leading to significant
North Africa and the Middle East, government stability is
production curtailments and industry restructuring.
Key Success Factors
Approximately 70 percent of global phosphate production
the ability to produce a more diversified product mix,
is integrated with captive sources of phosphate rock,
including feed and industrial products. Having a reliable,
which provides a significantly lower cost of production
lower-cost source of sulfur and ammonia is also a key
relative to non-integrated producers. Access to high-
factor that impacts margins.
quality rock not only provides cost advantages, but also
NUTRIEN 2018 51 ANNUAL REPORT
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Our Business
Nutrien has two integrated phosphate facilities in the US,
facility to double our ammonium sulfate capacity.
located near key fertilizer consuming markets. Due to the
We plan to increase production at our facilities in
high quality of our rock, we are able to produce a diverse
North Carolina and Florida to supply finished phosphate
mix of phosphate products, including solid and liquid
product into regions typically served by our Alberta
fertilizers, feed and industrial acids.
facility. This strategy allowed us to eliminate the purchase
We made the decision in 2018 to close our Geismar, LA
phosphate facility and repurpose our Redwater, Alberta
of imported phosphate rock by the end of December 2018,
while lowering per-tonne costs and maintaining existing
sales volumes.
Phosphate Production Process
NUTRIEN 2018 52 ANNUAL REPORT
P
2018 Market Conditions
Market Outlook
Production curtailments, delayed ramp-up of new
Supplies from major exporters and feedstock costs are
projects and strong import demand supported
key factors to watch.
phosphate prices.
We expect demand growth for phosphate will match
Global phosphate fertilizer prices increased more
historical trends of 2 percent in 2019, and believe import
than 20 percent in 2018 as the effect of production
requirements from India will be significant as its domestic
curtailments in the US and delayed ramp-up of projects
production remains low due to favorable DAP import
in Morocco and Saudi Arabia helped to balance market
economics versus domestic DAP production.
New capacity in Morocco and Saudi Arabia is expected to
further ramp up in 2019 after delays in 2018. However,
the new supply could be largely absorbed by global
demand increases, and Chinese export supplies may be
constrained due to environmental pressure.
We expect movement in ammonia and sulfur prices to
continue to influence phosphate prices in 2019.
supply. In addition, Chinese phosphate exports in the
first half of 2018 were lower year-over-year due to
more stringent environmental regulation. Subsequently,
Chinese exports in the second half of 2018 increased
as some environmental audits concluded, production
rates increased and the ability to export more
phosphate returned.
Global import demand for phosphate was strong in
2018 with record import volumes in the US and Brazil
and multi-year high import volumes in India. Imports
continue to represent a larger share of US supply
considering recent domestic closures and curtailments,
while demand in Brazil reached record levels due to
agricultural expansion and improved agronomic practices.
Despite unfavorable government policy and a weakening
rupee, demand in India was strong in 2018. Higher raw
material costs for ammonia, sulfur and phosphate rock in
2018 pressured Indian production of phosphate fertilizers
requiring higher year-over-year imports to meet
increasing domestic demand.
NUTRIEN 2018 53 ANNUAL REPORT
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Phosphate & Sulfate Financial Performance
Dollars (millions)
Tonnes (thousands)
Average per Tonne
Nutrien
2018
Nutrien
2017
%
Change
PCS
2017
%
Change
Nutrien
2018
Nutrien
2017
%
Change
PCS
2017
%
Change
Nutrien
2018
Nutrien
2017
%
Change
PCS
2017
%
Change
Manufactured product 1
Net sales
Fertilizer
Industrial and feed
Ammonium sulfate
$ 995 $ 800
423
81
424
85
24 $ 609
494
63
(14)
– n/m
2,425 2,285
868
345
847
340
6
1,809
(2) 1,002
(1)
34
(15)
– n/m
$ 410 $ 350
$ 500 $ 487
$ 250 $ 235
17 $ 337
3 $ 493
6
22
1
– n/m
–
5
Cost of goods sold
1,504
(1,377)
1,304
(1,601) 2
15
(14)
1,103
(1,471)
36
(6)
3,612 3,498
3
2,811
28
Gross margin
127
(297) n/m
(368) n/m
$ 416 $ 373
$(381) $(457)
12 $ 393
(17) $(523)
6
(27)
$ 35 $ (84) n/m $(130) n/m
Other 3
Gross margin
Expenses
EBIT
Depreciation and
amortization
1
5
(80)
2
(50)
Depreciation and amortization
$ 57 $ 68
(16) $ 78
(27)
128
(26)
(292) n/m
13
(23)
(366) n/m
(14) 86
102
(315) n/m
(380) n/m
206
240
(14)
220
(6)
Gross margin excluding
depreciation and amortization
$ 92 $ (16) n/m $ (52) n/m
EBITDA
$ 308 $
(75) n/m $
(160) n/m
1
2
3
Includes intersegment sales. See note 4 to the financial statements.
Includes a non-cash impairment of property, plant and equipment of
$305 million.
Includes other phosphate and purchased products and is comprised
of net sales of $163 million (2017 (Nutrien) – $53 million, 2017
(PotashCorp) – $8 million) less cost of goods sold of $162 million
(2017 (Nutrien) – $48 million, 2017 (PotashCorp) – $6 million).
n/m = not meaningful
The most significant contributors to the change in EBITDA were as follows (direction of arrows refers to impact on EBITDA and Š
means no impact):
2018 vs 2017 (Nutrien)
2018 vs 2017 (PotashCorp)
Volumes
a
Volumes were up due to strong fertilizer demand
and increased production levels at our phosphate
facilities.
a
_
Volumes increased primarily as a result of the
Merger.
Industrial volumes decreased primarily due to the
decision to close our small phosphate facility at
Geismar.
Net sales prices a
Our average realized fertilizer price was up due to
strong demand and higher global sulfur benchmark
prices.
a
Our average realized fertilizer price was up due to
strong demand and higher global sulfur benchmark
prices.
Cost per tonne
a
Industrial and feed costs were lower in 2018 than in
2017 due to the non-cash impairment of feed
assets at Aurora in 2017.
a
Industrial and feed costs were lower in 2018 than in
2017 due to the non-cash impairment of feed
assets at Aurora in 2017.
a
Fertilizer costs were lower in 2018 than in 2017 due to
the non-cash impairment of White Springs assets due
to sustained negative performance and the write-off
of other assets that were no longer used in 2017,
more than offsetting higher sulfur costs in 2018.
a
Fertilizer costs were lower in 2018 than in 2017 due to
the non-cash impairment of White Springs assets due
to sustained negative performance and the write-off
of other assets that were no longer used in 2017,
more than offsetting higher sulfur costs in 2018.
NUTRIEN 2018 54 ANNUAL REPORT
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Depreciation and
amortization
Š
2018 vs 2017 (Nutrien)
2018 vs 2017 (PotashCorp)
Expense was lower in 2018 primarily due to lower
depreciable asset balances at our US facilities as a result
of the non-cash impairments recorded in the latter half
of 2017 and the impact of the PPA adjustments as a
result of the Merger. The decrease was partially offset
by an increase in depreciation at our Redwater facility
due to a change in the assets’ estimated useful lives.
Š
Expense was lower in 2018 primarily due to lower
depreciable asset balances at our US facilities as a result
of the non-cash impairments recorded in the latter half
of 2017 and the impact of the PPA adjustments as a
result of the Merger. The decrease was partially offset
by an increase in depreciation at our Redwater facility
due to a change in the assets’ estimated useful lives.
PHOSPHATE PRODUCTION
Phosphate Rock
Phosphoric Acid (P2O5)
Liquid Products
Solid Fertilizer Products
(million tonnes)
Aurora Phosphate
White Springs Phosphate
Redwater Phosphate
Total
Annual
Capacity
Nutrien
Production
2018
2017
Annual
Capacity
5.4
2.0 1
–
4.03
1.85
–
4.78
1.55
–
7.4
5.88
6.33
1.2
0.5
0.3
2.0
Nutrien
Production
2018
2017
1.08
0.47
0.30
1.03
0.42
0.25
1.85
1.70
Annual
Capacity
Nutrien
Production
2018
2017
Annual
Capacity
Nutrien
Production
2018
2017
2.7 2
0.7 3
–
2.10
0.62
–
2.04
0.57
–
0.8
0.8 4
0.7
0.82
0.17
0.57
0.79
0.13
0.46
1 Revised capacity estimates based on review of mining operations completed in 2017. Prior capacity was 3.6 million tonnes.
2 A substantial portion is consumed internally in the production of downstream products. The balance is exported to phosphate fertilizer producers or sold
domestically to dealers who custom-mix liquid fertilizer. Capacity comprised of 2.0 million tonnes merchant grade acid and 0.7 million tonnes
superphosphoric acid.
3 Represents annual superphosphoric acid capacity. A substantial portion is consumed internally in the production of downstream products. The balance is
exported to phosphate fertilizer producers and sold domestically to dealers who custom-mix liquid fertilizer.
4 The second MAP train was restarted at the end of 2018 which added 0.4 million tonnes of annual capacity.
In addition to the production above, annual capacity (in millions of tonnes) for phosphate feed, ammonium sulfate and purified acid was 0.7,
0.4 and 0.3, respectively. 2018 production was 0.29, 0.36 and 0.23, respectively, and 2017 production was 0.28, 0.31 and 0.23, respectively.
NUTRIEN 2018 55 ANNUAL REPORT
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Enterprise Risk Management
Key Risks
We characterize a Key Risk as a risk or combination of
financial results, or our reputation, taking into
risks that could negatively impact the achievement of our
consideration mitigation efforts. We consider the
vision and ability to deliver on our strategy. We evaluate
following to be Key Risks at this time. For a more detailed
those risks we believe could have a significant negative
discussion of our risks, refer to Nutrien’s 2018 Annual
effect on safety, health and environment, the Company’s
Information Form.
1. Long-Term Agriculture Changes
Associated Key Actions
Description
Risk Management Approach
Farm and industry consolidation, shifting grower demographics,
agriculture productivity and development, changes in consumer
food preferences, technological innovation and digital business
models, and climate change, among other factors, could impact
our strategy, demand for our products or financial performance.
Our integrated platform and diversified earnings portfolio of
crop inputs and services are designed to respond and adapt to
changes in agriculture. We are proactive in the development
and use of new agricultural products and practices and recently
launched our integrated digital platform. We believe our teams
have strong industry knowledge and direct customer
relationships across the value chain, providing unique insights
on trends and developments in the agriculture industry.
2. Shifting Global Dynamics
Description
Associated Key Actions
Risk Management Approach
Changes in global macro-economic conditions, including trade
tariffs and/or other trade restrictions and increased price
competition, or a significant change in agriculture production
or consumption trends, could lead to a low crop price
environment and reduced demand for our products, or
increased prices for, or decreased availability of, raw materials
necessary to produce our products.
Our diversified portfolio of agricultural products, services and
solutions, combined with our global footprint, is designed to
enable us to respond to changing economic conditions and
dynamics.
We have a favorable cost-to-service position and flexibility to
make operational changes across our portfolio to minimize the
impact of changing market dynamics. In addition, we engage in
market development, education, training and customer
relations initiatives to support demand growth.
Sustainability & Safety
Drive Integration & Optimization
Strategically Allocate Capital
Invest in Growth & Innovation
Engage Employees
NUTRIEN 2018 56 ANNUAL REPORT
3. Political, Economic and Social Instability
Associated Key Actions
Description
Risk Management Approach
Political, economic and social instability may affect our business
in the jurisdictions in which we operate. Among other things,
restrictions on monetary distributions, forced divestitures or
changes to or nullification of existing agreements, mining
permits or leases could result. Instability in political or regulatory
regimes could also affect our ability to transact business and
could impact our sales and operating results, our reputation or
the value of our assets.
We have an active engagement strategy with governments,
regulators and other stakeholders in the countries where we
operate or plan to operate, and we assess our capital
investments and project decisions against political, country and
other related risk factors to ensure our exposure is controlled.
Dedicated teams regularly monitor political, economic, and
social developments and global trends that may impact us.
4. Changing Regulations
Description
Associated Key Actions
Risk Management Approach
Changing laws, regulations and government policies affecting
our operations, including health and safety, environmental and
climate change pressures, could affect our ability to produce or
sell certain products, reduce efficiency, increase our raw
material, energy, transportation or compliance costs, or require
us to make capital improvements to our operations, all of which
could impact our financial performance or reputation.
We have an active engagement strategy with governments and
regulators to stay informed of emerging issues and participate
in regulatory developments affecting our business. We are also
active members in various industry associations that address
proposed changes to laws and regulations impacting the
agriculture industry. Where regulations are subject to change,
we evaluate the potential implications and strive to adapt
as necessary.
5. Cybersecurity Threats
Description
Associated Key Actions
Risk Management Approach
Cyberattacks or breaches of our systems, including our digital
platform or exposure to potential computer viruses, could lead
to disruptions to our operations, loss of data, or the unintended
disclosure of confidential information or property damage
resulting in business disruptions, reputational damage, personal
injury, and third-party claims, which could impact our
operations, financial performance or reputation.
We maintain an enhanced focus on cybersecurity, including
continuous monitoring of key systems for abnormal and
elevated risk behavior in conjunction with our cybersecurity
strategy, policy and framework.
Threat and risk assessments are completed for all new
information technology systems, and our cybersecurity
incident response processes are backstopped by external
response capability.
6. Capital Allocation
Description
Associated Key Actions
Risk Management Approach
Our inability to deploy capital or to effectively execute on
opportunities, whether due to market conditions, lack of
options or otherwise, or our decisions to deploy capital in a
manner that is inconsistent with strategic priorities, could
impact our returns, operations, reputation or access to capital.
We allocate capital in a disciplined manner that is consistent
with our strategic priorities focused on creating the greatest
long-term value while ensuring sufficient capital is allocated to
safety and asset preservation. We employ a governance
process for all capital allocation decisions and incorporate risk-
related factors, including execution risk, in those decisions.
See page 23 of this report for more information on our capital
allocation priorities.
Sustainability & Safety
Drive Integration & Optimization
Strategically Allocate Capital
Invest in Growth & Innovation
Engage Employees
NUTRIEN 2018 57 ANNUAL REPORT
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7. Talent and Organizational Structure
Associated Key Actions
Description
Risk Management Approach
An inability to attract, develop, or retain skilled employees, or
establish the right organizational structure or culture, could
impact productivity, reliability, safety performance, costs or
our reputation.
We strategically map critical talent in anticipation of future
needs, seeking to hire talent at the right time and with the right
fit for our culture and purpose. Our succession planning
proactively identifies critical roles in the organization and links
to internal top talent. Our incentive programs are competitive
and support our purpose driven culture with performance
expectations encouraging inclusion and a desire to add greater
diversity to our workforce.
See page 26 of this report for Nutrien’s People Strategy.
8. Retail Business Model
Description
Associated Key Actions
Risk Management Approach
Digital innovations, increasing research and development activity
and new technology in the agriculture market, among other
factors, could alter the competitive environment, which could
impact our Retail operations and financial performance.
Our full-service offering and investment in technology,
including our integrated digital platform, is intended to position
our Retail business as a leader in agricultural solutions for
growers. We are actively involved in the ag technology
innovation space through external investments and
partnerships, which supports access to early stage technology.
Further, we seek to maintain strong relationships with industry
partners, positioning Nutrien Ag Solutions as a key part of the
ag value chain for both suppliers and growers.
Our dedicated in-house product innovation teams continue
to invest in enhancing our digital platform and e-commerce
capabilities through focused research and development
and acquisition.
See page 25 of this report for more information on innovation.
9. Safety, Health & Environment
Associated Key Actions
Description
Risk Management Approach
Our operations are subject to safety, health and environmental
risks inherent in mining, manufacturing, transportation, storage
and distribution. These factors could result in injuries or fatalities,
or impact the biodiversity, water resources or related ecosystems
near our operations, impacting our operations, financial
performance or reputation.
Our people arriving home safe, every day, is a core value for us.
We have robust governance processes that ensure we follow all
regulatory, industry and internal standards of operation,
including benchmarking to global organizations and adopting
best practices. We have structured incident prevention and
response systems in place, conduct regular security
vulnerability assessments and maintain protocols for
employees working and traveling abroad, including pre-travel
threat and risk intelligence. Crisis communication protocols
and emergency response programs and personnel are in place
in the event of a significant incident.
We maintain environmental monitoring and control systems,
including third-party reviews of key containment structures.
Sustainability & Safety
Drive Integration & Optimization
Strategically Allocate Capital
Invest in Growth & Innovation
Engage Employees
NUTRIEN 2018 58 ANNUAL REPORT
Financial Overview
60 Financial Highlights
62 Guidance
63 Others Segment Financial
Performance
63 Expenses & Income Below
Gross Margin
64 Other Comprehensive (Loss)
Income
65 Financial Condition Review
66 Liquidity & Capital
Resources
69 Capital Structure &
Management
71 Off-Balance Sheet
Arrangements
71 Other Financial Information
72 Quarterly Results
75 Controls and Procedures
76 Forward-Looking
Statements
77 Appendix – Non-IFRS
Financial Measures
85 Two Year Highlights
87 Terms
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Financial Highlights
Dollars (millions) unless otherwise noted
Sales
Net (loss) earnings from continuing operations
Basic net (loss) earnings per share from continuing operations
Diluted net (loss) earnings per share from continuing operations
Net earnings from continuing and discontinued operations
Basic net earnings per share from continuing and discontinued operations
Diluted net earnings per share from continuing and discontinued operations
Total assets
Total non-current financial liabilities
Dividends declared per share
n/a = Information was not prepared on a combined historical basis.
Nutrien
2018
$ 19,636
(31)
(0.05)
(0.05)
3,573
5.72
5.72
45,502
7,616
2.06
Nutrien
2017
PCS
2017
$18,169
656
n/a
n/a
n/a
n/a
n/a
34,940
n/a
n/a
$ 4,547
154
0.18
0.18
327
0.39
0.39
16,998
3,746
0.40
PCS
2016
$ 4,456
199
0.24
0.24
323
0.39
0.38
17,255
3,763
0.70
2018 vs 2017 (Nutrien)
2018 vs 2017 (PotashCorp)
2017 vs 2016 (PotashCorp)
Sales increased due to higher potash,
urea and phosphate fertilizer prices,
as well as higher potash sales
volumes and increased retail sales
due to recent acquisitions.
Sales increased primarily due to the
addition of Agrium’s operations in
the Merger. Sales also increased due
to Retail acquisitions, higher potash
sales volumes and increases in potash,
urea and phosphate fertilizer prices.
Sales increased slightly due to
increases in potash sales volumes and
net sales prices being partially offset
by decreases in nitrogen and
phosphate net sales prices.
There was a loss from continuing
operations in 2018 compared to
earnings in 2017 primarily due to a
non-cash impairment of property,
plant and equipment in the Potash
segment of $1,809 million in 2018
more than offsetting the impact of
higher gross margin in all operating
segments.
2017 information was not prepared
on a combined historical basis.
Sales
Earnings and
earnings per
share from
continuing
operations
Earnings and
earnings per
share from
continuing
and
discontinued
operations
Assets and
non-current
financial
liabilities
Assets increased primarily due to
the fair value adjustments to legacy
Agrium assets as a result of the PPA
in the Merger. Combined historical
non-current financial liability
information was not prepared.
There was a loss from continuing
operations in 2018 compared to
earnings in 2017 primarily due to a
non-cash impairment of property,
plant and equipment in the Potash
segment of $1,809 million in 2018
more than offsetting the impact of
the addition of Agrium’s operations
in the Merger and higher gross margin
in all operating segments.
Net earnings from continuing
operations (and related per share
amounts) decreased slightly due to
increased non-cash impairments of
property, plant and equipment and
increased Merger and related costs,
which were partially offset by an
income tax recovery in 2017
compared to income tax expense
in 2016.
Net earnings, and the related per
share amounts, were higher in 2018
due to the gains on sale of our
investments presented as
discontinued operations, the addition
of Agrium’s operations in the Merger
and higher gross margin in all
operating segments more than
offsetting the non-cash impairment
of property, plant and equipment in
the Potash segment.
Assets and financial liabilities
increased primarily due to the addition
of Agrium’s assets and liabilities,
including related PPA adjustments,
acquired in the Merger.
Net earnings (and related per share
amounts) were flat due to the
decrease in net earnings from
continuing operations being offset by
an increase in earnings from
discontinued operations consisting
primarily of the earnings of equity-
accounted investees SQM and APC.
There were no significant changes.
NUTRIEN 2018 60 ANNUAL REPORT
Nutrien 2018 EBITDA Compared to Nutrien 2017 EBITDA
Dollars (millions) except per share amounts, excluding depreciation and amortization
EBITDA December 31, 2017
RETAIL
Increases in Retail selling expenses
Increase in Retail crop nutrient gross margin
POTASH
Non-cash impairment of property, plant and equipment in Potash in
2018
Increases in Potash prices
Increases in Potash sales volumes
Decreases in Potash cost of goods sold (COGS)
Increase in Potash provincial mining and other taxes
NITROGEN
Increases in Nitrogen prices
Decreases in Nitrogen COGS
PHOSPHATE AND SULFATE
Decreases in Phosphate and Sulfate COGS due primarily to the 2017
non-cash impairment 1
Increases in Phosphate and Sulfate prices
OTHERS
Decreases in Others segment other income due primarily to the defined
benefit plans curtailment gain
ALL OTHER CHANGES
Other changes
EBITDA
$
2,412
Changes in
EBITDA
Earnings per
share impact
_
a
_
a
a
a
_
a
a
a
a
a
a
$
(86)
$
(0.10)
75
0.09
(1,809)
(2.11)
389
110
109
(85)
181
143
228
156
0.45
0.13
0.13
(0.10)
0.22
0.18
0.28
0.19
151
0.19
32
0.04
EBITDA December 31, 2018
$ 2,006
1
Includes a non-cash impairment of property, plant and equipment of $305 million. See note 16 to the financial statements.
NUTRIEN 2018 61 ANNUAL REPORT
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2019 Guidance
Dollars (billions) unless otherwise noted
Adjusted net earnings per share 1
Adjusted EBITDA 1
Retail EBITDA
Potash EBITDA
Nitrogen EBITDA
Phosphate EBITDA
Potash sales tonnes (millions) 2
Nitrogen sales tonnes (millions) 2
Depreciation and amortization
Integration and synergy costs (millions)
Effective tax rate on continuing operations
Sustaining capital expenditures
2019 Guidance Ranges
Low
High
$2.80
$ 4.4
$ 1.3
$ 1.8
$ 1.3
$ 0.2
13.0
10.6
$ 1.8
$ 50
24%
$ 1.0
$3.20
$ 4.9
$ 1.4
$ 2.0
$ 1.5
$ 0.3
13.4
11.0
$ 1.9
$ 75
26%
$ 1.1
2019 Sensitivities
Price and Volume Sensitivities
Price
Potash changes by $20/tonne
Ammonia changes by $20/tonne
Urea changes by $20/tonne
DAP/MAP changes by $20/tonne
Volume Potash changes by 100,000 tonnes
Nitrogen changes by 50,000 N tonnes
Phosphate changes by 50,000 P2O5
tonnes
Retail
Crop nutrients changes by 1% 1
Crop protection changes by 1% 1
Seed changes by 1% 1
1 Gross margin as a percentage of sales.
Effect
on EPS
$ 0.26
0.05
0.08
0.04
0.03
0.02
0.02
0.07
0.07
0.02
Input Cost Sensitivities
NYMEX natural gas
price increases by
$1/MMBTu
Canadian to US dollar
strengthens by $0.02
Nitrogen
Potash
Canadian operating
expenses excluding
provincial taxes and
translation gain/loss
Effect
on EPS
$ (0.20)
(0.01)
(0.02)
NUTRIEN 2018 62 ANNUAL REPORT
Others Segment Financial Performance
“Others” is a non-operating segment comprising corporate and administrative functions that provide support and governance to our
operating business units. No sales are made in this segment.
Dollars (millions), except percentage amounts
Selling expenses
General and administrative expenses
Provincial mining and other taxes
Other expenses
Loss before finance costs and income taxes
Depreciation and amortization
Nutrien
2018
Nutrien
2017
%
Change
PCS 1
2017
%
Change
$
22
$
15
47
$
(2)
(400)
(2)
(106)
(486)
54
(377)
6
(170)
–
n/m
(256)
(618)
56
(59)
(21)
(4)
–
(99)
(271)
37
n/m
135
n/m
7
79
46
85
EBITDA
$
(432)
$
(562)
(23) $
(234)
1 Certain amounts have been reclassified to conform to the current period’s presentation as described in note 33 to the financial statements.
n/m = not meaningful
2018 vs 2017 (Nutrien)
2018 vs 2017 (PotashCorp)
EBITDA
EBITDA increased primarily due to the impact of the defined
benefit plans curtailment gain included in other expenses
(see note 28 to the financial statements).
EBITDA decreased primarily due to the addition of
Agrium’s operations more than offsetting the impact of a
defined benefit plans curtailment gain in other expenses
(see note 28 to the financial statements).
Expenses & Income Below Gross Margin
Dollars (millions), except percentage amounts
Selling expenses 2
General and administrative expenses 3
Provincial mining and other taxes 4
Impairment of property, plant and equipment 5
Other expenses
Finance costs
Income tax recovery (expense)
Net earnings from discontinued operations
Nutrien
2018
Nutrien
2017
%
Change
PCS 1
2017
%
Change
$
$ (2,337) $ (2,043)
(503)
(159)
–
(255)
(515)
(20)
n/a
(539)
(250)
(1,809)
(43)
(538)
93
3,604
14
7
57
n/m
(83)
4
n/m
n/m
(29)
(185)
(146)
–
(125)
(238)
183
173
n/m
191
71
n/m
(66)
126
(49)
n/m
1 Certain amounts have been reclassified to conform to the current period’s presentation as described in note 33 to the financial statements.
2 Expenses are primarily in the Retail segment. See page 36 for analysis.
3 Expenses are primarily in the Others segment. See above for analysis.
4 Expenses are primarily in the Potash segment. See page 43 for analysis.
5
n/m = not meaningful
n/a = not available
Impairment was in the Potash segment. See page 43 for analysis.
NUTRIEN 2018 63 ANNUAL REPORT
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The most significant contributors to the change in expenses and income below gross margin results were as follows:
2018 vs 2017 (Nutrien)
2018 vs 2017 (PotashCorp)
Other (Expenses)
Income
Other expenses decreased primarily due to a defined
benefit plans curtailment gain (see note 28 to the
financial statements) in 2018 (none in 2017) and
foreign exchange gains in 2018 (losses in 2017).
Other expenses decreased as a defined benefit plans
curtailment gain (see note 28 to the financial
statements) in 2018 (none in 2017) more than offset
the increase in Merger and related costs.
There were no significant changes to finance costs.
Finance costs increased primarily as a result of the
Merger. See note 8 to the financial statements for a
breakdown of these costs.
WEIGHTED AVERAGE DEBT BALANCES & RATES
Dollars (millions), except percentage amounts
Nutrien 2018
Nutrien 2017
PCS 2017
Finance Costs
Short-term balance 1
Short-term rate 1,2
Long-term balance
Long-term rate
$
$
2,933
3.3%
8,175
4.8%
$
$
1,525
2.4%
8,641
4.7%
$
$
381
1.3%
4,229
4.7%
1 North American weighted average short-term debt balances were $2,719 (2017 (Nutrien) – $1,345, 2017 (PotashCorp) – $381)
and rates were 2.5% (2017 (Nutrien) – 1.5%, 2017 (PotashCorp) – 1.3%).
2 Rates were higher in 2018 due to increases in benchmark interest rates.
A loss from continuing operations was realized for
accounting purposes in 2018 compared to earnings
from continuing operations in 2017. As a result, a tax
recovery was recorded in 2018 compared to a tax
expense in 2017. The 2017 tax expense included a
net discrete recovery of $178 as a result of a federal
income tax rate decrease pursuant to US tax reform
legislation.
A loss from continuing operations was realized for
accounting purposes in 2018 and 2017. The 2017
tax recovery included a discrete recovery of $187
as a result of a federal income tax rate decrease
pursuant to US tax reform legislation.
See note 9 to the financial statements for further
information on income tax recovery (expense).
Income Tax
Recovery (Expense)
See note 9 to the financial statements for further
information on income tax recovery (expense).
EFFECTIVE TAX RATES & DISCRETE ITEMS
Dollars (millions), except percentage amounts
Nutrien 2018
Nutrien 2017 1
PCS 2017 1
Actual effective tax rate on ordinary earnings
Actual effective tax rate including discrete items
Discrete tax adjustments that impacted the rate
72%
75%
4
$
29%
3%
176
$
(7)%
n/m
185
$
1 Rates have been adjusted as a result of our equity interests in SQM, APC and ICL being classified as discontinued in 2017.
n/m = not meaningful
Combined historical Nutrien information was not
prepared for discontinued operations.
Net Earnings From
Discontinued
Operations
Net earnings from discontinued operations were
higher in 2018 primarily due to the gains on sale
of our equity investments in SQM and APC, and
dividends from SQM and APC, exceeding the
equity earnings and dividend income from these
investments in 2017 (equity accounting for these
investments ceased when the investments were
classified as held for sale). This was partially offset
by an increase in income tax expense.
Other Comprehensive (Loss) Income
Other comprehensive (loss) income in 2018 was a $302 million loss compared to $176 million income for 2017 Nutrien and
$96 million income for 2017 PotashCorp due primarily to a loss on translation of our net operations in Canada and Australia (gain
for 2017 Nutrien) and a fair value loss on our investment in Sinofert (Gain for 2017 Nutrien and 2017 PotashCorp).
NUTRIEN 2018 64 ANNUAL REPORT
Financial Condition Review
Balance Sheet Analysis
The most significant contributors to the changes in our balance sheet are analyzed below (direction of arrows refers to increase or
decrease in financial condition and Š means no impact). All impacts for balance sheet line items are after the opening balance sheet
impacts of the Merger, which includes fair value adjustments in relation to the Merger (if any).
Total assets and liabilities increased primarily as a result of the Merger and fair value adjustments described in note 3 to the financial
statements. Total equity increased primarily as a result of the issuance of Nutrien shares in the Merger. The analysis below explains
the further changes after these adjustments.
Assets
Liabilities
a
For information regarding changes in cash and cash
equivalents, refer to the “Sources and Uses of Cash” section
on page 67 and the consolidated statements of cash flows
in our financial statements.
a
Inventory increased primarily due to lower than expected
Retail crop protection sales caused by adverse weather in
North America and earlier than average seasonal inventory
purchases in Retail.
_
Assets held for sale were lower due to the sale of our equity
interests in SQM, APC and ICL as discussed in note 10 to the
financial statements.
_
Property, plant and equipment were primarily impacted by
a non-cash impairment loss relating to our New Brunswick
Potash operations as described in note 16 to the financial
statements.
a
Short-term debt decreased due to repayments upon
receipt of cash proceeds from the sale of our held for sale
equity investments.
Current portion of long-term debt increased and long-term
debt decreased due to the 6.75 percent notes due
January 15, 2019 and 6.5 percent notes due May 15, 2019
becoming due within one year.
Š
_
Payables and accrued charges increased due to a higher
dividend payable, accelerated seasonal Retail inventory
purchases, higher customer prepayments and the timing of
cash payments.
_
a
Share capital was reduced by share repurchases.
Equity
Retained earnings was higher primarily as a result of net
earnings exceeding the impact of share repurchases and
dividends declared.
As at December 31, 2018, $NIL (December 31, 2017 (Nutrien) – $104 million, (PotashCorp) – $104 million) of our cash and cash
equivalents was held in certain foreign subsidiaries that could be subject to taxes upon repatriation.
NUTRIEN 2018 65 ANNUAL REPORT
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Liquidity & Capital Resources
Sources & Uses of Liquidity
Liquidity risk arises from our general funding needs and in the management of our assets, liabilities and capital structure. We
manage liquidity risk to maintain sufficient liquid financial resources to fund our financial position and meet our commitments
and obligations in a cost-effective manner. Our 2018 significant liquidity sources are listed below along with our expected ongoing
primary uses of liquidity. Proceeds from the sale of investments are not expected to be a significant liquidity source in 2019 now
that the required Merger-related divestitures have been completed.
Liquidity sources:
Primary uses:
(cid:129) Cash from operations
(cid:129) Investments sale proceeds 1
(cid:129) Commercial paper issuances
(cid:129) Credit facility drawdowns
(cid:129) Accounts receivable securitization borrowings
(cid:129) Debt capital markets
(cid:129) Operational expenses
(cid:129) Seasonal working capital requirements
(cid:129) Sustaining and investing capital 2
(cid:129) Business acquisitions and investments 3
(cid:129) Dividends 4 and interest
(cid:129) Debt securities principal payments
(cid:129) Share repurchases 5
In 2018, we closed sales on our equity interests in SQM, ICL and APC for net proceeds of approximately $5.3 billion.
1
2 See graph below for forecast 2019 and actual 2018 capital expenditures to sustain operations and for investing (excluding business acquisitions and
3
investments in equity-accounted investees). Amounts are based on a forecast exchange rate of 1.32 Canadian Dollars per US Dollar.
In 2018, we acquired 53 retail locations in North America and Australia, in addition to companies operating within the digital agriculture, proprietary
products and agricultural services businesses (note 3 and note 21 to the financial statements). On February 5, 2019, we announced the planned acquisition
of Actagro, LLC, a developer, manufacturer and marketer of environmentally sustainable soil and plant health products and technologies for approximately
$340 million. Closing of the transaction is subject to US regulatory approval and is expected to be completed in the first half of 2019.
4 We target a stable and growing dividend that represents 40 to 60 percent of free cash flow after sustaining capital through the agricultural cycle. In
November 2018, we increased our dividend from $0.40 per share to $0.43 per share.
5 During 2018, 36,332,197 common shares were repurchased for cancellation at a cost of $1,852 million with an average price per share of $50.97. In the
fourth quarter of 2018, the Board of Directors approved an increase to the existing share repurchase program, raising the maximum number of shares
that can be repurchased by February 22, 2019 to 50,363,686 common shares, representing approximately 8% of our outstanding common shares. On
February 20, 2019, the Board of Directors approved the renewal of the share repurchase program of up to 5 percent of our outstanding common shares
over a one-year period through a normal course issuer bid. As of February 20, 2019, an additional 5,933,135 common shares were repurchased at a cost of
$297 million and an average price per share of $50.10.
We believe that internally generated cash flow, supplemented by available borrowings under our existing financing sources, if
necessary, will be sufficient to meet our anticipated capital expenditures and other cash requirements for at least the next
12 months. At this time, we do not reasonably expect any presently known trend or uncertainty to affect our ability to access our
historical sources of liquidity. We had positive working capital of $3.33 billion and a working capital ratio of 1.40 at December 31,
2018 and an adjusted net debt to adjusted EBITDA ratio of 1.64.
NUTRIEN 2018 66 ANNUAL REPORT
Sources and Uses of Cash
Our cash flows from operating, investing and financing activities are summarized in the following table:
Dollars (millions), except percentage amounts
Cash provided by operating activities
Cash provided by (used in) investing activities
Cash used in financing activities
Effect of exchange rate changes on cash and cash equivalents
Increase in cash and cash equivalents
n/m = not meaningful
Nutrien
2018
Nutrien
2017
%
Change
PCS
2017
%
Change
$ 2,052
3,887
(3,705)
(36)
$ 2,568
(1,594)
(824)
(12)
(20) $ 1,225
(652)
n/m
(489)
350
–
200
$ 2,198
$
138
n/m $
84
68
n/m
658
n/m
n/m
The most significant contributors to the changes in cash flows were as follows:
Cash Provided by
Operating
Activities was
impacted by:
2018 vs 2017 (Nutrien)
2018 vs 2017 (PotashCorp)
(cid:129) Higher net earnings in 2018 than in 2017.
(cid:129) Significant changes in non-cash adjustments were
due to the gain on disposal of SQM and APC net of
tax in 2018 ($NIL – 2017), higher depreciation and
amortization, and higher impairment of property,
plant and equipment.
(cid:129) Higher net earnings in 2018 than in 2017.
(cid:129) Significant changes in non-cash adjustments were
due to the gain on disposal of SQM and APC net of
tax in 2018 ($NIL – 2017), higher depreciation and
amortization, and higher impairment of property,
plant and equipment.
(cid:129) Non-cash working capital was impacted primarily
by cash outflows for payables and accrued charges
(inflows in 2017) and inventories (lower outflows in
2017) more than offsetting inflows from prepaid
expenses and other current assets (outflows in 2017).
(cid:129) Non-cash working capital was impacted primarily
by cash outflows for payables and accrued charges
(inflows in 2017) and inventories (lower outflows in
2017) more than offsetting inflows from prepaid
expenses and other current assets (outflows in 2017).
NUTRIEN 2018 67 ANNUAL REPORT
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2018 vs 2017 (Nutrien)
2018 vs 2017 (PotashCorp)
(cid:129) Higher net cash outlays for business acquisitions
(net of cash acquired) in 2018 compared to 2017.
(cid:129) Cash proceeds received from the disposals of our
discontinued operations in SQM, ICL and APC in 2018.
Cash Provided by
(Used in)
Investing Activities
was impacted by:
(cid:129) Cash acquired in the Merger in 2018.
(cid:129) Higher net cash outlays for business combinations
(net of cash acquired) in 2018 compared to 2017.
(cid:129) Higher cash additions to property, plant and
equipment in 2018 than in 2017 due primarily to
the addition of Agrium’s Retail operations in the
Merger.
(cid:129) Cash proceeds received from the disposals of our
discontinued operations in SQM, ICL and APC in 2018.
(cid:129) A net repayment of commercial paper in 2018
(cid:129) A net repayment of commercial paper in 2018
compared to net proceeds in 2017.
compared to net proceeds in 2017.
Cash Used in
Financing Activities
was impacted by:
(cid:129) Lower cash repayments of long-term debt in 2018.
(cid:129) Cash outlays for share repurchases under the NCIB
in 2018 (none in 2017).
(cid:129) Lower cash repayments of long-term debt in 2018.
(cid:129) Higher cash dividends paid in 2018 than in 2017.
(cid:129) Cash outlays for share repurchases under the NCIB
in 2018 (none in 2017).
Cash Requirements
The following aggregated information about our contractual obligations and other commitments summarizes certain of our liquidity
and capital resource requirements as at December 31, 2018. The information presented in the table below does not include planned
(but not legally committed) capital expenditures or potential share repurchases.
Dollars (millions) at December 31, 2018
Total
Within 1 Year
1 to 3 Years
3 to 5 Years
Over 5 Years
Payments Due by Period
Long-term debt obligations
Estimated interest payments on long-
term debt obligations
Operating leases
Purchase commitments1
Capital commitments
Other commitments
Asset retirement obligations and
environmental costs 2
Other long-term liabilities 3
Notes 23, 26
$ 8,175
$ 1,000
$
500
$ 1,000
$ 5,675
Note 26
Note 26
Note 26
Note 26
Note 26
Note 20
Notes 9, 13, 28
4,543
1,087
3,396
57
318
3,051
3,468
341
216
1,364
37
114
206
119
612
316
949
18
123
290
99
576
212
945
2
61
332
93
3,014
343
138
–
20
2,223
3,157
Total
$ 24,095
$ 3,397
$ 2,907
$ 3,221
$ 14,570
1
In 2018, we entered into a new long-term natural gas purchase agreement in Trinidad, which will commence January 1, 2019 and is set to expire
December 31, 2023. The contract provides for prices that vary primarily with ammonia market prices, and annual escalating floor prices. The commitments
included in the table are based on floor prices and minimum purchase quantities.
2 Commitments associated with our asset retirement obligations are the estimated cash outflows and are expected to occur over the next 480 years for
phosphate (with the majority taking place over the next 80 years) and between 50 and 430 years for Potash. Potash cash flows are estimated for the first year
of decommissioning for operating sites and for all years for permanently shut down sites. Environmental costs consist of restoration obligations, which are
expected to occur through 2048.
3 Other long-term liabilities consist primarily of pension and other post-retirement benefits, derivative instruments, income taxes and deferred income taxes.
Deferred income tax liabilities may vary according to changes in tax laws, tax rates and our operating results. Since it is impractical to determine whether
there will be a cash impact in any particular year, all deferred income tax liabilities have been reflected as other long-term liabilities in the Over 5 Years
category.
NUTRIEN 2018 68 ANNUAL REPORT
Capital Structure & Management
We manage our capital structure with a focus on maintaining a strong balance
sheet, enabling a strong investment-grade credit rating.
Principal Debt Instruments
We use a combination of cash generated from operations and short-term and long-term debt to finance our operations. We have
the following short-term debt instruments available:
Our long-term debt consists primarily of notes with the following maturities and interest rates:
NUTRIEN 2018 69 ANNUAL REPORT
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DEBT COVENANTS
Our credit facilities have financial tests and other covenants with which we must comply at each quarter-end. Non-compliance with
any such covenants could result in accelerated payment of amounts borrowed and termination of lenders’ further funding
obligations under the credit facilities. We were in compliance with all covenants as at December 31, 2018.
The accompanying table summarizes the limits and results of certain covenants.
DEBT COVENANTS AT DECEMBER 31
Debt-to-capital ratio 1
Limit
0.65
2018
0.28
≤
1 This debt covenant is a non-IFRS financial measure and is calculated as the sum of short-term debt, long-term debt (including current portion), finance lease
obligations and financial letters of credit divided by the sum of those amounts, non-controlling interests and shareholders’ equity. The ratio of our short-
term debt and long-term debt (including current portion) to our short-term debt, long-term debt (including current portion) and shareholders’ equity, which
is the nearest comparable IFRS measure, is 0.27.
CREDIT RATINGS
Our ability to access reasonably priced debt in the capital markets is dependent, in part, on the quality of our credit ratings. We
continue to maintain investment-grade credit ratings for our long-term debt. A downgrade of the credit rating of our long-term
debt could increase the interest rates applicable to borrowings under our credit facilities.
Commercial paper markets are normally a source of same-day cash for us. Our access to the US commercial paper market primarily
depends on maintaining our current short-term credit ratings as well as general conditions in the money markets.
Moody’s
S&P
Long-Term Debt
Rating (Outlook)
Short-Term Debt
Rating
December 31, 2018
December 31, 2018
Baa2 (stable)
BBB (stable)
P-2
A-2
A security rating is not a recommendation to buy, sell or hold securities. Such ratings may be subject to revision or withdrawal at any
time by the respective credit rating agency and each rating should be evaluated independently of any other rating.
OUTSTANDING SHARE DATA
Common shares 1
Options to purchase common shares
Share-settled performance share units
December 31, 2018
602,630,027
9,044,237
65,850
1 Common shares issued and outstanding as at February 20, 2019.
For more information on our capital structure and management, see note 25 to the financial statements.
For more information on our short-term debt and long-term debt, see notes 22 and 23 to the financial statements.
NUTRIEN 2018 70 ANNUAL REPORT
Off-Balance Sheet Arrangements
Principal off-balance sheet activities include:
(cid:129) Operating leases and long-term contracts containing fixed price and/or volume components (disclosed on page 68 under
Cash Requirements). As of January 1, 2019, we adopted the new accounting standard for leases as described in note 32 to the
financial statements. We anticipate approximately $1 billion of leases being brought on the balance sheet as “right of use assets”
and an equal amount recognized for lease obligations. The expected impact on net earnings is minimal based on leases
currently outstanding as the adoption of the standard is expected to result in a decrease in lease expenses of $225 million
(COGS of $145 million and selling expenses and general and administrative expenses of $80 million), an increase in depreciation
and amortization of $190 million (COGS of $130 million and selling expenses and general and administrative expenses of
$60 million) and an increase in finance costs of $30 million. The expected impact on EBITDA is an increase of $225 million.
(cid:129) Agreement to reimburse losses of Canpotex (see note 31 to the financial statements).
(cid:129) Issuance of guarantee contracts (see note 27 to the financial statements).
(cid:129) Certain non-financial derivatives that were entered into and continued to be held for the purpose of the receipt or delivery of
a non-financial item in accordance with expected purchase, sale or usage requirements. Other derivatives are included on our
balance sheet at fair value.
We do not reasonably expect any presently known trend or uncertainty to affect our ability to continue using these arrangements.
Other Financial Information
Related Party Transactions
Refer to note 30 to the financial statements for information on related party transactions.
Market Risks Associated with Financial Instruments
Market risk is the potential for loss from adverse changes in the market value of financial instruments. The level of market risk to
which we are exposed varies depending on the composition of our derivative instrument portfolio, as well as current and expected
market conditions. See note 13 to the financial statements for information on our financial instruments’ risks and risk management.
Critical Accounting Estimates
We prepare our financial statements in accordance with IFRS, which requires us to make judgments, assumptions and estimates in
applying accounting policies. Critical accounting estimates are those which are highly uncertain at the time they are made or where
different estimates would be reasonably likely to have a material impact on our financial condition or results of operations.
Critical Accounting Estimate
Financial Statement
Note Reference 1
Business combinations
Note 3
Goodwill impairment
Note 17 and Note 32
Long-lived asset impairment Note 16 and Note 32
Income taxes
Note 9 and Note 31
Asset retirement obligations
and accrued environmental
costs
Note 20
Primary Segment(s) Impacted
All segments were impacted as all assets acquired, and liabilities assumed,
from Agrium in the Merger were required to be measured at fair value.
The Retail, Potash, Nitrogen and Phosphate and Sulfate segments have
goodwill allocated to them that could be subject to impairment.
The Potash and Phosphate and Sulfate segments have had impairments
recorded, which could be subject to reversal. Further, all segments could
be subject to impairment in the event there is an impairment trigger.
Income taxes are not allocated to segments, therefore no segments are
impacted by these estimates.
The Potash and Phosphate and Sulfate segments have these liabilities
associated with their mining operations (Others segment has asset
retirement obligations associated with non-operational mines) which have
a high degree of estimation uncertainty for future costs and estimated
timelines.
1
Included in the notes are a description of the estimate and the methodology for calculating (when applicable) key areas of judgment related to the estimate,
changes to the estimate (if any) and sensitivity analysis (when available and would provide material information to investors).
We have discussed the development, selection and application of our key accounting policies, and the critical accounting estimates
and assumptions they involve, with the audit committee of the Board.
Refer to note 32 to the financial statements.
Recent Accounting Changes
NUTRIEN 2018 71 ANNUAL REPORT
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Quarterly Results
Dollars (millions)
except as otherwise noted
Sales
Gross margin
Earnings (loss) before finance
costs and income taxes
Net (loss) earnings from
continuing operations
Net earnings from
Nutrien 2018
PCS 2017 1
Q1
Q2
Q3
Q4
Total
Q1
Q2
Q3
Q4
Total
$ 3,695 $ 8,145 $ 4,034 $ 3,762 $ 19,636
$ 1,112 $ 1,120 $ 1,234 $ 1,081 $ 4,547
847
2,131
1,155
1,259
5,392
273
260
233
(72)
694
76
1,151
(1,359)
546
414
175
149
100
(215)
209
(1)
741
(1,067)
296
(31)
106
152
16
(120)
154
discontinued operations
–
675
23
2,906
Net (loss) earnings 2
(1) 1,416
(1,044) 3,202
EBITDA
487
1,507
(932)
944
3,604
3,573
2,006
43
149
347
49
201
317
37
53
280
44
(76)
(43)
173
327
901
Basic net (loss) earnings per
share from continuing
operations
Diluted net (loss) earnings per
share from continuing
operations
Basic net (loss) earnings per
share 2
Diluted net (loss) earnings per
share 2
Other comprehensive (loss)
–
1.18
(1.74)
0.48
(0.05)
0.13
0.18
0.02
(0.14)
0.18
–
–
–
1.17
(1.74)
0.48
(0.05)
0.13
0.18
0.02
(0.14)
0.18
2.25
(1.70)
5.23
5.72
0.18
0.24
0.06
(0.09)
0.39
2.24
(1.70)
5.22
5.72
0.18
0.24
0.06
(0.09)
0.39
income
(70)
(105)
1
(128)
(302)
39
69
42
(54)
96
Cash (used in) provided by
operating activities
(340)
601
(177) 1,968
2,052
223
328
293
381
1,225
1 Certain amounts have been reclassified to conform with Nutrien’s new method of presentation and certain fourth quarter amounts have been reclassified as
a result of discontinued operations discussed in note 10 of the financial statements.
2 From continuing and discontinued operations.
The agricultural products business is seasonal. Crop input sales are primarily concentrated in the spring and fall application seasons.
Crop nutrient inventories are normally accumulated leading up to each application season. Our cash collections generally occur after
the application season is complete, and our customer prepayments are concentrated in December and January. Feed and industrial
sales are more evenly distributed throughout the year. Beginning in 2018, earnings were impacted by the operations acquired in the
Merger. In the third quarter of 2018, earnings were impacted by a $1.8 billion non-cash impairment to property, plant and
equipment in the Potash segment as discussed in note 16 to the financial statements. In the fourth quarter of 2017, earnings were
impacted by a $276 million non-cash impairment to property, plant and equipment in the Phosphate and Sulfate segment.
Dollars (millions)
Q1
Q2
Q3
Q4
Total
Q1
Q2
Q3
Q4
Total
Nutrien 2018
Nutrien 2017
Sales
Gross margin
Earnings (loss) before finance
costs and income taxes
Net (loss) earnings from
continuing operations
EBITDA
$ 3,695 $ 8,145 $ 4,034 $ 3,762 $ 19,636
$ 3,737 $ 7,348 $ 3,586 $ 3,498 $ 18,169
847
2,131
1,155
1,259
5,392
838
1,791
793
729
4,151
76
1,151
(1,359)
546
414
222
995
74
(100)
1,191
(1)
741
(1,067)
487
1,507
(932)
296
944
(31)
97
705
2,006
521
1,306
(53)
375
(93)
656
210
2,412
NUTRIEN 2018 72 ANNUAL REPORT
Fourth Quarter Financial Performance
Dollars (millions)
Three months ended December 31
Nutrien
2018
Nutrien
2017
%
Change
PCS
2017
%
Change
Nutrien
2018
Nutrien
2017
%
Change
PCS
2017
%
Change
Sales
Gross Margin
RETAIL
Crop nutrients
$ 917 $ 890
3
$
Crop protection products
Seed
Merchandise
Services and other
Total
644
103
179
211
712
107
187
193
$ 2,054 $ 2,089
(10)
(4)
(4)
9
(2)
$
–
–
–
–
–
–
n/m
n/m
n/m
n/m
n/m
n/m
$ 184
$ 168
270
56
27
125
327
51
28
121
$ 662
$ 695
10
(17)
10
(4)
3
(5)
$
$
–
–
–
–
–
–
n/m
n/m
n/m
n/m
n/m
n/m
Dollars (millions)
Three months ended December 31
Nutrien
2018
Nutrien
2017
%
Change
PCS
2017
%
Change
Nutrien
2018
Nutrien
2017
%
Change
PCS
2017
%
Change
Manufactured Product Sales Tonnes (thousands)
Manufactured Product Average Net Price per MT
POTASH
North America
Offshore
Sales
Cost of Goods Sold
Gross Margin
NITROGEN
Ammonia
Urea
Solutions and nitrates
Sales
Cost of Goods Sold
Gross Margin
PHOSPHATE AND SULFATE
Fertilizer
Industrial and feed
Sulfate
Sales
Cost of Goods Sold
Gross Margin
n/m = not meaningful
17
29
23
(6)
58
13
24
12
18
1
91
22
6
13
16
$ 214
$ 169
$ 182
$ (96)
$ 86
$ 270
$ 288
$ 138
$ 207
$ (167)
$ 40
$ 342
$ 483
$
–
$ 385
$ (782)
$ (397)
13
28
23
(1)
49
7
17
22
24
5
105
24
6
n/m
12
(48)
n/m
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$ 242
$ 207
$ 216
$ 168
$ 223
$ 182
$ (95)
$ (101)
$ 128
$ 81
$ 290
$ 256
$ 337
$ 272
$ 169
$ 151
$ 257
$ 217
$ (175)
$ (174)
$ 82
$ 43
731
2,126
2,857
896
(18)
1,631
2,527
30
13
568
1,340
1,908
29
59
50
505
283
795
1,583
60
143
18
54
808
687
939
801
583
986
2,434
2,370
601
207
77
885
629
205
61
895
1
18
(5)
3
(4)
1
26
(1)
534
239
13
(13)
$ 423
$ 348
$ 513
$ 485
–
n/m
$ 267
$ 236
773
14
$ 431
$ 372
$ (406)
$ (694)
(41)
$ 25
$ (322)
n/m
NUTRIEN 2018 73 ANNUAL REPORT
Retail
Potash
Nitrogen
Highlights of our 2018 fourth quarter compared to the 2017 combined historical Nutrien fourth quarter results and the 2017
PotashCorp fourth quarter results were as follows (direction of arrows refers to impact on comprehensive income and Š means no
impact):
Q4 2018 vs Q4 2017 (Nutrien)
Q4 2018 vs Q4 2017 (PotashCorp)
_
Sales volumes for crop nutrients and crop protection were
impacted by a shortened application season in the US
caused by adverse weather.
a
Gross margin for crop nutrients was higher due to strong
fertilizer prices more than offsetting lower sales volumes.
a
Sales volumes were up due to strong demand in offshore
markets more than offsetting lower North America sales
due to adverse weather that postponed fall application.
a
PotashCorp did not have Retail operations prior to the
Merger.
a
Sales volumes were up due to the addition of the Vanscoy
Potash mine in the Merger and strong offshore demand.
a
Sales prices were up due to strong global demand and tight
supply.
a
Sales prices were up due to strong global demand and tight
supply.
a
Costs per tonne were lower due to realized synergies and
mine optimization.
Š
a
a
Sales volumes were higher due to improved production
rates and stable fall ammonia application in Canada.
Sales prices were up due to tight global supply and higher
global feedstock costs.
Š
Š
Costs per tonne were flat due to higher production volumes
and synergy realizations being offset by higher depreciation
and amortization from the PPA adjustments.
Sales volumes were flat as higher ammonium sulfate sales
offset lower dry fertilizer sales caused by the shortened
application in the US.
Phosphate and
Sulfate
a
Sales prices were up due to higher sulfur and ammonia
input costs and a more balanced global supply and demand.
a
Costs per tonne were down significantly as the impact of
higher sulfur and ammonia input costs were more than
offset by the non-cash impairment in the prior year.
Costs per tonne were flat due to realized synergies and mine
optimization offsetting the addition of Agrium’s operations,
higher depreciation on the related PPA adjustments, and
shutdowns at certain mines occurring in the fourth quarter
in 2018 and in the third quarter in 2017.
Sales volumes increased primarily as a result of the Merger.
Sales prices were up due to tight global supply , stable
demand and higher global feedstock costs.
_
Costs per tonne were higher due to higher depreciation
and amortization from the PPA adjustments more than
offsetting lower average natural gas costs from plants acquired
in the Merger.
Sales volumes increased primarily as a result of the Merger.
Sales prices were up due to higher sulfur and ammonia input
costs and a more balanced global supply and demand.
a
Costs per tonne were down significantly as the impact of
higher sulfur and ammonia input costs were more than
offset by the non-cash impairment in the prior year.
a
a
a
a
Selling costs in Retail increased due to acquisitions and
increased depreciation related to PPA adjustments.
_
_
Expenses increased primarily due to the acquisition of
Agrium’s operations in the Merger.
Expenses and
income below
gross margin
General and administrative costs decreased due primarily
to a share-based payment recovery in 2018 compared
to share based payment expenses in 2017.
a
_
Selling costs also increased due to Retail acquisitions and
increased depreciation related to PPA adjustments from
the Merger.
a
Other expenses decreased (Other income in 2018) primarily
due to lower Merger and related costs.
a
Other expenses decreased (Other income in 2018) primarily
due to lower Merger and related costs.
_
We realized earnings from continuing operations for the
three months ended December 31, 2018 compared to a loss
from continuing operations for the same period in 2017.
Significantly higher earnings were realized in high tax rate
jurisdictions in the fourth quarter of 2018 compared to the
same period in 2017. Discrete tax recoveries were $4 million
in the fourth quarter of 2018 compared to $109 million in
the fourth quarter of 2017.
_
We realized earnings from continuing operations for the
three months ended December 31, 2018 compared to a loss
from continuing operations for the same period in 2017.
Significantly higher earnings were realized in high tax rate
jurisdictions in the fourth quarter of 2018 compared to the
same period in 2017. Discrete tax recoveries were $4 million
in the fourth quarter of 2018 compared to $118 million in
the fourth quarter of 2017.
Combined historical Nutrien information was not prepared
for discontinued operations.
a
Net earnings from discontinued operations were higher
primarily due to the gains on sale of our equity investments
in SQM and APC.
Income tax
expense
(recovery)
Net earnings
from
discontinued
operations
Other
comprehensive
loss (OCI) _
Other comprehensive loss increased primarily due to a loss
on translation of net operations in Canada and Australia
due to weaker foreign currencies that were acquired in the
Merger and an actuarial loss on defined benefit plans in
2018 (compared to a gain in 2017) more than offsetting a
decreased fair value loss on our investments measured at
fair value through OCI. (2018 included a loss on Sinofert;
2017 included losses on Sinofert and ICL)
_
Other comprehensive loss increased primarily due to a loss
on translation of net operations in Canada and Australia
due to weaker foreign currencies that were acquired in the
Merger and an actuarial loss on defined benefit plans in
2018 (compared to a gain in 2017) more than offsetting a
decreased fair value loss on our investments measured at
fair value through OCI. (2018 included a loss on Sinofert;
2017 included losses on Sinofert and ICL)
NUTRIEN 2018 74 ANNUAL REPORT
Controls and Procedures
Disclosure Controls and Procedures
We maintain disclosure controls and procedures designed to provide reasonable assurance that information required to be disclosed
by Nutrien in its annual filings, interim filings (as these terms are defined in National Instrument 52-109 – Certification of Disclosure
(NI 52-109) in Issuers’ Annual and Interim Filings) and other reports filed or submitted by us under securities legislation is recorded,
processed, summarized and reported within the required time periods. Our Chief Executive Officer and Chief Financial Officer, after
evaluating the effectiveness of our disclosure controls and procedures as of the end of the period covered by the annual filings,
being December 31, 2018, have concluded that, as of such date, our disclosure controls and procedures were effective in providing
reasonable assurance that information required to be disclosed by Nutrien in its annual filings, interim filings or other reports filed or
submitted by it under securities legislation is (a) recorded, processed, summarized and reported within the time periods specified in
the securities legislation, and (b) accumulated and communicated to management, including our Chief Executive Officer and Chief
Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.
There are inherent limitations to the effectiveness of any system of disclosure controls and procedures, including the possibility of
human error and the circumvention or overriding of the controls and procedures. Accordingly, even effective disclosure controls
and procedures can only provide reasonable assurance of achieving their control objectives.
Internal Controls Over Financial Reporting
Management is responsible for establishing and maintaining adequate internal control over financial reporting, as defined in
Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934, as amended, and NI 52-109. Internal control over financial
reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and preparation of financial
statements for external purposes in accordance with IFRS.
On January 1, 2018, PotashCorp and Agrium combined their businesses in a transaction by way of a plan of arrangement by
becoming wholly owned subsidiaries of a new parent company named Nutrien. For the year ended December 31, 2018, the
Company has designed internal control over financial reporting for Nutrien, while maintaining the internal control over financial
reporting for its subsidiaries, PotashCorp and Agrium.
Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial
Officer, we conducted an evaluation of the design and effectiveness of our internal control over financial reporting as of the end of
the fiscal year covered by this report based on the framework issued by the Committee of Sponsoring Organizations of the Treadway
Commission (COSO) in Internal Control – Integrated Framework (2013). There was no change in our internal control over financial
reporting in 2018 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
Based on this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as at December 31, 2018, Nutrien
Ltd. did maintain effective internal control over financial reporting.
The effectiveness of the Company’s internal control over financial reporting as at December 31, 2018 was audited by KPMG LLP,
as reflected in their report, which is included in this 2018 Annual Report included on page 91.
NUTRIEN 2018 75 ANNUAL REPORT
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Forward-Looking Statements
This 2018 Annual Report, including the “Outlook” section of “Management’s Discussion & Analysis of Financial Condition and
Results of Operations,” contains and incorporates by reference “forward-looking statements” or “forward-looking information”
(within the meaning of the US Private Securities Litigation Reform Act of 1995, and other US federal securities laws and applicable
Canadian securities laws) (collectively, “forward-looking statements”) that relate to future events or our future financial
performance. These statements can be identified by expressions of belief, expectation or intention, as well as those statements that
are not historical fact. These statements often contain words such as “should”, “could”, “expect”, “may”, “anticipate”, “forecast”,
“believe”, “intend”, “estimates”, “plans” and similar expressions. These statements are based on certain factors and assumptions as
set forth in this Annual Report, including with respect to: foreign exchange rates, expected synergies, expected growth, results of
operations, performance, business prospects and opportunities, and effective tax rates. While the Company considers these factors
and assumptions to be reasonable based on information currently available, they may prove to be incorrect. Forward-looking
statements are subject to risks and uncertainties that are difficult to predict. The results or events set forth in forward-looking
statements may differ materially from actual results or events. Several factors could cause actual results or events to differ materially
from those expressed in forward-looking statements, including, but not limited to, the following: a number of matters relating to the
Merger, including the failure to realize the anticipated benefits of the Merger; the risk that our credit ratings may be downgraded or
there may be adverse conditions in the credit markets; any significant impairment of the carrying amount of certain of our assets;
variations from our assumptions with respect to foreign exchange rates, expected growth, results of operations, performance,
business prospects and opportunities, and effective tax rates; fluctuations in supply and demand in the fertilizer, sulfur and
petrochemical markets; changes in competitive pressures, including pricing pressures; risks and uncertainties related to any
operating and workforce changes made in response to our industry and the markets we serve, including mine and inventory
shutdowns; adverse or uncertain economic conditions and changes in credit and financial markets; economic and political
uncertainty around the world; changes in capital markets; the results of sales contract negotiations; unexpected or adverse weather
conditions; changes in foreign currency and exchange rates; risks related to reputational loss; the occurrence of a major safety
incident; inadequate insurance coverage for a significant liability; inability to obtain relevant permits for our operations; catastrophic
events or malicious acts, including terrorism; certain complications that may arise in our mining process, including water inflows;
risks and uncertainties related to our international operations and assets; our ownership of non-controlling equity interests in other
companies; our prospects to reinvest capital in strategic opportunities and acquisitions; risks associated with natural gas and other
hedging activities; security risks related to our information technology systems; imprecision in mineral resource and reserve
estimates; costs and availability of transportation and distribution for our raw materials and products, including railcars and ocean
freight; changes in, and the effects of, government policies and regulations; earnings and the decisions of taxing authorities which
could affect our effective tax rates; increases in the price or reduced availability of the raw materials that we use; our ability to attract,
develop, engage and retain skilled employees; strikes or other forms of work stoppage or slowdowns; rates of return on, and the
risks associated with, our investments and capital expenditures; timing and impact of capital expenditures; the impact of further
innovation; adverse developments in new and pending legal proceedings or government investigations; and violations of our
governance and compliance policies. Forward-looking statements are based on certain assumptions and analyses made by us in
light of our experience and perception of historical trends, current conditions and expected future developments as well as other
factors we believe are appropriate in the circumstances. Readers are cautioned not to place undue reliance on the forward-looking
statements which involve known and unknown risks and uncertainties that may cause our actual results, performance or
achievements to be materially different from any future results, performance or achievements expressed or implied by such
forward-looking statements. These risks and uncertainties and additional risks and uncertainties can be found in our Annual
Information Form for the year ended December 31, 2018 and in our filings with the SEC and the Canadian provincial securities
commissions. The purpose of our expected adjusted earnings per share, adjusted EBITDA and EBITDA by segment guidance range is
to assist readers in understanding our expected and targeted financial results, and this information may not be appropriate for other
purposes. Forward-looking statements in or incorporated into this report are given only as at the date of this report or the document
incorporated into this report and the Company disclaims any obligation to update or revise any forward-looking statements, whether
as a result of new information, future events or otherwise, except as required by law.
NUTRIEN 2018 76 ANNUAL REPORT
Appendix
Non-IFRS Financial Measures
We use both IFRS and certain non-IFRS measures to assess performance. Non-IFRS measures are a numerical measure of a
company’s performance, that either excludes or includes amounts that are not normally excluded or included in the most directly
comparable measures calculated and presented in accordance with IFRS. In evaluating these measures, investors should consider
that the methodology applied in calculating such measures may differ among companies and analysts.
Management believes the non-IFRS measures provide transparent and useful supplemental information to investors in order that
they may evaluate our financial performance using the same measures as management. These non-IFRS financial measures should
not be considered as a substitute for, nor superior to, measures of financial performance prepared in accordance with IFRS.
The following section outlines our non-IFRS financial measures, their definitions, why management uses each measure and contains
reconciliations to the most directly comparable IFRS measures.
COMBINED HISTORICAL RESULTS OF POTASHCORP AND AGRIUM FOR THE YEAR ENDED
DECEMBER 31, 2017
The combined historical information below may differ from the Nutrien pro forma earnings and balance sheet presented in the
Business Acquisition Report dated February 20, 2017 (BAR) as the pro forma information presented therein required certain
adjustments under applicable securities laws and accounting standards that we believe does not provide as useful a measure as
the combined historical financial information. The primary differences in the statement of earnings were that pro forma finance
costs were reduced by the amortization of the change in carrying amount of Agrium’s debt resulting from the PPA adjustments and
the pro forma other expenses were adjusted to remove any Merger-related costs. There were no comparable adjustments in the
combined historical financial information. The primary differences in the balance sheet were the pro forma adjustments for the
estimated proceeds from the sale of SQM, APC, ICL and Agrium’s Conda Idaho phosphate production facility and adjacent phosphate
mineral rights at December 31, 2017, while there was no adjustment in the combined historical financial information, and the PPA
adjustments in the pro forma information was largely allocated to goodwill as fewer provisional fair value adjustments were known
at the time of its preparation.
Most directly comparable IFRS financial measure: As the continuing reporting entity under IFRS, the audited annual financial
statements of PotashCorp for the year ended December 31, 2017 are the IFRS comparative figures.
Definition: The combined historical results for Nutrien were calculated by adding the historical IFRS financial statements prepared
by PotashCorp and Agrium and then eliminating intercompany transactions and reclassifying line items to conform with our
financial statement presentation. This combined historical information does not include, among other things, estimated cost
synergies, adjustments related to restructuring or integration activities, adjustments related to the PPA and the impact of
discontinued operations.
Why we use the measure and why it is useful to investors: It provides a measure of what the combined results may have been
had the Merger been completed on January 1, 2017. Information prepared includes a combined historical balance sheet, combined
historical EBITDA by segment and in total, combined historical summary cash flow information and a combined historical summary
other comprehensive income.
NUTRIEN COMBINED HISTORICAL SUMMARY CASH FLOW INFORMATION FOR THE YEAR ENDED DECEMBER 31, 2017
Dollars (millions)
Cash provided by operating activities
Cash used in investing activities
Cash used in financing activities
Effect of exchange rate changes on cash and cash equivalents
Increase in cash and cash equivalents
Historical
PotashCorp
$
$
1,225
(652)
(489)
–
84
Historical Agrium
Adjustments 1
Nutrien
$
$
1,319
(922)
(335)
(12)
50
$
$
24 1
(20) 1
–
–
4
$
$
2,568
(1,594)
(824)
(12)
138
1 To reclassify legacy Agrium cash used in discontinued operations to match Nutrien’s method of presentation.
NUTRIEN COMBINED HISTORICAL SUMMARY OTHER COMPREHENSIVE INCOME FOR THE YEAR ENDED DECEMBER 31, 2017
Dollars (millions)
Other comprehensive income
Historical
PotashCorp
$
96
Historical
Agrium
Nutrien
$
80
$
176
NUTRIEN 2018 77 ANNUAL REPORT
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NUTRIEN COMBINED HISTORICAL BALANCE SHEET AS AT DECEMBER 31, 2017
Dollars (millions)
ASSETS
Current assets
Cash and cash equivalents
Receivables
Income tax receivables
Inventories
Prepaid expenses and other current assets
Other current assets
Assets held for sale
Non-current assets
Property, plant and equipment
Goodwill
Other intangible assets
Investments
Available for sale investments
Deferred income tax assets
Other assets
TOTAL ASSETS
LIABILITIES
Current liabilities
Short-term debt
Payables and accrued charges
Income taxes payable
Current portion of long-term debt
Current portion of derivative instrument liabilities
Current portion of other provisions
Deferred income tax liabilities on assets held for sale
Non-current liabilities
Long-term debt
Deferred income tax liabilities
Pension and other post-retirement benefit liabilities
Asset retirement obligations and accrued environmental costs
Derivative instrument liabilities
Other non-current liabilities
TOTAL LIABILITIES
SHAREHOLDERS’ EQUITY
Share capital
Contributed surplus
Accumulated other comprehensive income (loss)
Retained earnings
Non-controlling interests
TOTAL SHAREHOLDERS’ EQUITY
Historical
PotashCorp
Historical
Agrium
Adjustments 1
Nutrien
$
$
$
$
116
489
–
788
72
–
1,465
1,858
3,323
12,971
–
166
30
262
–
246
$
466
2,406
18
3,321
1,004
120
7,335
105
7,440
7,091
2,228
518
522
–
85
58
$ 16,998
$ 17,942
$
730
807
–
–
29
–
36
1,602
3,711
2,205
440
651
35
51
8,695
1,806
230
25
6,242
8,303
–
8,303
$
867
5,206
27
11
–
63
–
6,174
4,397
473
142
522
–
106
11,814
1,776
–
(1,116)
5,461
6,121
7
6,128
–
18 2
(18) 2
–
120 3
(120) 3
–
–
–
–
97 4
(97) 4
262 5
(262) 5
(85) 6
85 6
$
582
2,913
–
4,109
1,196
–
8,800
1,963
10,763
20,062
2,325
587
814
–
–
389
–
$ 34,940
$
– 7
119 8, 9, 10
(27) 8
– 7
(29) 9
(63) 10
–
–
–
–
–
–
(35) 11
42 11, 12
7
–
–
–
–
–
(7) 12
(7)
–
1,597
6,132
–
11
–
–
36
7,776
8,108
2,678
582
1,173
–
199
20,516
3,582
230
(1,091)
11,703
14,424
–
14,424
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY
$ 16,998
$ 17,942
$
$ 34,940
1 The following balances do not reflect the issuance of new shares or the
8 Reclassified Agrium income taxes payable as part of payables and
PPA adjustments resulting from the Merger.
accrued charges.
2 Reclassified Agrium income tax receivables as part of receivables.
3 Reclassified Agrium other current assets as part of prepaid expenses and
other current assets.
4 Reclassified PotashCorp goodwill from intangibles to a separate line item.
5 Combined investments in equity-accounted investees and available for
sale.
6 Reclassified Agrium deferred income tax assets as part of other assets.
7 Reclassified PotashCorp current portion of long-term debt as a separate
line item.
9 Reclassified PotashCorp current portion of derivative instrument
liabilities as part of payables and accrued charges.
10 Reclassified Agrium current portion of other provisions as part of
payables and accrued charges.
11 Reclassified PotashCorp derivative instrument liabilities as part of other
non-current liabilities.
12 Reclassified Agrium non-controlling interests as part of other
non-current liabilities.
NUTRIEN 2018 78 ANNUAL REPORT
NUTRIEN COMBINED HISTORICAL EARNINGS FROM CONTINUING OPERATIONS AND EBITDA FOR THE YEAR ENDED
DECEMBER 31, 2017
Dollars (millions)
Retail
Potash
Nitrogen
Phosphate
and Sulfate
Others
Eliminations
Nutrien
SALES
Freight, transportation and distribution
Cost of goods sold
GROSS MARGIN
Selling expenses
General and administrative expenses
Provincial mining and other taxes
Earnings of equity-accounted investees
Other income (expenses)
EARNINGS (LOSS) BEFORE FINANCE COSTS AND
INCOME TAXES
Finance costs
EARNINGS (LOSS) BEFORE INCOME TAXES
Income taxes
NET EARNINGS (LOSS) FROM CONTINUING
OPERATIONS
Finance costs
Income taxes
Depreciation and amortization
$ 12,103 $ 2,391 $ 2,986 $
1,561 $
– $
–
(334)
(347)
(9,157)
(1,124)
(2,084)
2,946
(2,007)
(100)
–
9
8
856
–
856
–
933
(12)
(5)
(159)
1
(20)
738
–
738
–
555
(31)
(13)
–
35
(25)
521
–
521
–
(204)
(1,649)
(292)
(8)
(8)
–
–
(7)
(315)
–
–
–
–
15
(377)
–
1
(257)
(618)
(515)
(315)
(1,133)
–
(20)
$
856 $
738 $
521 $
(315) $ (1,153) $
–
–
–
–
–
–
289
345
291
–
–
240
515
20
56
(872) $ 18,169
(885)
881
(13,133)
9
–
–
–
–
–
9
–
9
–
9 $
–
–
–
4,151
(2,043)
(503)
(159)
46
(301)
1,191
(515)
676
(20)
656
515
20
1,221
EBITDA
$
1,145 $ 1,083 $
812 $
(75) $
(562) $
9 $
2,412
EBITDA RECONCILIATION TO HISTORICAL
Nutrien
PotashCorp
Agrium
Combined EBITDA
Adjustments:
Allocate Retail finance costs
Other
NUTRIEN EBITDA
$
901
1,546
2,447
(34)
(1)
$
2,412
NUTRIEN COMBINED HISTORICAL RETAIL SEGMENT EBITDA FOR THE YEAR ENDED DECEMBER 31, 2017
Dollars (millions)
SALES
External
Intersegment
TOTAL SALES
Cost of goods sold
GROSS MARGIN
Selling expenses
General and administrative expenses
Earnings of equity-accounted investees
Other income (expenses)
EARNINGS BEFORE FINANCE COSTS AND INCOME TAXES
Depreciation and amortization
EBITDA
Historical
PotashCorp
Historical
Agrium
Adjustments
Nutrien
$
$
–
–
–
–
–
–
–
–
–
–
–
–
$ 12,056
$
47
12,103
(9,157)
2,946
(2,007)
(100)
9
42
890
289
–
–
–
–
–
–
–
–
(34) 1
(34)
–
$ 12,056
47
12,103
(9,157)
2,946
(2,007)
(100)
9
8
856
289
$
1,179
$
(34)
$
1,145
1 Finance costs associated with Retail operations will be allocated to the Retail segment, and will be presented in other income (expenses).
NUTRIEN 2018 79 ANNUAL REPORT
I
I
S
S
Y
L
A
N
A
D
N
A
N
O
S
S
U
C
S
D
S
T
N
E
M
E
G
A
N
A
M
’
I
NUTRIEN COMBINED HISTORICAL POTASH SEGMENT EBITDA FOR THE YEAR ENDED DECEMBER 31, 2017
Dollars (millions)
SALES
External
Intersegment
TOTAL SALES
Freight, transportation and distribution
Cost of goods sold
GROSS MARGIN
Selling expenses
General and administrative expenses
Provincial mining and other taxes
Earnings of equity-accounted investees
Other expenses
EARNINGS BEFORE FINANCE COSTS AND INCOME TAXES
Depreciation and amortization
EBITDA
Historical
PotashCorp
Historical
Agrium
Adjustments
Nutrien
$
$
1,868
–
1,868
(235)
(848)
785
–
–
(151)
–
–
634
232
866
$
$
386
133
519
–
(390)
129
(5)
(6)
–
–
(13)
105
113
218
$
$
4
–
4
(99) 1
114 1, 4
19
(7) 4
1 3, 4
(8) 2, 4
1 4
(7) 2, 4
(1)
–
(1)
$
2,258
133
2,391
(334)
(1,124)
933
(12)
(5)
(159)
1
(20)
738
345
$
1,083
1 To separately present legacy Agrium direct and indirect freight costs.
2 To separately present legacy Agrium provincial mining taxes.
3 To reclassify legacy Agrium costs related to business support functions to Others.
4 To allocate legacy PotashCorp all Others segment selling and administrative expenses to segment.
NUTRIEN COMBINED HISTORICAL NITROGEN SEGMENT EBITDA FOR THE YEAR ENDED DECEMBER 31, 2017
Dollars (millions)
SALES
External
Intersegment
TOTAL SALES
Freight, transportation and distribution
Cost of goods sold
Cost of intersegment purchases
GROSS MARGIN
Selling expenses
General and administrative expenses
Earnings of equity-accounted investees
Other expenses
EARNINGS BEFORE FINANCE COSTS AND INCOME TAXES
Depreciation and amortization
EBITDA
Historical
PotashCorp
Historical
Agrium
Adjustments
Nutrien
$
$
1,395
74
1,469
(129)
(1,046)
(38)
256
–
–
–
–
256
203
459
$
$
755
254
$
387 2
121 2, 4
2,537
449
1,009
–
(757)
–
252
(12)
(13)
–
(18)
209
79
288
$
508
(218) 1
(243) 1, 2, 4
–
2,986
(347)
(2,046)
(38)
47
(19) 2, 5
– 2, 3, 5
35 2, 5
(7) 2, 5
56
9 2, 4
$
65
$
555
(31)
(13)
35
(25)
521
291
812
1 To separately present legacy Agrium direct and indirect freight costs.
2 To reclassify legacy wholesale other Agrium segment between Nitrogen and Phosphate and Sulfate.
3 To reclassify legacy Agrium costs related to business support functions to Others.
4 To record profit on legacy Agrium transfers of ammonia to Phosphate and Sulfate segment not previously recorded.
5 To allocate legacy PotashCorp all Others segment selling and administrative expenses to segment.
NUTRIEN 2018 80 ANNUAL REPORT
NUTRIEN COMBINED HISTORICAL PHOSPHATE AND SULFATE SEGMENT EBITDA FOR THE YEAR ENDED DECEMBER 31, 2017
Dollars (millions)
SALES
External
Intersegment
TOTAL SALES
Freight, transportation and distribution
Cost of goods sold
Cost of intersegment purchases
GROSS MARGIN
Selling expenses
General and administrative expenses
Other expenses
(LOSS) EARNINGS BEFORE FINANCE COSTS AND INCOME TAXES
Depreciation and amortization
EBITDA
1 To separately present legacy Agrium direct and indirect freight costs.
2 To reclassify legacy wholesale other Agrium segment between Nitrogen
and Phosphate and Sulfate.
3 To record incremental cost on legacy Agrium transfers of ammonia to
Phosphate and Sulfate segment not previously recorded.
Historical
PotashCorp
Historical
Agrium
Adjustments
Nutrien
$
$
1,284
–
1,284
(173)
(1,441)
(36)
(366)
–
–
–
(366)
220
$
(146)
$
115
122
237
–
(228)
–
9
(2)
–
(3)
4
17
21
$
(18) 2, 5 $
58 2
1,381
180
40
(31) 1, 5
56 1, 2, 3, 5
–
65
(6) 4
(8) 2, 4
(4) 2, 4
47
3 2, 3
$
50
$
1,561
(204)
(1,613)
(36)
(292)
(8)
(8)
(7)
(315)
240
(75)
4 To allocate legacy PotashCorp all Others segment selling and
administrative expenses to segment.
5 To reclassify certain phosphate products to Others segment.
NUTRIEN COMBINED HISTORICAL OTHERS SEGMENT AND ELIMINATIONS EBITDA FOR THE YEAR ENDED DECEMBER 31, 2017
Dollars (millions)
SALES
Intersegment
TOTAL SALES
Cost of goods sold
GROSS MARGIN
Selling and administrative expenses
Selling expenses
General and administrative expenses
Share-based payments
Earnings of equity-accounted investees
Other expenses
LOSS BEFORE FINANCE COSTS AND INCOME TAXES
Finance costs
Finance costs related to long-term debt
LOSS BEFORE INCOME TAXES
Income tax recovery (expense)
NET LOSS FROM CONTINUING OPERATIONS
Finance costs
Finance costs related to long-term debt
Income tax (recovery) expense
Depreciation and amortization
Historical
PotashCorp
Historical
Agrium
Adjustments
Nutrien
$
–
–
–
–
(214)
–
–
–
121
(90)
(183)
(238)
–
(421)
180
(241)
238
–
(180)
37
$
(696)
$
(176) 1, 2, 9 $
(696)
705
9
–
17
(121)
(69)
–
(127)
(291)
(101)
(210)
(602)
(203)
(805)
101
210
203
19
(176)
176 1, 2, 9
–
214 10
(2) 10
(256) 4, 5, 10
69 4
(120) 7, 10
(40) 8, 10, 11
(135)
(176) 3, 6
210 6
(101)
3 7
(98)
176 3, 6
(210) 6
(3) 7
–
(872)
(872)
881
9
–
15
(377)
–
1
(257)
(609)
(515)
–
(1,124)
(20)
(1,144)
515
–
20
56
EBITDA
$
(146)
$
(272)
$
(135)
$
(553)
1 To eliminate sales made from legacy PotashCorp to legacy Agrium.
2 To eliminate incremental sales and cost of goods sold related to ammonia
6 To reclassify finance costs related to long-term debt to finance costs.
7 To eliminate the earnings of legacy PotashCorp’s investments in SQM
transfers to Phosphate and Sulfate segment.
and APC.
3 Finance costs associated with Retail operations will be allocated to Retail
segment, and presented in other expenses.
8 To eliminate the earnings of legacy PotashCorp’s investment in ICL.
9 To eliminate legacy PotashCorp intersegment sales between Nitrogen
4 To reclassify legacy Agrium’s share-based payments to general and
and Phosphate and Sulfate.
administrative expenses.
10 To allocate legacy PotashCorp all Others segment selling and
5 To reclassify legacy Agrium costs related to business support functions to
administrative expenses to segments.
Others.
11 To reclassify certain phosphate products to Others segment.
NUTRIEN 2018 81 ANNUAL REPORT
I
I
S
S
Y
L
A
N
A
D
N
A
N
O
S
S
U
C
S
D
S
T
N
E
M
E
G
A
N
A
M
’
I
EBITDA, ADJUSTED EBITDA AND POTASH ADJUSTED EBITDA
Most Directly Comparable IFRS financial measure: Net earnings (loss) from continuing operations.
Definition: EBITDA is calculated as net earnings (loss) from continuing operations before finance costs, income taxes and
depreciation and amortization. Adjusted EBITDA is calculated as net earnings (loss) from continuing operations before finance costs,
income taxes and depreciation and amortization, impairment, Merger and related costs, share-based compensation and defined
benefit plans curtailment gain.
Why we use the measure and why it is useful to investors: As a valuation measurement it excludes the effects of items that
primarily reflect the impact of long-term investment and financing decisions, rather than the performance of our day-to-day
operations, and as a measure of our ability to service debt and to meet other payment obligations.
Dollars (millions)
Net (loss) earnings from continuing operations
Finance costs
Income tax (recovery) expense
Depreciation and amortization
EBITDA
Impairment of property, plant and equipment
Merger and related costs
Share-based compensation
Defined benefit plans curtailment gain
Adjusted EBITDA
Potash EBITDA
Impairment of property, plant and equipment
Potash adjusted EBITDA
Nutrien 2018
Nutrien 2017 1
$
$
(31)
538
(93)
1,592
2,006
1,809
170
116
(157)
3,944
$
$
656
515
20
1,221
2,412
305
178
92
–
2,987
Nutrien 2018
Nutrien 2017
$
$
(203)
1,809
1,606
$
$
1,083
–
1,083
1 Amount presented is the combined historical financial results of PotashCorp and Agrium.
ADJUSTED NET EARNINGS (AND THE RELATED PER SHARE AMOUNTS)
Most Directly Comparable IFRS financial measure: Net (loss) earnings from continuing operations and net (loss) earnings per
share.
Definition: Net loss from continuing operations before purchase price allocation, impairment, Merger and related costs, share-
based compensation, defined benefit plans curtailment gain and dividend income from discontinued operations net of tax.
Why we use the measure and why it is useful to investors: Focuses on the performance of our day-to-day operations excluding
the effects of non-operating items.
Dollars (millions), except per share amounts
Net loss from continuing operations
Adjustments:
Purchase price allocation
Impairment of property, plant and equipment
Merger and related costs
Share-based compensation
Defined benefit plans curtailment gain
Dividend income of SQM and APC
Adjusted net earnings
Increases
(Decreases)
$
211
1,809
170
116
(157)
156
2018
Post-Tax
Per Share
$
(31)
$
(0.05)
161
1,320
130
89
(120)
130
0.26
2.11
0.21
0.14
(0.19)
0.21
$
1,679
$
2.69
GROSS MARGIN EXCLUDING DEPRECIATION AND AMORTIZATION PER TONNE
Most Directly Comparable IFRS financial measure: Gross margin per tonne.
Definition: Gross margin less depreciation and amortization per tonne. (Reconciliations are provided on pages 42, 48 and 54.)
Why we use the measure and why it is useful to investors: Focuses on the performance of our day-to-day operations, which
excludes the effects of items that primarily reflect the impact of long-term investment and financing decisions.
NUTRIEN 2018 82 ANNUAL REPORT
FREE CASH FLOW
Most Directly Comparable IFRS financial measure: Cash provided by operating activities.
Definition: Cash provided by operating activities less sustaining capital expenditures, cash provided by operating activities from
discontinued operations and changes in non-cash operating working capital. Sustaining capital expenditures include the cost of
replacements and betterments for our facilities.
Why we use the measure and why it is useful to investors: For evaluation of liquidity and financial strength, and as a component
of employee remuneration calculations. It is also useful as an indicator of our ability to service debt, meet other payment obligations
and make strategic investments. Free cash flow does not represent residual cash flow available for discretionary expenditures.
Dollars (millions)
Cash provided by operating activities
Cash provided by operating activities from discontinued operations
Sustaining capital expenditures
Changes in non-cash operating working capital
Free cash flow
1 Amount presented is the combined historical financial results of PotashCorp and Agrium.
POTASH CASH COPM
Most Directly Comparable IFRS financial measure: Cost of goods sold (COGS).
2018 Nutrien
2017 Nutrien 1
$
2,052
(130)
(1,085)
1,138
$
2,568
(200)
(1,018)
(57)
$
1,975
$
1,293
Definition: Potash COGS for the period excluding depreciation and amortization expense and inventory and other adjustments
divided by the production tonnes for the period.
Why we use the measure and why it is useful to investors: To assess operational performance. Cash COPM excludes the effects of
production from other periods and long-term investment decisions, supporting a focus on the performance of our day-to-day operations.
Dollars (millions), except per tonne amounts
Total COGS – Potash
Change in inventory
Other adjustments
COPM
Depreciation and amortization included in COPM
Cash COPM
Production tonnes (tonnes - thousands)
Potash cash COPM per tonne
2018 Nutrien
2017 Nutrien 1
$
$
$
$
1,183
(5)
(14)
1,164
(391)
773
12,842
$
$
$
1,124
36
20
1,180
(378)
802
12,224
60
$
66
1 Amount presented is the combined historical financial results of PotashCorp and Agrium.
UREA CONTROLLABLE CASH COPM
Most directly comparable IFRS financial measure: COGS.
Definition: Urea COGS for the Nitrogen segment excluding depreciation and amortization expense, cash COGS for products excluding
urea, inventory and other adjustments and urea natural gas and steam costs, divided by the urea production tonnes for the period.
Why we use the measure and why it is useful to investors: To assess operational performance. Cash COPM excludes the effects of
production from other periods and long-term investment decisions, supporting a focus on the performance of our day-to-day operations.
Dollars (millions), except per tonne amounts
Total COGS – Nitrogen
Nitrogen depreciation and amortization
Cash COGS for products other than urea
Urea
Total cash COGS
Change in inventory and other adjustments
Total cash COPM
Natural gas and steam costs
Controllable cash COPM
Production (tonnes - thousands)
Urea controllable cash COPM per tonne
1 Amount presented is the combined historical financial results of PotashCorp and Agrium.
NUTRIEN 2018 83 ANNUAL REPORT
2018 Nutrien
2017 Nutrien 1
$
$
$
$
$
2,079
(429)
(1,251)
399
70
469
(221)
248
3,422
$
$
$
$
72
$
2,084
(291)
(1,421)
372
52
424
(205)
219
2,891
76
I
I
S
S
Y
L
A
N
A
D
N
A
N
O
S
S
U
C
S
D
S
T
N
E
M
E
G
A
N
A
M
’
I
RETAIL NORMALIZED COMPARABLE STORE SALES
Most directly comparable IFRS financial measure: Retail sales from comparable base as a component of total Retail sales.
Definition: Retail normalized comparable store sales is determined by adjusting prior year comparable store sales for published
potash, nitrogen and phosphate benchmark prices and foreign exchange rates used in the current year. We retain sales of closed
locations in the comparable base if the closed location is in close proximity to an existing location, unless we plan to exit the market
area or are unable to economically or logistically serve it. We do not adjust for temporary closures, expansions or renovations of
stores.
Why we use the measure and why it is useful to investors: Evaluate sales growth by adjusting for fluctuations in commodity prices
and foreign exchange rates. Included are locations owned by us for more than 12 months.
Dollars (millions), except percentage amounts
Sales from comparable base
Current period
Prior period
Comparable store sales (%)
Prior period normalized for benchmark prices and foreign exchange rates
Normalized comparable store sales (%)
1 Amount presented is the combined historical financial results of PotashCorp and Agrium.
2018 Nutrien
2017 Nutrien 1
$ 12,253
12,103
1%
12,363
(1%)
$ 11,782
11,766
0%
11,509
2%
RETAIL AVERAGE WORKING CAPITAL TO SALES
Most directly comparable IFRS financial measure: (Current assets minus current liabilities for Retail) divided by Retail sales.
Definition: Retail average working capital divided by sales for the last four rolling quarters.
Why we use the measure and why it is useful to investors: To evaluate operational efficiency. A lower or higher percentage
represents increased or decreased efficiency, respectively.
Dollars (millions), except percentage amounts
Q1 2018
Q2 2018
Q3 2018
Q4 2018
Average/Total
Working capital
Sales
Average working capital to sales
$ 1,781
2,099
$ 3,170
6,342
$ 3,633
2,175
$ 2,312
2,054
$
2,724
12,670
21%
Rolling four quarters ended December 31, 2018
RETAIL CASH OPERATING COVERAGE RATIO
Most directly comparable IFRS financial measure: Retail expenses below gross margin as a percentage of Retail gross margin.
Definition: Retail gross margin less depreciation and amortization, EBIT and Merger-related adjustments, divided by Retail gross
margin excluding depreciation and amortization expense in cost of goods sold.
Why we use the measure and why it is useful to investors: To understand the costs and underlying economics of our Retail
operations and to assess our Retail operating performance and ability to generate free cash flow.
Dollars (millions), except percentage amounts
Q1 2018
Q2 2018
Q3 2018
Q4 2018
Total
Rolling four quarters ended December 31, 2018
Gross margin
Depreciation and amortization in cost of goods sold
Gross margin excluding depreciation and amortization
EBIT
Depreciation and amortization
Merger-related adjustments 1
Operating expenses excluding depreciation and amortization
and Merger-related adjustments
1 Adjusted for the impact of Merger-related presentation adjustments.
Cash operating coverage ratio (%)
$
$
$
$
408
2
410
(133)
123
14
$ 1,432
2
$ 1,434
764
122
12
$
$
533
1
534
(6)
122
6
$
$
662
2
664
82
132
8
3,035
7
3,042
707
499
40
$
406
$
536
$
412
$
442
$
1,796
59%
ADJUSTED NET DEBT
Most directly comparable IFRS financial measure: Long-term debt.
Definition: Long-term debt less net unamortized fair value adjustments plus short-term debt and current portion of long-term debt.
Why we use the measure and why it is useful to investors: As a component of adjusted net debt to adjusted EBITDA, it is used to
evaluate our ability to pay our debts. See note 25 to the financial statements for a reconciliation of adjusted net debt.
NUTRIEN 2018 84 ANNUAL REPORT
Two Year Highlights
The following information is not part of our MD&A on SEDAR and EDGAR and is
furnished for those readers who may find value in the use of such information over
the long term. In future years, we plan to expand the historical data in these tables
as such information becomes available.
Dollars (millions), except as noted
OPERATIONS
Summary Financial Information
Nutrien 2018
Nutrien 2017 1
Sales
Gross margin
Earnings before finance costs and income taxes
Net (loss) earnings from continuing operations
Net earnings
Diluted net (loss) earnings per share from continuing operations
Diluted net earnings per share from continuing and discontinued operations
Finance costs
EBITDA 1
Adjusted EBITDA 1
Cash provided by operating activities
BALANCE SHEET
Total assets
Short-term debt and long-term debt
Shareholders’ equity
COMMON SHARE INFORMATION
Weighted average common shares outstanding (millions)
Closing share price (USD)
Total Shareholder Return percentage
OPERATING SEGMENT INFORMATION
Retail net sales
Potash net sales
Nitrogen net sales
Phosphate and sulfate net sales
Retail EBITDA
Potash EBITDA
Nitrogen EBITDA
Phosphate and sulfate EBITDA
CAPITAL ALLOCATION
Sustaining capital
Investing capital
Acquisitions (net of cash acquired)
Purchase of investments
Dividends paid
Long-term debt repayment
Cost of shares repurchased and cancelled
1 Refer to “Non-IFRS Financial Measures” section starting on page 77 for details.
n/a = not available on a combined historical basis
NUTRIEN 2018 85 ANNUAL REPORT
$
$
$
$
$
$
19,636
5,392
414
(31)
3,573
(0.05)
5.72
538
2,006
3,944
2,052
$
45,502
9,223
24,425
$
625
47.00
(6.6%)
12,670
2,667
2,859
1,667
1,206
(203)
1,162
308
1,085
320
433
135
952
12
1,800
18,169
4,151
1,191
656
n/a
n/a
n/a
515
2,412
2,987
2,568
34,940
9,716
14,424
n/a
n/a
n/a
12,103
2,057
2,639
1,357
1,145
1,083
812
(75)
n/a
n/a
n/a
n/a
n/a
n/a
n/a
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Summary Non-Financial Information
SAFETY
Total Recordable Injury Frequency
Lost-Time Injury Frequency
Life-altering injuries
ENVIRONMENT
Environmental Incidents
COMMUNITY
Community investment ($ millions)
Taxes and royalties ($ millions)
EMPLOYEES
Employees at December 31
Annual employee turnover rate
Proportion of women
Proportion of women in senior leadership (director level and above)
n/a = not available on a combined historical basis
Nutrien 2018
Nutrien 2017
1.28
0.34
2
22
17
1,614
20,300
16%
17%
17%
n/a
0.33
n/a
35
16
n/a
20,745
11%
17%
16%
Summary Production and Sales Volumes Information
PRODUCTION (THOUSANDS)
Potash production (Product tonnes)
Nitrogen production (Ammonia tonnes)
Phosphate production (P2O5 tonnes)
SALES OF MANUFACTURED PRODUCT TONNES (THOUSANDS)
Retail crop nutrient tonnes sold
Potash tonnes sold
Nitrogen tonnes sold
Phosphate tonnes sold
Nutrien 2018
Nutrien 2017
12,842
6,372
1,851
10,689
13,019
10,258
3,612
12,224
6,004
1,699
10,202
11,728
9,853
3,498
NUTRIEN 2018 86 ANNUAL REPORT
Terms
Community Investment
Represents cash disbursements, matching of employee gifts and in-kind contributions of equipment,
goods and services and employee volunteerism (on corporate time).
Compound Annual Growth
Rate (CAGR)
CAGR is the rate of return that would be required for an investment to grow from its beginning
balance to its ending balance assuming the profits were reinvested at the end of each year of the
investment’s lifespan.
Environmental Incidents
Employee Turnover Rate
Investing Capital
Number of incidents includes release quantities that exceed the US Comprehensive Environmental
Response, Compensation, and Liability Act (CERCLA) limits, in Potash facilities any release that
exceeds Saskatchewan Release Limits (based on the Saskatchewan Environmental Code), non-
compliance incidents that exceed $10 thousand in costs to reach compliance or enforcement actions
with fines exceeding $1 thousand.
The number of permanent employees who left the Company (due to deaths and voluntary and
involuntary terminations, and excluding retirements and announced workforce reductions) as a
percentage of average total employees during the year. Retirements and terminations of temporary
employees are excluded.
Capital for significant expansions of current operations or to create cost savings (synergies), including
capitalized interest. Investing capital excludes capital outlays for business acquisitions and equity-
accounted investees.
Net Sales
Sales minus freight, transportation and distribution expenses.
Lost-Time Injury Frequency
Merger
Total lost-time injuries for every 200,000 hours worked for all Nutrien employees, contractors and
others on site. Calculated as the total lost-time injuries multiplied by 200,000 hours worked divided
by the actual number of hours worked.
The merger of equals transaction between PotashCorp and Agrium completed effective January 1,
2018, pursuant to which PotashCorp and Agrium combined their businesses pursuant to a statutory
plan of arrangement under the Canada Business Corporations Act and became wholly owned
subsidiaries of Nutrien Ltd.
Purchase Price Allocation
(PPA)
The allocation of the purchase price in a business combination to the fair values of assets acquired
and liabilities assumed. The PPA adjustments impacted net earnings primarily through increased
depreciation and amortization and decreased finance costs.
Sustaining Capital
Taxes and Royalties
Sustaining capital expenditures are required to sustain operations at existing levels and include major
repairs and maintenance and plant turnarounds.
Includes tax and royalty amounts on an accrual basis calculated as: current income tax expense from
continuing and discontinued operations minus investment tax credits and realized excess tax benefit
related to share-based compensation plus potash production tax, resource surcharge, royalties,
municipal taxes and other miscellaneous taxes.
Total Recordable Injury
Frequency
Total recordable injuries for every 200,000 hours worked for all Nutrien employees, contractors and
others on site. Calculated as the total recordable injuries multiplied by 200,000 hours worked divided
by the actual number of hours worked.
Total Shareholder Return
Return on investment in Nutrien shares from the time the investment is made based on two
components: (1) growth in share price and (2) return from reinvested dividend income on the shares.
Working Capital Ratio
Current assets divided by current liabilities.
NUTRIEN 2018 87 ANNUAL REPORT
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Financial Statements & Notes
Consolidated Statements of
94 Earnings
95 Comprehensive Income
96 Cash Flows
97 Changes in Shareholders’ Equity
98 Consolidated Balance Sheets
Business and Environment
99 Note 1 Description of Business
100 Note 2 Basis of Presentation
P, E 100 Note 3 Business Combinations
Earnings, Expenses and Cash Flows
P, E 103 Note 4 Segment Information
108 Note 5 Nature of Expenses
P
109 Note 6 Provincial Mining and Other Taxes
109 Note 7 Other Expenses
109 Note 8 Finance Costs
P, E 110 Note 9 Income Taxes
P, E 113 Note 10 Discontinued Operations
114 Note 11 Net Earnings Per Share
115 Note 12 Consolidated Statements of Cash Flows
P
Operating Assets and Liabilities
P, E 116 Note 13 Financial Instruments and Related Risk Management
P, E 121 Note 14 Receivables
P, E 122 Note 15 Inventories
P, E 123 Note 16 Property, Plant and Equipment
P, E 125 Note 17 Goodwill and Other Intangible Assets
127 Note 18 Other Assets
127 Note 19 Payables and Accrued Charges
P, E 128 Note 20 Asset Retirement Obligations and Accrued
Environmental Costs
Investments, Financing and Capital Structure
P, E 130 Note 21 Investments
P
132 Note 22 Short-Term Debt
132 Note 23 Long-Term Debt
134 Note 24 Share Capital
135 Note 25 Capital Management
P, E 137 Note 26 Commitments
138 Note 27 Guarantees
P
Personnel
P, E 139 Note 28 Pension and Other Post-Retirement Benefits
P, E 143 Note 29 Share-Based Compensation
Other
146 Note 30 Related Party Transactions
P
P, E 147 Note 31 Contingencies and Other Matters
P, E 149 Note 32 Accounting Policies, Estimates and Judgments
154 Note 33 Comparative Figures
P Includes Accounting Policies
E Includes Accounting Estimates and Judgments
Management’s Responsibility
Management’s Responsibility for Financial Reporting
Management’s Report on Financial
Statements
The accompanying consolidated financial statements
and related financial information are the responsibility of
Nutrien’s management. They have been prepared in
accordance with International Financial Reporting Standards as
issued by the International Accounting Standards Board (“IFRS”)
and include amounts based on estimates and judgments.
Financial information included elsewhere in this report is
consistent with the consolidated financial statements.
Management’s Annual Report on
Internal Control over Financial Reporting
Management is responsible for establishing and maintaining
adequate internal control over financial reporting, as defined
in Rules 13a-15(f) and 15d-15(f) of the Exchange Act, as
amended, and NI 52-109. Internal control over financial
reporting is designed to provide reasonable assurance
regarding the reliability of financial reporting and preparation
of financial statements for external purposes in accordance
with IFRS.
The consolidated financial statements are approved by the
Board of Directors on the recommendation of the audit
committee. The audit committee of the Board of Directors
is composed entirely of independent directors. The audit
committee discusses and analyzes Nutrien’s interim condensed
consolidated financial statements and Management’s
Discussion & Analysis (“MD&A”) with management before such
information is approved by the committee and submitted to
securities commissions or other regulatory authorities. The
annual consolidated financial statements and MD&A are also
analyzed by the audit committee and management and are
approved by the Board of Directors.
In addition, the audit committee has the duty to review critical
accounting policies and significant estimates and judgments
underlying the consolidated financial statements as presented
by management, and to approve the fees of our independent
registered public accounting firm.
Our independent registered public accounting firm, KPMG LLP,
performs an audit of the consolidated financial statements, the
results of which are reflected in their report for 2018 included
on Page 92. KPMG LLP have full and independent access to the
audit committee to discuss their audit and related matters.
On January 1, 2018, Potash Corporation of Saskatchewan Inc.
(“PotashCorp”) and Agrium Inc. (“Agrium”) combined their
businesses in a transaction by way of a plan of arrangement
(the “Merger”) by becoming wholly owned subsidiaries of a
new parent company named Nutrien Ltd. (collectively with its
subsidiaries, known as “Nutrien” or the “Company” except to
the extent the context otherwise requires). For the year ended
December 31, 2018, the Company has designed internal
control over financial reporting for Nutrien, while maintaining
the internal control over financial reporting for its subsidiaries,
PotashCorp and Agrium.
Under our supervision and with the participation of
management, the Company conducted an evaluation of the
design and effectiveness of our internal control over financial
reporting as of the end of the fiscal year covered by this report,
based on the framework issued by the Committee of
Sponsoring Organizations of the Treadway Commission
(“COSO”) in Internal Control – Integrated Framework (2013).
Based on this evaluation, management concluded that, as of
December 31, 2018, Nutrien did maintain effective internal
control over financial reporting. The effectiveness of the
Company’s internal control over financial reporting as at
December 31, 2018 has been audited by KPMG LLP, as
reflected in their report for 2018 included on page 91.
Chuck Magro
President and Chief Executive Officer
February 20, 2019
Pedro Farah
Chief Financial Officer
February 20, 2019
NUTRIEN 2018 90 ANNUAL REPORT
Report of Independent
Registered Public Accounting Firm – 2018
To the Shareholders and the Board of Directors of Nutrien Ltd.
Opinion on Internal Control over Financial
Reporting
We have audited Nutrien Ltd. and subsidiaries’ (the “Company”)
internal control over financial reporting as of December 31,
2018, based on criteria established in Internal Control—
Integrated Framework (2013) issued by the Committee of
Sponsoring Organizations of the Treadway Commission. In our
opinion, the Company maintained, in all material respects,
effective internal control over financial reporting as of
December 31, 2018, based on criteria established in Internal
Control—Integrated Framework (2013) issued by the
Committee of Sponsoring Organizations of the Treadway
Commission.
We also have audited, in accordance with the standards of
the Public Company Accounting Oversight Board (United
States) (“PCAOB”), the consolidated balance sheet of the
Company as of December 31, 2018, the related consolidated
statements of earnings, comprehensive income, shareholders’
equity, and cash flows for the year ended December 31, 2018,
and the related notes (collectively, the consolidated
financial statements), and our report dated February 20, 2019
expressed an unqualified opinion on those consolidated
financial statements.
Basis for Opinion
The Company’s management is responsible for maintaining
effective internal control over financial reporting and for
its assessment of the effectiveness of internal control over
financial reporting, included in the accompanying
Management’s Responsibility Report. Our responsibility is to
express an opinion on the Company’s internal control over
financial reporting based on our audit. We are a public
accounting firm registered with the PCAOB and are required
to be independent with respect to the Company in accordance
with the U.S. federal securities laws and the applicable rules
and regulations of the Securities and Exchange Commission
and the PCAOB.
We conducted our audit in accordance with the standards of
the PCAOB. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether
effective internal control over financial reporting was
maintained in all material respects. Our audit of internal
control over financial reporting included obtaining an
understanding of internal control over financial reporting,
assessing the risk that a material weakness exists, and testing
and evaluating the design and operating effectiveness of
internal control based on the assessed risk. Our audit also
included performing such other procedures as we considered
necessary in the circumstances. We believe that our audit
provides a reasonable basis for our opinion.
Definition and Limitations of Internal
Control over Financial Reporting
A company’s internal control over financial reporting is a
process designed to provide reasonable assurance regarding
the reliability of financial reporting and the preparation of
financial statements for external purposes in accordance with
generally accepted accounting principles. A company’s internal
control over financial reporting includes those policies and
procedures that 1) pertain to the maintenance of records that,
in reasonable detail, accurately and fairly reflect the
transactions and dispositions of the assets of the Company;
2) provide reasonable assurance that transactions are recorded
as necessary to permit preparation of financial statements in
accordance with generally accepted accounting principles, and
that receipts and expenditures of the Company are being made
only in accordance with authorizations of management and
directors of the Company; and 3) provide reasonable assurance
regarding prevention or timely detection of unauthorized
acquisition, use, or disposition of the Company’s assets that
could have a material effect on the financial statements.
Because of its inherent limitations, internal control over
financial reporting may not prevent or detect misstatements.
Also, projections of any evaluation of effectiveness to
future periods are subject to the risk that controls may
become inadequate because of changes in conditions, or
that the degree of compliance with the policies or procedures
may deteriorate.
Chartered Professional Accountants
Saskatoon and Calgary, Canada
February 20, 2019
NUTRIEN 2018 91 ANNUAL REPORT
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Report of Independent
Registered Public Accounting Firm – 2018
To the Shareholders and the Board of Directors of Nutrien Ltd.
Opinion on the Consolidated Financial
Statements
We have audited the accompanying consolidated balance
sheet of Nutrien Ltd. and subsidiaries (the “Company”) as of
December 31, 2018, the related consolidated statements of
earnings, comprehensive income, changes in shareholders’
equity, and cash flows for the year then ended, and the related
notes (collectively, the “consolidated financial statements”).
In our opinion, the consolidated financial statements present
fairly, in all material respects, the financial position of the
Company as of December 31, 2018, and the results of its
operations and its cash flows for the year then ended, in
conformity with International Financial Reporting Standards
as issued by the International Accounting Standards Board.
The accompanying consolidated financial statements of
Potash Corporation of Saskatchewan Inc. and subsidiaries
(“PotashCorp”) as of December 31, 2017 and for the year
then ended were audited by other auditors, whose report
thereon dated February 20, 2018 expressed an unqualified
opinion on those consolidated financial statements, before
the retrospective reclassification of certain comparative
information as well as additional disclosures within the segment
and capital management financial statement notes, described
in Note 33 to the consolidated financial statements.
We have audited the adjustments described in Note 33 that
were applied to restate the December 31, 2017 consolidated
financial statements including the retrospective reclassification
of certain comparative information as well as additional
disclosures within the segment and capital management
financial statement notes, to conform to the current year
presentation. In our opinion, such adjustments are appropriate
and have been properly applied. We were not engaged to audit,
review, or apply any procedures to the 2017 consolidated
financial statements of PotashCorp other than with respect to
the adjustments and, accordingly, we do not express an opinion
or any other form of assurance on the 2017 consolidated
financial statements taken as a whole.
We also have audited, in accordance with the standards of the
Public Company Accounting Oversight Board (United States)
(“PCAOB”), the Company’s internal control over financial
reporting as of December 31, 2018, based on criteria
established in Internal Control—Integrated Framework (2013)
issued by the Committee of Sponsoring Organizations of the
Treadway Commission, and our report dated February 20, 2019
expressed an unqualified opinion on the effectiveness of the
Company’s internal control over financial reporting.
Basis for Opinion
These consolidated financial statements are the responsibility
of the Company’s management. Our responsibility is to express
an opinion on these consolidated financial statements based on
our audit. We are a public accounting firm registered with the
PCAOB and are required to be independent with respect to the
Company in accordance with the U.S. federal securities laws
and the applicable rules and regulations of the Securities and
Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards
of the PCAOB. Those standards require that we plan and
perform the audit to obtain reasonable assurance about
whether the consolidated financial statements are free
of material misstatement, whether due to error or fraud.
Our audit included performing procedures to assess the risks
of material misstatement of the consolidated financial
statements, whether due to error or fraud, and performing
procedures that respond to those risks. Such procedures
included examining, on a test basis, evidence regarding
the amounts and disclosures in the consolidated financial
statements. Our audit also included evaluating the accounting
principles used and significant estimates made by
management, as well as evaluating the overall presentation
of the consolidated financial statements. We believe that our
audit provides a reasonable basis for our opinion.
Chartered Professional Accountants
We have served as the Company’s auditor since our
appointment in 2018.
Saskatoon and Calgary, Canada
February 20, 2019
NUTRIEN 2018 92 ANNUAL REPORT
Report of Independent
Registered Public Accounting Firm – 2017
To the Shareholders and the Board of Directors of Potash Corporation of
Saskatchewan Inc.
Opinion on the Financial Statements
We have audited, before the effects of the adjustments to
retrospectively reclassify certain comparative information and
to provide additional disclosures to conform to the current year
presentation as discussed in Note 33 to the consolidated
financial statements, the consolidated statement of financial
position of Potash Corporation of Saskatchewan Inc. and
subsidiaries (“PotashCorp”) as of December 31, 2017, the
related consolidated statements of income, comprehensive
income, changes in shareholders’ equity, and cash flows, for
the year ended December 31, 2017, and the related notes
(collectively referred to as the “financial statements”) (the 2017
financial statements before the effects of the retrospective
reclassification and additional disclosures discussed in Note 33
to the financial statements are not presented herein). In our
opinion, the 2017 financial statements before the effects of the
adjustments to retrospectively reclassify certain comparative
information and to provide additional disclosures to conform
to the current year presentation as discussed in Note 33 to the
financial statements, present fairly, in all material respects,
the financial position of PotashCorp as of December 31, 2017,
and the results of its operations and its cash flows for the year
ended December 31, 2017, in conformity with International
Financial Reporting Standards as issued by the International
Accounting Standards Board.
We were not engaged to audit, review, or apply any procedures
to the adjustments to retrospectively reclassify certain
comparative information and to provide additional disclosures
to conform to the current year presentation as discussed in
Note 33 to the financial statements, and accordingly, we do
not express an opinion or any other form of assurance about
whether such retrospective adjustments and additional
disclosures discussed in Note 33 are appropriate and have
been properly applied. Those retrospective adjustments and
additional disclosures were audited by other auditors.
Basis for Opinion
These financial statements are the responsibility of
PotashCorp’s management. Our responsibility is to express
an opinion on PotashCorp’s financial statements based on
our audit. We are a public accounting firm registered with the
Public Company Accounting Oversight Board (“PCAOB”) and
are required to be independent with respect to PotashCorp
in accordance with the U.S. federal securities laws and the
applicable rules and regulations of the Securities and Exchange
Commission and the PCAOB.
We conducted our audit in accordance with the standards
of the PCAOB. Those standards require that we plan and
perform the audit to obtain reasonable assurance about
whether the financial statements are free of material
misstatement, whether due to error or fraud. Our audit included
performing procedures to assess the risks of material
misstatement of the financial statements, whether due to error
or fraud, and performing procedures that respond to those
risks. Such procedures included examining, on a test basis,
evidence regarding the amounts and disclosures in the financial
statements. Our audit also included evaluating the accounting
principles used and significant estimates made by
management, as well as evaluating the overall presentation
of the financial statements. We believe that our audit provides
a reasonable basis for our opinion.
Chartered Professional Accountants
Saskatoon, Canada
February 20, 2018
We began serving as PotashCorp’s auditor in 1977. In 2018,
we became the predecessor auditor.
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NUTRIEN 2018 93 ANNUAL REPORT
IN MILLIONS OF US DOLLARS EXCEPT AS OTHERWISE NOTED
Consolidated Financial Statements
Consolidated Statements of Earnings
For the years ended December 31
SALES
Freight, transportation and distribution
Cost of goods sold
GROSS MARGIN
Selling expenses
General and administrative expenses
Provincial mining and other taxes
Impairment of property, plant and equipment
Other expenses
EARNINGS BEFORE FINANCE COSTS AND INCOME TAXES
Finance costs
LOSS BEFORE INCOME TAXES
Income tax recovery
NET (LOSS) EARNINGS FROM CONTINUING OPERATIONS
Net earnings from discontinued operations
NET EARNINGS
NET (LOSS) EARNINGS PER SHARE FROM CONTINUING OPERATIONS
Basic
Diluted
NET EARNINGS PER SHARE FROM DISCONTINUED OPERATIONS
Basic
Diluted
Note 4
Note 5
Note 5
Note 5
Note 5
Note 6
Note 16
Note 7
Note 8
Note 9
Note 10
Note 11
Note 11
NET EARNINGS PER SHARE FROM CONTINUING AND DISCONTINUED OPERATIONS
Note 11
Basic
Diluted
2018
$
19,636
(864)
(13,380)
$
2017
(Note 33)
4,547
(537)
(3,316)
5,392
(2,337)
(539)
(250)
(1,809)
(43)
414
(538)
(124)
93
(31)
3,604
3,573
(0.05)
(0.05)
5.77
5.77
5.72
5.72
$
$
$
$
$
$
$
694
(29)
(185)
(146)
–
(125)
209
(238)
(29)
183
154
173
327
0.18
0.18
0.21
0.21
0.39
0.39
$
$
$
$
$
$
$
Weighted average shares outstanding for basic earnings per share (“EPS”)
Weighted average shares outstanding for diluted EPS
Note 11
Note 11
624,900,000
624,900,000
840,079,000
840,316,000
(See Notes to the Consolidated Financial Statements)
2018 HIGHLIGHTS
(cid:129) Merger of Potash Corporation of Saskatchewan Inc. (“PotashCorp”) and Agrium Inc. (“Agrium”) occurred on January 1, 2018. As a
result, the 2017 figures throughout are the financial results of PotashCorp only, the accounting acquirer.
8
6
4
2
0
-2
2017
2018
NUTRIEN 2018 94 ANNUAL REPORT
IN MILLIONS OF US DOLLARS EXCEPT AS OTHERWISE NOTED
Consolidated Statements of Comprehensive Income
For the years ended December 31 (net of related income taxes)
NET EARNINGS
Other comprehensive (loss) income
Items that will not be reclassified to net earnings:
Net actuarial gain on defined benefit plans
Net fair value (loss) gain on investments 1
Items that have been or may be subsequently reclassified to net earnings:
Loss on currency translation of foreign operations
Other
OTHER COMPREHENSIVE (LOSS) INCOME
COMPREHENSIVE INCOME
2018
2017
(Note 33)
$
3,573
$
327
54
(99)
(249)
(8)
(302)
46
30
–
20
96
$
3,271
$
423
1 As at December 31, 2018 and 2017, financial instruments measured at fair value through other comprehensive income (“FVTOCI”) are comprised of shares
in Sinofert Holdings Limited (“Sinofert”) and other. The Company’s investment in Israel Chemicals Ltd. (“ICL”) was classified as held for sale at December 31,
2017 and the divestiture of all equity interests in ICL was completed on January 24, 2018.
(See Notes to the Consolidated Financial Statements)
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NUTRIEN 2018 95 ANNUAL REPORT
IN MILLIONS OF US DOLLARS EXCEPT AS OTHERWISE NOTED
Consolidated Statements of Cash Flows
For the years ended December 31
2018
2017
OPERATING ACTIVITIES
Net earnings
Adjustments to reconcile net earnings to cash provided by operating activities
Changes in non-cash operating working capital
$
Note 12
Note 12
CASH PROVIDED BY OPERATING ACTIVITIES
INVESTING ACTIVITIES
Cash acquired in Merger
Business acquisitions, net of cash acquired
Additions to property, plant and equipment
Proceeds from disposal of discontinued operations, net of tax
Purchase of investments
Other
CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES
FINANCING ACTIVITIES
Finance costs on long-term debt
(Repayment of) proceeds from short-term debt
Repayment of long-term debt
Dividends paid
Repurchase of common shares
Issuance of common shares
CASH USED IN FINANCING ACTIVITIES
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS
INCREASE IN CASH AND CASH EQUIVALENTS
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR
CASH AND CASH EQUIVALENTS, END OF YEAR
Cash and cash equivalents comprised of:
Cash
Short-term investments
(See Notes to the Consolidated Financial Statements)
2018 HIGHLIGHTS
The graph below represents the significant changes in Nutrien’s cash flows in 2018.
Note 3
Note 3
Note 16
Note 10
Note 22
Note 23
Note 24
Note 24
Note 24
$
$
$
3,573
(383)
(1,138)
2,052
466
(433)
(1,405)
5,394
(135)
–
3,887
(21)
(927)
(12)
(952)
(1,800)
7
(3,705)
(36)
2,198
116
2,314
1,506
808
2,314
$
327
826
72
1,225
–
–
(651)
–
–
(1)
(652)
(1)
341
(500)
(330)
–
1
(489)
–
84
32
116
14
102
116
$
$
$
NUTRIEN 2018 96 ANNUAL REPORT
IN MILLIONS OF US DOLLARS EXCEPT AS OTHERWISE NOTED
Consolidated Statements of Changes
in Shareholders’ Equity
Accumulated Other Comprehensive (Loss) Income (“AOCI”)
Net Fair
Value
Loss on
Investments 1, 2
Net Actuarial
Gain on
Defined
Benefit Plans 3
Loss on
Currency
Translation
of Foreign
Operations
Share
Capital
Contributed
Surplus
Other
Total
AOCI
Retained
Earnings
Total
Equity 4
BALANCE – DECEMBER 31, 2016
$ 1,798 $
222
$
Net earnings
Other comprehensive income
Dividends declared
Effect of share-based compensation
including issuance of common
shares
Shares issued for dividend
reinvestment plan
Transfer of net actuarial gain on
defined benefit plans
–
–
–
2
6
–
–
–
–
8
–
–
$
43
–
30
–
–
–
–
BALANCE – DECEMBER 31, 2017
$ 1,806 $
230
$
73
$
Merger impact (Notes 3 and 11)
15,898
Net earnings
Other comprehensive (loss) income
Shares repurchased (Note 24)
Dividends declared
Effect of share-based compensation
including issuance of common
shares
Transfer of net actuarial gain on
defined benefit plans
Transfer of net loss on sale of
investment
Transfer of net loss on cash flow
hedges
–
–
(998)
–
7
–
–
(23)
–
34
17
–
–
–
–
–
–
BALANCE – DECEMBER 31, 2018
$16,740 $
231
$
–
–
(99)
–
–
–
–
19
–
(7)
$
(Note 33)
(Note 33)
$
(2) $
(66)
$
(25) $ 6,204 $ 8,199
–
–
–
–
–
–
–
20
–
–
–
–
–
96
–
–
–
327
–
327
96
(335)
(335)
–
–
10
6
–
(46)
46
$
(2) $
(46)
$
25
$ 6,242 $ 8,303
–
–
(249)
–
–
–
–
–
–
–
–
(8)
–
–
–
–
–
21
–
–
(1) 15,904
3,573
3,573
(302)
–
(302)
–
–
–
(54)
19
21
(831)
(1,852)
(1,273)
(1,273)
–
54
(19)
51
–
–
–
21
$
(251) $
(33) $ (291) $ 7,745 $24,425
–
–
46
–
–
–
(46)
–
–
–
54
–
–
–
(54)
–
–
–
1 The Company adopted IFRS 9 “Financial Instruments” in 2018 and reclassified available-for-sale investments as financial instruments measured at FVTOCI.
2 The Company divested its equity interests in the investment in ICL on January 24, 2018. The loss on sale of ICL of $(19) was transferred to retained earnings
in 2018. The cumulative net unrealized gain at December 31, 2017 was $4.
3 Any amounts incurred during a period were closed out to retained earnings at each period-end. Therefore, no balance exists at the beginning or end
of period.
4 All equity transactions were attributable to common shareholders.
(See Notes to the Consolidated Financial Statements)
NUTRIEN 2018 97 ANNUAL REPORT
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IN MILLIONS OF US DOLLARS EXCEPT AS OTHERWISE NOTED
Consolidated Balance Sheets
As at December 31
ASSETS
Current assets
Cash and cash equivalents
Receivables
Inventories
Prepaid expenses and other
current assets
$
Note 14
Note 15
Assets held for sale
Note 10
Non-current assets
Property, plant and equipment Note 16
Goodwill
Note 17
Other intangible assets
Note 17
Investments
Note 21
Other assets
Note 18
2018
2017
(Note 33)
2,314
3,342
4,917
1,089
11,662
–
11,662
18,796
11,431
2,210
878
525
$
116
489
788
72
1,465
1,858
3,323
12,971
97
69
292
246
TOTAL ASSETS
$ 45,502
$ 16,998
(See Notes to the Consolidated Financial Statements)
As at December 31
LIABILITIES
Current liabilities
2018
2017
(Note 33)
Short-term debt
Current portion of
long-term debt
Note 23
Payables and accrued charges Note 19
Note 22 $
629
$
1,003
6,703
8,335
–
8,335
7,591
2,907
395
1,673
176
21,077
16,740
231
(291)
7,745
24,425
730
–
836
1,566
36
1,602
3,711
2,205
440
651
86
8,695
1,806
230
25
6,242
8,303
$ 45,502
$ 16,998
Deferred income tax liabilities
on assets held for sale
Note 10
Non-current liabilities
Long-term debt
Deferred income tax liabilities Note 9
Pension and other post-
Note 23
retirement benefit liabilities Note 28
Asset retirement obligations
and accrued environmental
costs
Other non-current liabilities
Note 20
Note 24
TOTAL LIABILITIES
SHAREHOLDERS’ EQUITY
Share capital
Contributed surplus
Accumulated other
comprehensive (loss)
income
Retained earnings
TOTAL SHAREHOLDERS’ EQUITY
TOTAL LIABILITIES AND
SHAREHOLDERS’ EQUITY
Approved by the Board of Directors,
(See Notes to the Consolidated Financial Statements)
Director
2018 HIGHLIGHTS
Director
(cid:129) Increase in assets and liabilities primarily relates to the Merger of PotashCorp and Agrium.
NUTRIEN 2018 98 ANNUAL REPORT
IN MILLIONS OF US DOLLARS EXCEPT AS OTHERWISE NOTED
NOTE 1 DESCRIPTION OF BUSINESS
Nutrien Ltd. is an integrated ag solutions provider and plays a critical role in helping growers around
the globe increase food production in a sustainable manner. The Company’s Retail segment supplies key
products and services directly to growers – including crop nutrients, crop protection and seed, as well
as agronomic and application services. The Company produces the three essential nutrients – potash,
nitrogen and phosphate – required to help farmers grow healthier, more abundant crops.
On January 1, 2018, PotashCorp and Agrium combined their
businesses in a transaction by way of a plan of arrangement
(the “Merger”) by becoming wholly owned subsidiaries of a new
parent company named Nutrien Ltd. (collectively with its
subsidiaries, known as “Nutrien” or “the Company” except to
the extent the context otherwise requires).
Nutrien is the world’s largest provider of crop inputs and
services. The Company is a corporation organized under the laws
of Canada and its registered head office is located at Suite 500,
122—1st Avenue South, Saskatoon, Saskatchewan, Canada.
As at December 31, 2018, the Company had assets as follows:
Retail
(cid:129) more than 1,700 retail facilities across the US, Canada,
Australia and key areas of South America
(cid:129) capability to formulate and distribute advanced proprietary
crop protection products and nutritionals
(cid:129) an innovative integrated digital platform for growers and
crop consultants
Production (Owned)
Potash
(cid:129) six operations in the province of Saskatchewan
Nitrogen
(cid:129) eight production facilities in North America: four in the
province of Alberta and one located in each of the states of
Texas, Georgia, Louisiana and Ohio
(cid:129) one large-scale operation in Trinidad
(cid:129) seven upgrade facilities in North America: three in the
province of Alberta and one in each of the states of
Washington, Missouri, Georgia and Alabama
(cid:129) 50 percent investment in Profertil S.A. (“Profertil”), a nitrogen
producer based in Argentina
(cid:129) 26 percent investment in Misr Fertilizers Production Company
S.A.E. (“MOPCO”), a nitrogen producer based in Egypt
Phosphate and Sulfate
(cid:129) two mines and processing plants: one in each of the states
of North Carolina and Florida
(cid:129) a production facility in the province of Alberta
(cid:129) phosphate feed plants in the states of Illinois, Missouri and
Nebraska
(cid:129) an industrial phosphoric acid plant in the state of Ohio
Others
(cid:129) investment in Canpotex Ltd. (“Canpotex”), a Canadian potash
export, sales and marketing company owned in equal shares
by Nutrien and another potash producer
(cid:129) 22 percent investment in Sinofert, a fertilizer supplier and
distributor in China
(cid:129) a phosphate processing plant in the state of Louisiana
permanently shut down in 2018
(cid:129) one potash operation in the province of New Brunswick that
will be permanently shut down
Transportation and Distribution
(Leased and Owned)
(cid:129) leased or owned approximately 400 terminals and
warehouses relating to the Company’s production operations
within North America, some of which have multi-product
capability
(cid:129) leased or owned approximately 15,000 railcars and
approximately 31, 000 retail vehicles and application
equipment in North America
(cid:129) ownership in a joint venture that leases a dry bulk fertilizer
port terminal in Brazil allowing for timely delivery of product
(cid:129) leased four vessels for ammonia transportation
(cid:129) owned one multi-purpose vessel used for molten sulfur
and phosphoric acid transportation
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NUTRIEN 2018 99 ANNUAL REPORT
IN MILLIONS OF US DOLLARS EXCEPT AS OTHERWISE NOTED
NOTE 2 BASIS OF PRESENTATION
These consolidated financial statements have been prepared
in accordance with International Financial Reporting Standards
as issued by the International Accounting Standards Board
(“IFRS”). The Company has consistently applied the same
accounting policies throughout all periods presented, as if
these policies had always been in effect, with the exception of
IFRS 9 “Financial Instruments” and IFRS 15 “Revenue from
Contracts with Customers” which were adopted effective
January 1, 2018. Figures for 2017 and prior reflect the historical
operations of PotashCorp, the accounting acquirer. The
financial statements and related notes of Nutrien in 2018 and
beyond reflect the operations of Nutrien.
These consolidated financial statements were authorized by
the Board of Directors for issue on February 20, 2019.
Where an accounting policy is applicable to a specific note to
the statements, the policy is described within that note, with
the related financial disclosures by major caption as noted
in the table included on page 89. Certain of the Company’s
accounting policies that relate to the financial statements as
a whole, as well as estimates and judgments it has made and
how they affect the amounts reported in the consolidated
financial statements, are disclosed in Note 32. New standards
and amendments or interpretations that were either effective
and applied by the Company during 2018 or that were not
yet effective are described in Note 32. Sensitivity analyses
included throughout the notes should be used with caution
as the changes are hypothetical and not reflective of future
performance. The sensitivities have been calculated
independently of changes in other key variables. Changes
in one factor may result in changes in another, which could
amplify or reduce certain sensitivities. These consolidated
financial statements were prepared under the historical cost
basis, except for items that IFRS requires to be measured at
fair value.
NOTE 3 BUSINESS COMBINATIONS
The Company’s business combinations include the Merger between PotashCorp and Agrium and the
acquisition of Retail businesses, including farm centers in North America and Australia, digital agriculture,
proprietary products and agricultural services. Assets acquired and liabilities assumed are measured at
fair value.
Accounting Policies
(cid:129) The acquisition method is followed.
(cid:129) Consideration is measured at the aggregate of the fair values
of assets transferred, liabilities incurred or assumed, and
equity instruments issued in exchange for control of the
acquiree at the acquisition date.
(cid:129) The acquisition date is the date the Company obtains control
over the acquiree.
(cid:129) Identifiable assets acquired and liabilities assumed are
generally measured at fair value.
(cid:129) Acquisition-related costs are recognized in net earnings as
incurred.
(cid:129) The excess of total consideration for each acquisition plus
non-controlling interest in the acquiree, over the fair value of
the identifiable net assets acquired, is recorded as goodwill.
Accounting Estimates and Judgments
(cid:129) Purchase price allocation involves judgment in identifying
assets acquired and liabilities assumed and estimation of
their fair values.
(cid:129) Judgment is required to determine which entity is the
acquirer in a merger of equals. In identifying PotashCorp as
the acquirer, the companies considered the voting rights of
all equity instruments, the intended corporate governance
structure of the combined company, the intended
composition of senior management of the combined
company and the size of each of the companies. In assessing
the size of each of the companies, the companies evaluated
various metrics. No single factor was the sole determinant
in the overall conclusion that PotashCorp is the acquirer for
accounting purposes; rather, all factors were considered in
arriving at the conclusion.
NUTRIEN 2018 100 ANNUAL REPORT
IN MILLIONS OF US DOLLARS EXCEPT AS OTHERWISE NOTED
NOTE 3 BUSINESS COMBINATIONS CONTINUED
Merger
As described in Note 1, PotashCorp and Agrium combined their
businesses in a merger of equals. Benefits of the Merger include
operating synergies, primarily from the distribution and retail
integration, production and expense optimization, and
procurement savings.
Agrium was a retail distributor of agricultural crop inputs,
providing growers with fertilizer, crop protection products, seed,
services and solutions. Agrium was also one of the largest
manufacturers of fertilizer in the world, producing and marketing
all three major crop nutrients – nitrogen, potash and phosphate.
On January 1, 2018, the acquisition date, shareholders of
PotashCorp received 0.400 common shares of Nutrien for each
PotashCorp share held, and shareholders of Agrium received
2.230 common shares of Nutrien for each Agrium share held.
The exchange ratios represent the respective closing share
prices of each company’s common shares at market close on
the New York Stock Exchange (“NYSE”) on August 29, 2016, the
last trading day prior to when the companies announced that
they were in preliminary discussions regarding a merger of
equals, which is consistent with the weighted average prices
through that date. The outstanding share-based compensation
awards of PotashCorp and Agrium were replaced by Nutrien
share-based compensation awards with substantially
equivalent terms after adjusting for the applicable exchange
ratio (refer to Note 29). Merger and related costs of $170 in
2018 were included in other expenses (2017 – $84).
The purchase price was determined based on the number
of Agrium shares outstanding and its trading price on
December 29, 2017. The share price reflects market
participants’ assumptions of the fair value of Agrium as a going
concern, which exceeds the fair value of the assets acquired
and liabilities assumed. This resulted in the recognition of
goodwill in the amount of $11,185, none of which is deductible
for income tax purposes. The value of goodwill is primarily
attributable to: (a) the location and scale of the Retail
distribution network; (b) the proximity of the nitrogen
operations to sources of low-cost natural gas; (c) cost synergies
associated with the reduction of selling, general and
administrative expenses, in addition to the optimization of the
rail fleet, distribution and logistics, and procurement; and (d)
the assembled workforce, mostly related to the employees in
the Retail distribution network.
Management completed an assessment in identifying and
measuring all the assets acquired and liabilities assumed prior
to the recognition of goodwill. This assessment included a
thorough review of all internal and external sources of
information available on circumstances that existed at the
acquisition date. The Company engaged independent valuation
experts to assist in determining the fair value of certain assets
acquired and liabilities assumed and related deferred income
tax impacts.
The final values that were allocated to Agrium’s assets and
liabilities as at January 1, 2018 based upon fair values were
as follows:
Cash and cash equivalents
Receivables 1
Inventories
Prepaid expenses and other current assets
Assets held for sale 2
Property, plant and equipment 3
Goodwill 4
Other intangible assets 4
Investments
Other assets 5
Total assets
Short-term debt
Payables and accrued charges 6
Long-term debt
Deferred income tax liabilities
Pension and other post-retirement benefit
liabilities
Asset retirement obligations and accrued
environmental costs 6
Other non-current liabilities
Total liabilities
$
466
2,600
3,303
1,124
95
7,459
11,185
2,348
528
198
29,306
867
5,239
4,941
934
142
1,094
79
13,296
Net assets (consideration for the Merger)
$ 16,010
1 Includes trade receivables with gross contractual amount of $2,247, of
which $80 are considered to be uncollectible.
2 Relates to the assets held at the Company’s Conda Phosphate operations
and North Bend nitric acid operations. The sale was completed on
January 12, 2018.
3 Refer to Note 16 for detailed information of property, plant and
equipment acquired.
4 Refer to Note 17 for detailed information on other intangible assets
acquired and the allocation of goodwill to groups of cash generating
units (“CGUs”).
5 Includes deferred income tax assets of $158.
6 Refer to Note 20 for detailed information of asset retirement obligations
and accrued environmental costs acquired. Included in payables and
accrued charges is $39 related to the current portion of asset retirement
obligations and accrued environmental costs.
The significant fair value considerations included in the
allocation of purchase price are discussed below:
Property, Plant and Equipment
The fair value was primarily determined using a market
approach for land and certain types of personal property, and
a replacement cost approach for the remaining property, plant
and equipment. The market approach for land and certain types
of personal property represents a sales comparison that
measures the value of an asset through an analysis of sales and
offerings of comparable assets. The replacement cost approach
used for all other depreciable property, plant and equipment
measures the value of an asset by estimating the cost to acquire
or construct comparable assets and adjusts for age and
condition of the asset.
NUTRIEN 2018 101 ANNUAL REPORT
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NOTE 3 BUSINESS COMBINATIONS CONTINUED
Other Intangible Assets
Other intangible assets primarily consist of acquired
customer relationships, brands, proprietary technology,
trademarks and trade names. The fair value of customer-
related assets was determined using the excess earnings
method, an income approach. In determining the fair value of
customer relationships, a segment of customers was identified
where the sales from these customers are driven by factors
such as relationships with the Company and its employees and,
as such, fair value was associated with customer relationships.
Segmenting customers is a matter of judgment and includes
factors such as the size of the customer and customer
behavior patterns.
Long-Term Debt
The fair value of debentures was determined based on
comparable debt instruments with similar maturities, adjusted
where necessary to Agrium’s credit spread, based on
information published by financial institutions.
Asset Retirement Obligations and Accrued Environmental Costs
Asset retirement obligations for phosphate sites are expected
to be paid over the next 68 years, while asset retirement
obligations for potash and nitrogen sites are expected to be
paid after that time. The fair value for environmental costs was
determined using a decision-tree approach of future costs and
a risk premium to capture the compensation sought by risk-
averse market participants for bearing the uncertainty inherent
in the cash flows of the liability. Accrued environmental costs
are expected to be paid over a period extending up to 30 years
and were discounted using a credit adjusted risk-free rate.
Financial Information Related to the Acquired
Operations of Agrium
The following table provides “gross sales” and “net earnings
from continuing operations before income taxes”:
Summary results of acquired operations of
Agrium 1
Sales
Net earnings from continuing operations
before income taxes
2018
$ 14,551
$
546
1 Results of acquired operations included in the Company’s consolidated
statements of earnings for 2018.
Retail Acquisitions
During the year, the Retail segment acquired 53 farm centers
in North America and Australia and companies operating within
the digital agriculture, proprietary products and agricultural
services business. Benefits of the acquisitions include expansion
of geographical coverage for the sale of crop input products,
increased customer base and workforce, continued growth in
the digital agricultural field and synergies between Nutrien and
the acquired businesses.
The values allocated to the acquired assets and assumed liabilities
based upon fair values were as follows as at December 31:
Working capital
Property, plant and equipment
Goodwill 1
Other intangible assets
Other non-current assets
Other non-current liabilities
Total consideration
2018
$ 116
107
197
8
14
(9)
$ 433
1 Goodwill was calculated as the difference between the amount of
consideration transferred and the net identifiable assets acquired.
Goodwill resulting from the acquisition is attributed to the assembled
workforce, value of potential increase in customer base and synergies
between Nutrien and the acquired companies.
Financial information related to business
acquisitions 1
Sales from date of acquisition
Net earnings from continuing operations before
2018
$ 213
income taxes from date of acquisition
$
10
1 Estimated annual sales and earnings before finance costs, income taxes,
and depreciation and amortization if acquisitions occurred at the
beginning of the year are approximately $441 and $42, respectively.
On February 5, 2019, the Company announced the planned
acquisition of Actagro, LLC, a developer, manufacturer and
marketer of environmentally sustainable soil and plant health
products and technologies for an estimated purchase price
of $340. Closing of the transaction is subject to US regulatory
approval and is expected to be completed in the first half
of 2019.
NUTRIEN 2018 102 ANNUAL REPORT
IN MILLIONS OF US DOLLARS EXCEPT AS OTHERWISE NOTED
NOTE 4 SEGMENT INFORMATION
The Company has four reportable operating segments: Retail, Potash, Nitrogen, and Phosphate and
Sulfate. The Retail segment distributes crop nutrients, crop protection products, seed and merchandise,
and provides services directly to growers through a network of farm centers in North and South America
and Australia. The Potash, Nitrogen, and Phosphate and Sulfate segments are differentiated by the
chemical nutrient contained in the products that each produces.
Accounting Estimates and Judgments
Operating Segments
Judgment is used in determining the
composition of the reportable segments
based on factors including risks and returns,
internal organization, and internal reports
reviewed by the CODM.
Certain expenses are allocated across
segments based on an appropriate basis
such as production capacities or historical
trends.
Revenue
For product sales which contain volume
rebates, revenue is recognized to the extent
that it is highly probable that significant
reversals will not occur using the most likely
method and accumulated experience.
Returns and incentives are estimated based
on historical and forecasted data,
contractual terms and current conditions.
Due to the nature of goods and services sold,
any single estimate would have only a
negligible impact on revenue recognition.
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Accounting Policies
Operating Segments
Prior to the Merger, the Company identified the Chief Executive Officer as the
Chief Operating Decision Maker (“CODM”) under IFRS and used gross margin to
measure the segments’ profit or loss. The operating segments were limited to the
following: Potash, Nitrogen and Phosphate. The changes in the structure of the
Company’s internal organization as a result of the Merger caused the composition
of the operating segments to change as well as who the Company identified to be
the CODM.
Post-Merger, the Company identified the Executive Leadership Team (“ELT”),
comprised of officers at the Executive Vice President level and above, as the
CODM. The CODM uses net (loss) earnings before finance costs, income taxes, and
depreciation and amortization (“EBITDA”) to measure performance and allocate
resources to the operating segments. The CODM believes EBITDA to be an
important measure as it excludes the effects of items that primarily reflect the
impact of long-term investment and financing decisions, rather than the
performance of the Company’s day-to-day operations.
In 2019, the Company’s CODM reassessed product groupings and decided to
evaluate the performance of sulfate products as part of the Nitrogen segment,
rather than the Phosphate and Sulfate segment; therefore, future comparative
figures will be restated for the change in the composition of the segments, which
will result in an increase in the Nitrogen segment and a decrease in the Phosphate
and Sulfate segment. For the year ended December 31, 2018, this change will be
approximately $121, $42, and $69 in sales, gross margin and EBITDA, respectively.
Revenue
The Company recognizes revenue when it transfers control over a good or service
to a customer.
Retail
Potash, Nitrogen, and Phosphate and Sulfate
Transfer of control for the sale of goods
At the point in time when the product is:
(cid:129) purchased at the Company’s Retail
farm center or
(cid:129) delivered and accepted by customers
at their premises
At the point in time when the product is:
(cid:129) loaded for shipping or
(cid:129) delivered to the customer
Transfer of control for services
When the promised service is rendered When the promised service is rendered
Retail
Sales revenue consists primarily of:
(cid:129) Crop nutrients – sales of dry and liquid macronutrient products which include
nitrogen, potash and phosphate, proprietary liquid micronutrient products and
nutrient application services;
(cid:129) Crop protection products – sales of various third-party supplier and proprietary
products designed to maintain crop quality and manage plant diseases, weeds,
and other pests;
NUTRIEN 2018 103 ANNUAL REPORT
IN MILLIONS OF US DOLLARS EXCEPT AS OTHERWISE NOTED
NOTE 4 SEGMENT INFORMATION CONTINUED
Accounting Policies
Accounting Estimates and Judgments
(cid:129) Seed – various third-party supplier seed brands and proprietary seed product lines;
(cid:129) Merchandise – sales of fencing, feed supplements, livestock-related animal
health products, storage and irrigation equipment, and other products; and
(cid:129) Services and other revenues – sales of product application, soil and leaf testing,
crop scouting and precision agriculture services, financial services and livestock
marketing.
Provisions for returns, trade discounts and rebates are deducted from sales revenue.
Potash, Nitrogen, and Phosphate and Sulfate
The Company manufactures and sells potash, nitrogen, and phosphate and sulfate
products. While agriculture is the Company’s primary market, it also produces
products for animal nutrition and industrial uses.
The Company’s sales revenue is recorded and measured based on the “freight on
board” mine, plant, warehouse or terminal price specified in the contract (except
for certain vessel sales or specific product sales that are shipped and recorded on
a delivered basis), which reflects the consideration the Company expects to be
entitled to in exchange for the goods or services, net of any variable consideration
(e.g., any trade discounts or estimated volume rebates). Where volume rebates are
provided for in customer contracts, the Company estimates revenue at the earlier
of the most likely amount of consideration expected to be received or when the
consideration becomes fixed. The Company’s customer contracts may provide
certain product quality specification guarantees but do not generally provide for
refunds or returns.
Sales prices are based on North American and International benchmark market prices
which are variable and subject to global supply and demand, and competitive factors.
Products
Potash
(cid:129) North American –
primarily granular
Sales prices
impacted by
(cid:129) Offshore
(International) –
primarily granular
and standard
(cid:129) North American
prices referenced
at delivered prices
(including
transportation
and distribution
costs)
Nitrogen
(cid:129) Ammonia, urea,
urea ammonium
nitrate,
and industrial
grade ammonium
nitrate
(cid:129) Global energy
costs and supply
Phosphate and Sulfate
(cid:129) Solid fertilizer, liquid
fertilizer, industrial
products and feed
products
(cid:129) Global ammonia and
sulfur costs and
supply
(cid:129) International
prices referenced
at the mine site
(excluding
transportation
and distribution
costs)
Other
The Company does not provide general warranties. Intersegment sales are made
under terms that approximate market value. Transportation costs are generally
recovered from the customer through sales pricing.
Seasonality in the Company’s business results from increased demand for
products during planting season. Crop input sales are generally higher in spring
and fall crop input application seasons. Crop nutrient inventories are normally
accumulated leading up to each application season. The Company’s cash
collections generally occur after the application season is complete while
customer prepayments are concentrated in December and January.
NUTRIEN 2018 104 ANNUAL REPORT
IN MILLIONS OF US DOLLARS EXCEPT AS OTHERWISE NOTED
NOTE 4 SEGMENT INFORMATION CONTINUED
Supporting Information
Financial information on each of these segments is summarized in the following tables:
2018
Sales – third party
– intersegment
Sales – total
Freight, transportation and distribution
Net sales
Cost of goods sold
Gross margin
Selling expenses
General and administrative expenses
Provincial mining and other taxes
Impairment of property, plant and
equipment (Note 16)
Other income (expenses)
Earnings (loss) before finance costs and
income taxes
Depreciation and amortization
Retail
Potash
Nitrogen
Phosphate
and
Sulfate
Others
Eliminations Consolidated
$12,620
50
$ 2,796
220
$ 2,651
566
$ 1,569
328
$
12,670
–
12,670
(9,635)
3,035
(2,303)
(100)
–
–
75
707
499
3,016
(349)
2,667
(1,183)
1,484
(14)
(10)
(244)
(1,809)
(14)
(607)
404
3,217
(358)
2,859
(2,079)
1,897
(230)
1,667
(1,539)
780
(32)
(20)
(3)
–
8
733
429
128
(10)
(9)
(1)
–
(6)
102
206
–
–
–
–
–
–
$
–
(1,164)
(1,164)
73
(1,091)
1,056
–
22
(400)
(2)
–
(106)
(486)
54
(35)
–
–
–
–
–
(35)
–
$19,636
–
19,636
(864)
(13,380)
5,392
(2,337)
(539)
(250)
(1,809)
(43)
414
1,592
EBITDA 1
Assets 2
$ 1,206
$17,964
$ (203)
$11,710
$ 1,162
$10,009
308
$
$ 2,783
$ (432)
$ 3,678
$ (35)
$ (642)
$ 2,006
$45,502
1 EBITDA is a non-IFRS measure calculated as net (loss) earnings from continuing operations before finance costs, income taxes, and depreciation and
amortization. Nutrien uses EBITDA as a supplemental measure. Generally, this measure is a numerical measure of a company’s performance, that either
excludes or includes amounts that are not normally excluded or included in the most directly comparable measure calculated and presented in accordance
with IFRS. In evaluating this measure, investors should consider that the methodology applied in calculating this measure may differ among companies and
analysts. The Company uses both IFRS and certain non-IFRS measures to assess performance. Management believes the non-IFRS measures provide useful
supplemental information to investors in order that they may evaluate Nutrien’s financial performance using the same measures as management.
Management believes that, as a result, the investor is afforded greater transparency in assessing the financial performance of the Company. This non-IFRS
financial measure should not be considered as a substitute for, nor superior to, measures of financial performance prepared in accordance with IFRS.
2 Included in the Nitrogen and Retail segments are $428 and $208 relating to equity-accounted investees, respectively, as described in Note 21.
S
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T
O
N
D
N
A
S
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N
E
M
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A
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S
L
A
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N
A
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NUTRIEN 2018 105 ANNUAL REPORT
NOTE 4 SEGMENT INFORMATION CONTINUED
2017
Sales – third party
– intersegment
Sales – total
Freight, transportation and distribution
Net sales
Cost of goods sold 1
Gross margin
Selling expenses
General and administrative expenses
Provincial mining and other taxes
Other expenses
Earnings (loss) before finance costs and
income taxes
Depreciation and amortization
EBITDA
Assets 2
IN MILLIONS OF US DOLLARS EXCEPT AS OTHERWISE NOTED
Potash
Nitrogen
Phosphate
and
Sulfate
Others
Eliminations Consolidated
$
1,868
–
1,868
(235)
1,633
(829)
804
(7)
(7)
(146)
(19)
625
232
$
$
1,395
74
1,469
(129)
1,340
(1,084)
256
(14)
(4)
–
(3)
235
203
$
1,284
–
1,284
(173)
1,111
(1,477)
(366)
(6)
(4)
–
(4)
(380)
220
–
–
–
–
–
–
–
(2)
(170)
–
(99)
(271)
37
4,547
–
4,547
(537)
(3,316)
694
(29)
(185)
(146)
(125)
209
692
$
$
–
(74)
(74)
–
(74)
74
–
–
–
–
–
–
–
–
–
$
$
857
9,756
$
$
438
2,577
$
$
(160)
1,938
$
$
(234)
2,727
$
$
901
$
$ 16,998
1 Included in the Phosphate and Sulfate segment is $305 of impairment of property, plant and equipment as described in Note 16.
2 Included in the total assets relating to the Others segment is $1,858 relating to the investments held for sale as described in Note 10.
Financial information by geographic area is summarized in the following tables:
Country of Origin
2018
United States
Canada
Australia
Trinidad
Other
Consolidated
Sales to customers outside the Company
United States
Canada
Australia
Canpotex 1
Mexico
Trinidad
Argentina
Brazil
Colombia
Other Latin America
India
Europe
Other
Non-current assets 2
$ 10,488
208
2
–
70
9
9
38
9
20
151
11
22
$ 1,249
2,582
–
1,657
–
–
–
–
–
–
–
58
–
$
–
–
1,679
–
–
–
–
–
–
–
–
67
100
$ 11,037
$ 5,546
$ 1,846
$ 14,501
$ 17,100
$
607
$
$
$
153
–
–
–
15
181
–
–
42
59
–
93
32
575
570
$
$
$
1
–
–
–
–
–
378
74
–
92
–
83
4
632
621
$ 11,891
2,790
1,681
1,657
85
190
387
112
51
171
151
312
158
$ 19,636
$ 33,399
1 As described in Note 1, Canpotex executed offshore marketing, sales and distribution functions for certain of the Company’s products. Canpotex’s 2018
sales volumes were made to: Latin America 33%, China 18%, India 10%, Other Asian markets 31%, other markets 8% (Note 30).
2 Includes non-current assets other than financial instruments, deferred tax assets and post-employment benefit assets.
NUTRIEN 2018 106 ANNUAL REPORT
IN MILLIONS OF US DOLLARS EXCEPT AS OTHERWISE NOTED
NOTE 4 SEGMENT INFORMATION CONTINUED
2017
United States
Canada
Trinidad
Other
Consolidated
Sales to customers outside the Company
Country of Origin
United States
Canada
Canpotex 1
Mexico
Trinidad
Brazil
Colombia
Other Latin America
India
Other
Non-current assets 2
$ 1,657
194
–
76
–
26
12
26
97
10
$ 2,098
$ 3,259
$
$
784
95
988
–
–
1
–
–
–
–
$ 1,868
$ 9,501
$
$
274
–
–
9
132
–
36
42
7
81
581
554
$
$
$
–
–
–
–
–
–
–
–
–
–
–
6
$ 2,715
289
988
85
132
27
48
68
104
91
$ 4,547
$ 13,320
1 Canpotex’s 2017 sales volumes were made to: Latin America 30%, China 18%, India 12%, Other Asian markets 33%, other markets 7% (Note 30).
2 Includes non-current assets other than financial instruments, deferred tax assets and post-employment benefit assets.
The Company disaggregated revenue from contracts with customers by product line or geographic location for each reportable segment
to show how the nature, amount, timing and uncertainty of revenue and cash flows are affected by economic factors.
Retail sales by product line
2018
2017
Nitrogen sales by product line
2018
2017
Year Ended December 31,
Year Ended December 31,
Crop nutrients
Crop protection products
Seed
Merchandise
Services and other
$
4,577
4,862
1,687
734
810
$ 12,670
Manufactured Potash sales by geography
North America
Offshore 1
$
$
1,359
1,657
3,016
1 Relates primarily to Canpotex (Note 30).
$
$
$
–
–
–
–
–
–
878
990
$ 1,868
Manufactured Product
Ammonia
Urea
Solutions and nitrates
Other nitrogen and purchased
products
$
1,061
979
729
448
$
628
330
478
33
$
3,217
$ 1,469
Phosphate and Sulfate sales by product line
Manufactured Product
Fertilizer
Industrial and Feed
Ammonium sulfate
Other phosphate and purchased
products
$
1,141
469
96
191
$
739
537
–
8
$
1,897
$ 1,284
S
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D
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M
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NUTRIEN 2018 107 ANNUAL REPORT
IN MILLIONS OF US DOLLARS EXCEPT AS OTHERWISE NOTED
NOTE 5 NATURE OF EXPENSES
Accounting Policies
Cost of goods sold represents the cost of purchasing products for resale and costs primarily incurred at, and charged to,
producing facilities.
The primary components of selling and general and administrative expenses are compensation, other employee costs, depreciation
and amortization, other operating leases, and fleet fuel, repairs and maintenance.
Supporting Information
Expenses by nature were comprised of:
Purchased and produced raw materials
and product for resale 1
Depreciation and amortization
Employee costs 2
Freight (direct and indirect)
Impairment of property, plant and
equipment (Note 16)
Offsite warehouse costs 3
Railcar and vessel costs 3
Merger and related costs
Other operating leases
Fleet fuel, repairs and maintenance
Other
Total
Expenses included in:
Freight, transportation and distribution
Cost of goods sold
Selling expenses
General and administrative expenses
Other expenses
Cost of Goods Sold
Other
2018
$ 11,145
1,038
713
303
2017
(Note 33)
$ 1,724
655
563
–
–
–
–
–
38
–
143
305
–
–
–
–
–
69
2018
2017
(Note 33)
$
$
–
554
1,236
631
–
69
131
170
110
183
699
–
37
113
372
–
47
102
84
–
–
121
876
$ 13,380
$ 3,316
$
3,783
$
Total
2018
$ 11,145
1,592
1,949
934
–
69
131
170
148
183
842
2017
(Note 33)
$ 1,724
692
676
372
305
47
102
84
–
–
190
$ 17,163
$ 4,192
$
864
13,380
2,337
539
43
$
537
3,316
29
185
125
1 Significant expenses include: contract services, supplies, energy, fuel, purchases of raw material (natural gas – feedstock, sulfur, ammonia and reagents) and
product for resale (crop nutrients and protection products, and seed).
2 Includes employee benefits and share-based compensation. In 2018, employee costs also include a $157 gain on curtailment of defined benefit pension and
other post-retirement benefit plans (“Defined Benefit Plans Curtailment Gain”) as described in Note 28.
3 Includes expenses relating to operating leases.
NUTRIEN 2018 108 ANNUAL REPORT
IN MILLIONS OF US DOLLARS EXCEPT AS OTHERWISE NOTED
NOTE 6 PROVINCIAL MINING AND OTHER TAXES
Under Saskatchewan provincial legislation, the Company is subject to resource taxes, including the potash
production tax and the resource surcharge.
Saskatchewan potash production tax
Saskatchewan resource surcharge and other
NOTE 7 OTHER EXPENSES
Merger and related costs
Defined Benefit Plans Curtailment Gain (Note 28)
Foreign exchange gain (loss)
Other expenses
NOTE 8 FINANCE COSTS
Interest expense
Short-term debt
Long-term debt
Unwinding of discount on asset retirement obligations (Note 20)
Interest on net defined benefit pension and other post-retirement plan obligations (Note 28)
Borrowing costs capitalized to property, plant and equipment
Interest income
2018
160
90
250
2018
(170)
157
10
(40)
(43)
$
$
$
2017
(Note 33)
95
51
146
2017
(Note 33)
(84)
–
(21)
(20)
$
(125)
2018
2017
129
372
51
15
(12)
(17)
538
$
$
9
206
17
19
(11)
(2)
238
$
$
$
$
$
$
Borrowing costs capitalized to property, plant and equipment in 2018 were calculated by applying an average capitalization rate of
4.4 percent (2017 – 4.4 percent) to expenditures on qualifying assets.
See Note 12 for interest paid.
S
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O
N
D
N
A
S
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N
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M
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A
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L
A
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N
A
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F
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NUTRIEN 2018 109 ANNUAL REPORT
IN MILLIONS OF US DOLLARS EXCEPT AS OTHERWISE NOTED
NOTE 9 INCOME TAXES
This note explains the Company’s income tax recovery and tax-related balances within the consolidated
financial statements. The deferred tax section provides information on expected future tax payments.
Accounting Policies
Accounting Estimates and Judgments
Estimates and judgments to determine
the Company’s taxes are impacted by:
(cid:129) the breadth of the Company’s
operations; and
(cid:129) global complexity of tax regulations.
The final taxes paid, and potential
adjustments to tax assets and liabilities,
are dependent upon many factors
including:
(cid:129) negotiations with taxation authorities
in various jurisdictions;
(cid:129) outcomes of tax litigation; and
(cid:129) resolution of disputes arising from
federal, provincial, state and local tax
audits.
Estimates and judgments are used to
recognize the amount of deferred tax
assets, which:
(cid:129) includes the probability that future
taxable profit will be available to use
deductible temporary differences, and
could be reduced if projected earnings
are not achieved or increased if
earnings previously not projected
become probable.
The Company operates in a specialized industry and in several tax jurisdictions. As a
result, its income is subject to various rates of taxation. Taxation on items recognized
in the consolidated statements of earnings, other comprehensive income (“OCI”) or
contributed surplus is recognized in the same location as those items.
Taxation on (loss) earnings is comprised of current and deferred income tax.
Current income tax is:
(cid:129) the expected tax payable on the taxable
earnings for the year;
(cid:129) calculated using rates enacted or
substantively enacted at the dates of the
consolidated balance sheets in the
countries where the Company’s
subsidiaries, held for sale investees and
equity-accounted investees operate and
generate taxable earnings; and
(cid:129) inclusive of any adjustment to income tax
payable or recoverable in respect of
previous years.
Deferred income tax is:
(cid:129) recognized using the liability method;
(cid:129) based on temporary differences
between financial statements’
carrying amounts of assets and
liabilities and their respective income
tax bases; and
(cid:129) determined using tax rates that have
been enacted or substantively
enacted by the dates of the
consolidated balance sheets and are
expected to apply when the related
deferred income tax asset is realized
or the deferred income tax liability
is settled.
Uncertain income tax positions are accounted for using the standards applicable to
current income tax liabilities and assets, i.e., both liabilities and assets are recorded
when probable and measured at the amount expected to be paid to (recovered from)
the taxation authorities using the Company’s best estimate of the amount.
Deferred income tax is not accounted for:
(cid:129) with respect to investments in subsidiaries and equity-accounted investees where
the Company is able to control the reversal of the temporary difference and that
difference is not expected to reverse in the foreseeable future; and
(cid:129) if arising from initial recognition of an asset or liability in a transaction, other than a
business combination, that at the time of the transaction affects neither accounting
nor taxable profit or loss.
The realized and unrealized excess tax benefits from share-based payment arrangements
are recognized in contributed surplus as current and deferred tax, respectively.
Deferred income tax assets are reviewed at each balance sheet date and amended to
the extent that it is no longer probable that the related tax benefit will be realized.
Income tax assets and liabilities are offset when:
For current income taxes, the Company has: For deferred income taxes:
(cid:129) a legally enforceable right to offset the
(cid:129) the Company has a legally
recognized amounts 1 ; and
(cid:129) the intention to settle on a net basis or
realize the asset and settle the liability
simultaneously.
enforceable right to set off current
tax assets against current tax
liabilities; and
(cid:129) they relate to income taxes levied by
the same taxation authority on
either: 1) the same taxable entity; or
2) different taxable entities intending
to settle current tax liabilities and
assets on a net basis, or realize assets
and settle liabilities simultaneously in
each future period. 2
1 For income taxes levied by the same taxation authority and the authority permits the Company to
make or receive a single net payment or receipt.
2 In which significant amounts of deferred tax liabilities or assets expected are to be settled or recovered.
NUTRIEN 2018 110 ANNUAL REPORT
IN MILLIONS OF US DOLLARS EXCEPT AS OTHERWISE NOTED
NOTE 9 INCOME TAXES CONTINUED
Supporting Information
Income Taxes included in Net (Loss) Earnings from Continuing
Operations
The provision for income taxes differs from the amount that
would have resulted from applying the Canadian statutory
income tax rates to (loss) earnings before income taxes as
follows:
2018
2017
(Loss) earnings before income
taxes
Canada
United States
Trinidad
Australia
Other
Canadian federal and provincial
statutory income tax rate
Income tax at statutory rates
Adjusted for the effect of:
Impact of foreign tax rates (US,
Trinidad, Australia and other)
Production-related deductions
Non-taxable income
Foreign accrual property income
Impact of tax rate changes
Other
Income tax recovery included in net
(loss) earnings from continuing
operations
$ (1,195)
619
98
96
258
$
123
(271)
95
–
24
$
(124)
$
(29)
27%
27%
$
33
$
8
58
15
10
(15)
–
(8)
(25)
14
–
(3)
187
2
$
93
$
183
Total income tax recovery, included in net (loss) earnings from
continuing operations, was comprised of the following:
Current income tax
Tax expense for current year
Adjustments in respect of prior
2018
2017
$
(195)
$
(70)
years
15
Total current income tax expense
(180)
Deferred income tax
Origination and reversal of
temporary differences
Adjustments in respect of prior
years
Impact of tax rate changes
Other
Total deferred income tax
recovery
Income tax recovery included in net
(loss) earnings from continuing
operations
(20)
(90)
69
20
187
(3)
283
(12)
–
2
273
273
$
93
$
183
Income Tax Balances
Income tax balances within the consolidated balance sheets as at December 31 were comprised of the following:
Income Tax Assets (Liabilities)
Balance Sheet Location
2018
2017
Current income tax assets
Current
Long-term
Deferred income tax assets
Total income tax assets
Current income tax liabilities
Current
Non-current
Deferred income tax liabilities
Total income tax liabilities
Receivables (Note 14)
Other assets (Note 18)
Other assets (Note 18)
Payables and accrued charges (Note 19)
Other non-current liabilities
Deferred income tax liabilities
$
$
$
248
36
216
500
(47)
(64)
(2,907)
$
$
$
24
64
18
106
(16)
(43)
(2,205)
$
(3,018)
$
(2,264)
S
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O
N
D
N
A
S
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N
E
M
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A
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S
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A
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N
A
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F
I
NUTRIEN 2018 111 ANNUAL REPORT
IN MILLIONS OF US DOLLARS EXCEPT AS OTHERWISE NOTED
NOTE 9 INCOME TAXES CONTINUED
Deferred Income Taxes
In respect of each type of temporary difference, unused tax loss and unused tax credit, the amounts of deferred tax assets and
liabilities recognized in the consolidated balance sheets as at December 31 and the amount of the deferred tax recovery (expense)
recognized in net (loss) earnings from continuing operations were:
Deferred income tax assets
Asset retirement obligations and accrued environmental costs
Tax loss and other carryforwards
Pension and other post-retirement benefit liabilities
Long-term debt
Receivables
Inventories
Derivatives
Other assets
Deferred income tax liabilities
Property, plant and equipment
Goodwill and other intangible assets
Other liabilities
Reconciliation of net deferred income tax liabilities:
2018
2017
$ (2,187)
(776)
$ (2,453)
–
Balance, beginning of year
Merger impact (Note 3)
Income tax recovery
recognized in net (loss)
earnings from continuing
operations
Income tax recovery
recognized in net earnings
from discontinued
operations
Income tax charge recognized
in OCI
Reclassified as held for sale
Other
17
(22)
–
4
–
(43)
36
–
Balance, end of year
$ (2,691)
$ (2,187)
Deferred Income Tax Assets
(Liabilities)
Deferred Income Tax
Recovery (Expense)
Recognized in Net
Earnings
2018
2017
2018
2017
$
412
261
130
110
58
54
17
57
$
120
13
124
–
–
4
13
11
(3,218)
(546)
(26)
(2,441)
(17)
(14)
$
(11)
198
(44)
(10)
3
13
(15)
(18)
132
31
(6)
$
(56)
(105)
(22)
–
–
(2)
–
(11)
472
–
(3)
$ (2,691)
$ (2,187)
$
273
$
273
Amounts and expiry dates of unused tax losses and unused tax
credits as at December 31, 2018 were:
Unused operating losses
Unused capital losses
Unused investment tax
Amount
Expiry Date
$ 1,083
795
$
2020 – Indefinite
Indefinite
The unused tax losses and credits with no expiry dates can be
carried forward indefinitely.
As at December 31, 2018, the Company had $932 of tax losses
for which it did not recognize deferred tax assets.
The Company has determined that it is probable that all
recognized deferred tax assets will be realized through a
combination of future reversals of temporary differences and
taxable income.
The aggregate amount of temporary differences associated
with investments in subsidiaries and equity-accounted
investees, for which deferred tax liabilities have not been
recognized, as at December 31, 2018 was $8,710 (2017 –
$5,252).
273
273
credits
$
46
2019 – 2037
NUTRIEN 2018 112 ANNUAL REPORT
IN MILLIONS OF US DOLLARS EXCEPT AS OTHERWISE NOTED
NOTE 10 DISCONTINUED OPERATIONS
Held for Sale and Discontinued Operations
Accounting Policies
The Company classifies assets and liabilities as held for sale if it is highly probable
that the carrying value will be recovered through a sale transaction within one year
rather than through continuing use.
Discontinued operations represent a component of the Company’s business that
either has been disposed of, or is classified as held for sale, and represents a
separate major line of business or geographic area of operations or is a part of a
single coordinated plan to dispose of a separate major line of business or
geographical area of operations.
The Company’s significant policies include:
(cid:129) cessation of equity accounting for associates and joint ventures at the date the
investments were classified as held for sale;
(cid:129) measurement of assets at the lower of carrying amount and fair value less costs
to sell, with the exception of financial assets measured at FVTOCI;
(cid:129) unrealized gains and losses on remeasurement of investments measured at
FVTOCI are recorded, net of related income taxes, to OCI;
(cid:129) dividends received are recorded on the consolidated statements of earnings;
and
(cid:129) the comparative statements of earnings and OCI are restated as if the operation
had been discontinued from the start of the comparative year.
Accounting Estimates and Judgments
Expected cost to sell the investments
requires estimation, which is based on
several factors such as historical trends of
similar types of investments sold, the
percentage of investments held relative to
the total shares in circulation and the type of
the investment.
Judgment involves determining:
(cid:129) whether the highly probable standard is
met and the date when equity accounting
ceases; and
(cid:129) if the business component for sale or
disposal meets the criteria of a
discontinued operation.
The Company’s investments in SQM, ICL and APC were classified as held for sale and as discontinued operations in December 2017,
due to regulatory requirements to dispose of these investments in connection with the Merger.
As of December 31, 2018, the Company completed all required divestitures and retained no residual interests as outlined below:
For the year ended December 31, 2018
Proceeds 1
Shares in SQM
Shares in ICL
Shares in APC
Conda Phosphate operations
$ 5,126
685
501
98
Gain (Loss) on
Sale
$ 4,278
(19)
121
–
Gain (Loss) on
Sale Net of
Income
Taxes
$ 3,366
(19)
126
–
Total Sale
$ 6,410
$ 4,380
$ 3,473
1 Proceeds are net of commissions.
AOCI
Net Earnings and
Retained Earnings
$
$
–
(19)
–
–
(19)
$ 3,366
–
126
–
$ 3,492
S
E
T
O
N
D
N
A
S
T
N
E
M
E
T
A
T
S
L
A
C
N
A
N
I
F
I
NUTRIEN 2018 113 ANNUAL REPORT
IN MILLIONS OF US DOLLARS EXCEPT AS OTHERWISE NOTED
NOTE 10 DISCONTINUED OPERATIONS CONTINUED
Supporting Information
Assets and liabilities held for sale as at December 31, 2017 were
comprised of:
Net earnings from discontinued operations for the years ended
December 31 were as follows:
ASSETS
Investments in SQM and APC
Investment in ICL
Current tax asset
Assets held for sale
LIABILITIES
Payables and accrued charges
Deferred income tax liabilities
Liabilities on assets held for sale
2017
$ 1,146
708
4
$ 1,858
$
$
–
36
36
Gain on disposal of investments in
SQM and APC
Dividend income of SQM, APC
and ICL 2
Share in earnings of SQM and APC 2
Income tax expense 3
Net earnings from discontinued
2018
2017 1
$ 4,399
$
–
156
–
(951)
24
151
(2)
operations
$ 3,604
$
173
1 Share of earnings, dividend income and income tax recovery pertaining to
these investments were reclassified from loss before income taxes and
income tax recovery to net earnings from discontinued operations on the
consolidated statements of earnings.
2 The Company’s investments in SQM and APC were classified as
discontinued operations in the later part of 2017 and, as a result, equity
accounting in respect of these investments ceased.
3 For 2018, income tax (expense) recovery is comprised of $(912) relating to the
disposals of SQM shares, including the repatriation of the net proceeds, and
$(39) relating to earnings from discontinued operations ($(18) for the planned
repatriation of the remaining excess cash available in Chile, $(26) for the
repatriation of dividend income received from SQM and $5 relating to APC).
Cash flows from discontinued operations for the year ended December 31 were as follows:
Cash provided by operating activities
Dividends from discontinued operations
Income tax related to the disposal of discontinued operations
Dividends from discontinued operations, net of tax
Cash provided by investing activities
Proceeds from disposal of discontinued operations 1
Income tax related to the disposal of discontinued operations
Proceeds from disposal of discontinued operations, net of tax
1 Excludes a receivable of $39 to be collected in 2019.
2018
2017
$
$
156
(26)
130
$ 6,371
(977)
$ 5,394
$
$
$
$
176
–
176
–
–
–
NOTE 11 NET EARNINGS PER SHARE
Basic net earnings per share provides a measure of the interests of each ordinary common share in the
Company’s performance over the year. Diluted net earnings per share adjusts basic net earnings per share
for the effects of all dilutive potential common shares.
WEIGHTED AVERAGE NUMBER OF COMMON SHARES
Dilutive effect of stock options 2
Dilutive effect of share-settled performance share units (“PSUs”) 4
Weighted average number of diluted common shares
2018 1
2017
624,900,000
– 3
– 3
840,079,000
199,000
38,000
624,900,000
840,316,000
1 The number of shares, stock options and share-settled PSUs reflect the Merger. Refer to Note 3 for details.
2 Diluted effect of stock options assumes exercise of all stock options with exercise prices at or below the average market price for the year would increase the
denominator, and the denominator would be decreased by the number of shares that the Company could have repurchased if it had assumed proceeds
from the exercise of stock options to repurchase them on the open market at the average share price for the year.
3 The diluted weighted average share calculations excluded an additional 658,000stock options and 137,000equity-settled PSUs due to their anti-dilutive effect.
4 Diluted effect of PSUs assumes the denominator would be increased by the total of the additional share-settled PSUs that could be issued if vesting criteria are achieved.
NUTRIEN 2018 114 ANNUAL REPORT
IN MILLIONS OF US DOLLARS EXCEPT AS OTHERWISE NOTED
NOTE 11 NET EARNINGS PER SHARE CONTINUED
Options excluded from the calculation of diluted net earnings per share due to the option exercise prices being greater
than the average market price of common shares were as follows:
Number of options excluded
Performance option plan years fully excluded
Stock option plan years fully excluded
2018
5,721,656
2009-2015
2015, 2018
2017
12,304,351
2008-2015, 2017
–
NOTE 12 CONSOLIDATED STATEMENTS OF CASH FLOWS
Accounting Policy
Highly liquid investments with a maturity of three months or less from the date of purchase are considered to be cash equivalents.
Supporting Information
For the years ended December 31
RECONCILIATION OF CASH PROVIDED BY OPERATING ACTIVITIES
Net earnings
Adjustments to reconcile net earnings to cash provided by operating activities
Gain on sale of investments in SQM and APC
Income tax related to the sale of the investment in SQM
Depreciation and amortization
Impairment of property, plant and equipment (Note 16)
Share-based compensation (Note 29)
Recovery of deferred income tax
Other long-term liabilities and miscellaneous
Subtotal of adjustments
CHANGES IN NON-CASH OPERATING WORKING CAPITAL
Receivables
Inventories
Prepaid expenses and other current assets
Payables and accrued charges
Subtotal of changes in non-cash operating working capital
CASH PROVIDED BY OPERATING ACTIVITIES
SUPPLEMENTAL CASH FLOWS DISCLOSURES
Interest paid
Income taxes paid
2018
2017
(Note 33)
$ 3,573
$
327
(4,399)
977
1,592
1,809
116
(290)
(188)
(383)
(153)
(887)
561
(659)
(1,138)
–
–
692
305
11
(273)
91
826
47
(10)
(13)
48
72
$ 2,052
$ 1,225
$
507
$ 1,155
$
$
198
83
S
E
T
O
N
D
N
A
S
T
N
E
M
E
T
A
T
S
L
A
C
N
A
N
I
F
I
NUTRIEN 2018 115 ANNUAL REPORT
IN MILLIONS OF US DOLLARS EXCEPT AS OTHERWISE NOTED
NOTE 12 CONSOLIDATED STATEMENTS OF CASH FLOWS CONTINUED
The following is a summary of changes in liabilities arising from financing activities:
Balance – December 31, 2017
Debt acquired in Merger (Note 3)
Cash flows 1
Reclassifications
Foreign currency translation and other non-cash changes
Balance – December 31, 2018
Balance – December 31, 2016
Cash flows 1
Non-cash changes
Short-Term Debt and
Current Portion of
Long-Term Debt 1
Long-Term Debt
Total
$
730
878
(927)
1,023
(72)
$ 1,632
$
884
(159)
5
$
$
$
3,711
4,930
(12)
(1,023)
(15)
7,591
3,707
(1)
5
$
$
$
4,441
5,808
(939)
–
(87)
9,223
4,591
(160)
10
Balance – December 31, 2017
$
730
$
3,711
$
4,441
1 Cash inflows and cash outflows arising from short-term debt transactions are presented on a net basis.
NOTE 13 FINANCIAL INSTRUMENTS AND RELATED RISK MANAGEMENT
Outlined below are the Company’s financial instruments, related risk management objectives, policies and
exposure, sensitivity and monitoring strategies to financial risks.
Accounting Estimates and Judgments
Judgment is required to determine whether the
right to offset is legally enforceable.
For derivatives or embedded derivatives, the most
significant area of judgment is whether the
contract can be settled net. This is one of the
criteria used to determine whether a contract for a
nonfinancial asset is considered a derivative and
accounted for as such. Judgment is also applied in
determining whether an embedded derivative is
closely related to the host contract, in which case
bifurcation and separate accounting are not
necessary.
Accounting Policies
Financial instruments are classified and measured as follows:
Instrument type
Fair Value
Through Profit or
Loss (“FVTPL”)
Cash and cash
equivalents and
derivatives
Financial Assets and
Liabilities at
Amortized
Cost 1
Receivables, short-term
debt, payables and
accrued charges, long-
term debt, other long-
term debt instruments
FVTOCI
Equity
investments
not held for
trading
Measurement
Fair value
Fair value
Amortized cost
Fair value gains and losses
Profit or loss
Interest and dividends
Profit or loss
Impairment of assets
–
Foreign exchange
Transaction costs
Profit or loss
Profit or loss
OCI 2
Profit or
loss
–
OCI
OCI
–
Profit or loss: effective
interest rate
Profit or loss
Profit or loss
Included in cost of
instrument
1 Amortized cost is applied if the objective of the business model for the instrument or group of
instruments is to hold the asset to collect the contractual cash flows and the contractual terms
give rise on specified dates to cash flows that are solely payments of principal and interest.
2 For equity investments not held for trading, the Company may make an irrevocable election at
initial recognition to recognize changes in fair value through OCI rather than profit or loss. The
Company made this election for its investments in ICL, Sinofert and certain equity investments
as the investments are held for strategic purposes.
NUTRIEN 2018 116 ANNUAL REPORT
IN MILLIONS OF US DOLLARS EXCEPT AS OTHERWISE NOTED
NOTE 13 FINANCIAL INSTRUMENTS AND RELATED RISK MANAGEMENT CONTINUED
Accounting Policies
Accounting Estimates and Judgments
Financial instruments are recognized at trade date when the Company commits to
purchase or sell the asset. Financial assets are derecognized when the rights to receive
cash flows from the investments have expired or the Company has transferred them,
and all the risks and rewards of ownership have been substantially transferred.
Derivatives are used to lock in commodity prices and exchange rates. For designated
and qualified cash flow hedges:
(cid:129) the effective portion of the change in the fair value of the derivative is accumulated
in OCI;
(cid:129) when the hedged forecast transaction occurs, the related gain or loss is removed
from AOCI and included in the cost of inventory;
(cid:129) the hedging gain or loss included in the cost of inventory is recognized in earnings
when the product containing the hedged item is sold or becomes impaired; and
(cid:129) the ineffective portions of hedges are recorded in net earnings in the current period.
The Company also assesses whether the natural gas derivatives used in hedging
transactions are expected to be or were highly effective, both at the hedge’s inception
and on an ongoing basis, in offsetting changes in fair values of hedged items. Hedge
effectiveness related to the Company’s New York Mercantile Exchange (“NYMEX”)
natural gas hedges is assessed on a prospective and retrospective basis using
regression analyses. The Company’s Alberta Energy Company (“AECO”) natural gas
hedges are assessed using a qualitative assessment. Potential sources of
ineffectiveness are changes in timing of forecast transactions, changes in volume
delivered or changes in credit risk of the Company or the counterparty.
Financial assets and financial liabilities are offset and the net amount is presented in
the consolidated balance sheets when the Company:
(cid:129) currently has a legally enforceable right to offset the recognized amounts; and
(cid:129) intends either to settle on a net basis, or to realize the assets and settle the liabilities
simultaneously.
See Note 32 for discussion related to the policies, estimates and judgments for fair
value measurements.
Supporting Information
Financial Risks
The Company is exposed in varying degrees to a variety of
financial risks from its use of financial instruments: credit risk,
liquidity risk and market risk. The source of risk exposure and
how each is managed are outlined below.
Credit Risk
The Company’s exposure to credit risk on its cash and cash
equivalents, receivables (excluding taxes) and derivative
instrument assets is the carrying amount of each instrument on
the consolidated balance sheets.
Maximum exposure to credit risk as at December 31:
2018
2017
Cash and cash equivalents
Receivables 1
Other current assets – derivatives
Other non-current assets –
derivatives
$ 2,314
3,094
5
–
$
116
465
7
3
$ 5,413
$
591
1 Excluding income tax receivable.
Credit risk is managed through policies applicable to the following assets:
Acceptable Minimum
Counterparty Credit
Ratings
Exposure Thresholds
by Counterparty
Daily Counterparty
Settlement Based on
Prescribed Credit
Thresholds
Counterparties
to Contracts are
Investment-Grade
Quality
Cash and Cash Equivalents
Natural Gas Derivatives
Foreign Currency Derivatives
X
X
X
X
X
X
S
E
T
O
N
D
N
A
S
T
N
E
M
E
T
A
T
S
L
A
C
N
A
N
I
F
I
NUTRIEN 2018 117 ANNUAL REPORT
IN MILLIONS OF US DOLLARS EXCEPT AS OTHERWISE NOTED
NOTE 13 FINANCIAL INSTRUMENTS AND RELATED RISK MANAGEMENT CONTINUED
Credit risk on trade receivables for the Company’s Retail,
Potash, Nitrogen, and Phosphate and Sulfate segments is
managed through a credit management program whereby:
(cid:129) credit approval policies and procedures are in place to guide
the granting of credit to new customers as well as its
continued extension to existing customers;
(cid:129) existing customer accounts are reviewed every
12-24 months, depending on the credit limit amounts;
(cid:129) credit is extended to international customers based upon an
evaluation of both customer and country risk;
(cid:129) the credit period on sales is generally 15 and 30 days for
wholesale fertilizer customers, 30 days for industrial and feed
customers, 30-90 days for Retail customers and up to 180
days for select export sales customers; and
(cid:129) credit agency reports, where available, and an assessment of
other relevant information such as current financial
statements and/or credit references are used before
assigning credit limits to customers. Those that fail to meet
specified benchmark creditworthiness may transact with the
Company on a prepayment basis or provide another form of
credit support that the Company approves.
The Company’s trade receivables include a concentration in
Retail operations in Australia for advances to the customers to
purchase crop inputs and livestock. The Company mitigates risk
in these receivables by obtaining security over livestock. In the
Company’s Retail operations in Western Canada, credit risk in
accounts receivable is mitigated through an agency agreement
with a Canadian financial institution wherein the financial
institution provides credit to qualifying customers to assist in
financing their crop input purchases. Through the agency
agreement, which expires in 2021, customers have loans
directly with the financial institution while the Company has
only a limited recourse involvement to the extent of an
indemnification of the financial institution for 52 percent of its
future bad debts to a maximum of 5 percent of the qualified
customer loans. Outstanding customer credit with the financial
institution was $571 at December 31, 2018, which is not
recognized in the Company’s consolidated balance sheets.
Historical indemnification losses on this arrangement have
been negligible, and the average aging of the customer loans
with the financial institution is current.
Liquidity Risk
Liquidity risk arises from the Company’s general funding needs
and the management of its assets, liabilities and optimal capital
structure. The Company manages its liquidity risk to maintain
sufficient liquid financial resources to fund its operations and
meet its commitments and obligations in a cost-effective
manner. In managing its liquidity risk, the Company has access
to a range of funding options. It has established an external
borrowing policy with the following objectives:
(cid:129) maintain an optimal capital structure;
(cid:129) maintain investment-grade credit ratings that provide ease
of access to the debt capital and commercial paper markets;
(cid:129) maintain sufficient short-term credit availability; and
(cid:129) maintain long-term relationships with a sufficient number
of high-quality and diverse lenders.
The table below outlines the Company’s available credit
facilities as at December 31, 2018.
Total
Amount
Amount Outstanding
and Committed
Amount
Available
Unsecured revolving
term credit facility $ 4,500
$ 391
$ 4,109
Uncommitted
revolving demand
facility
Accounts receivable
securitization
program
Other credit facilities
500
500
520
–
–
238
500
500
282
The following maturity analysis of the Company’s financial liabilities and gross settled derivative contracts (for which the cash flows
are settled simultaneously) is based on the expected undiscounted contractual cash flows from the date of the consolidated balance
sheets to the contractual maturity date.
2018
Carrying Amount
of Liability as at
December 31
Contractual
Cash Flows
Within 1
Year
1 to 3 Years
3 to 5 Years
Over 5 Years
Short-term debt 1
Payables and accrued charges 2
Current portion of long-term
debt and Long-term debt1
Derivatives
$
$
629
4,695
8,594
71
$
13,989
$
629
4,695
12,818
72
18,214
$
$
629
4,695
1,362
44
6,730
$
$
–
–
1,121
19
1,140
$
$
–
–
1,583
9
1,592
$
$
–
–
8,752
–
8,752
1 Contractual cash flows include contractual interest payments related to debt obligations. Interest rates on variable rate debt are based on prevailing rates as
at December 31, 2018. Disclosures regarding offsetting of certain debt obligations are provided below.
2 Excludes non-financial liabilities and includes trade payables of approximately $500 paid in January 2019 through an arrangement whereby a supplier sold
the right to receive payment to a financial institution.
NUTRIEN 2018 118 ANNUAL REPORT
IN MILLIONS OF US DOLLARS EXCEPT AS OTHERWISE NOTED
NOTE 13 FINANCIAL INSTRUMENTS AND RELATED RISK MANAGEMENT CONTINUED
Market Risk
Market risks, where financial instrument fair values can fluctuate due to changes in market prices, include foreign exchange risk,
interest rate risk and price risk (related to commodity and equity securities).
Foreign Exchange Risk
To manage foreign exchange risk (primarily related to Canadian operating and capital expenditures, certain subsidiaries
denominated in currencies other than the functional currency of an operation, taxes and dividends), the Company may enter into
foreign currency derivatives. Treasury risk management policies allow such exposures to be hedged within certain prescribed limits
for both forecast operating and capital expenditures. The risk management policy is to manage the earnings impact that could occur
from a reasonably possible strengthening or weakening of the US dollar. The foreign currency derivatives are not currently
designated as hedging instruments for accounting purposes. The Company had no material exposure to foreign exchange risk that
could affect the Company’s net earnings as at December 31, 2018 and 2017.
Interest Rate Risk
Fluctuations in interest rates impact the future cash flows and
fair values of various financial instruments.
Interest rate risk on debt is addressed by:
(cid:129) using a portfolio of fixed and floating rate instruments;
(cid:129) aligning current and long-term assets with demand and
fixed-term debt;
(cid:129) monitoring the effects of market changes in interest rates;
and
(cid:129) using interest rate swaps, if desired.
Related to interest rate risk on investments in marketable
securities, the Company’s primary objectives are to:
(cid:129) ensure the security of principal amounts invested;
(cid:129) provide for an adequate degree of liquidity; and
(cid:129) achieve a satisfactory return.
Treasury risk management policies specify investment
parameters including eligible types of investment, maximum
maturity dates, maximum exposure by counterparty and
minimum credit ratings.
The Company had no material exposure to interest rate risk on
its financial instruments and earnings as at December 31, 2018
and 2017.
Price Risk
Commodity price risk exists on the Company’s natural gas
derivative instruments. Its natural gas strategy is to diversify its
forecast gas volume requirements, including a portion of
annual requirements purchased at spot market prices, a portion
at fixed prices (up to 10 years) and a portion indexed to the
market price of ammonia. Its objective is to acquire a reliable
supply of natural gas feedstock and fuel on a location-adjusted,
cost-competitive basis.
Price risk also exists for exchange-traded equity securities
measured at FVTPL or FVTOCI. The Company had no material
exposure to price risk on its financial instruments as at
December 31, 2018 and 2017.
Fair Value
Estimated fair values for financial instruments are designed to approximate amounts for which the instruments could be exchanged
in a current arm’s-length transaction between knowledgeable, willing parties. The valuation policies and procedures for financial
reporting purposes are determined by the Company’s finance department.
Financial instruments included in the consolidated balance sheets are measured either at fair value or amortized cost. The tables below
explain the valuation methods used to determine the fair value of each financial instrument and its associated level in the fair value
hierarchy.
Financial Instruments Measured at Fair Value
Fair Value Method
Cash and cash equivalents
Equity securities
Debt securities
Foreign currency derivatives not traded in an active market
Carrying amount (approximation to fair value assumed due to
short-term nature)
Closing bid price of the common shares as at the balance sheet
date
Closing bid price of the debt (Level 2) as at the balance sheet
date
Quoted forward exchange rates (Level 2) as at the balance
sheet date
S
E
T
O
N
D
N
A
S
T
N
E
M
E
T
A
T
S
L
A
C
N
A
N
I
F
I
NUTRIEN 2018 119 ANNUAL REPORT
IN MILLIONS OF US DOLLARS EXCEPT AS OTHERWISE NOTED
NOTE 13 FINANCIAL INSTRUMENTS AND RELATED RISK MANAGEMENT CONTINUED
Financial Instruments Measured at Fair Value
Fair Value Method
Foreign exchange forward contracts, swaps and options and
natural gas swaps not traded in an active market
A discounted cash flow model 1
Market comparison 2
1 Inputs included contractual cash flows based on prices for natural gas futures contracts, fixed prices and notional volumes specified by the swap contracts,
the time value of money, liquidity risk, the Company’s own credit risk (related to instruments in a liability position) and counterparty credit risk (related to
instruments in an asset position). Futures contract prices used as inputs in the model were supported by prices quoted in an active market and therefore
categorized in Level 2.
2 Inputs include current market and contractual prices, forward pricing curves, quoted forward prices, basis differentials, volatility factors and interest rates
and therefore categorized in Level 2.
Financial Instruments Measured at Amortized Cost
Fair Value Method
Receivables, short-term debt and payables and accrued charges
Long-term debt
Carrying amount (approximation to fair value assumed due to
short-term nature)
Quoted market prices (Level 1 or 2 depending on the market
liquidity of the debt)
Other long-term debt instruments
Carrying amount
The following table presents the Company’s fair value hierarchy for financial assets and financial liabilities carried at fair value on a
recurring basis or measured at amortized costs:
2018
Financial instruments measured at fair value on a recurring basis
Derivative instrument assets
Other current financial assets – marketable securities 2
Investments at FVTOCI 3
Derivative instrument liabilities
Financial instruments measured at amortized cost
Cash and cash equivalents
Current portion of long-term debt
Senior notes and debentures 4
Fixed and floating rate debt
Long-term debt
Senior notes and debentures 4
Fixed and floating rate debt
2017
Derivative instrument assets
Natural gas derivatives
Investments at FVTOCI 3
Derivative instrument liabilities
Natural gas derivatives
Long-term debt
Senior notes 4
Fair Value Measurements at Reporting
Dates Using:
Quoted Prices in
Active Markets
for Identical Assets
(Level 1) 1
Significant Other
Observable
Inputs (Level 2) 1
Carrying Amount of
Asset (Liability) as
at December 31
$
5
97
186
(71)
$
2,314
(995)
(8)
(7,569)
(22)
$
9
970
(64)
(3,707)
$
$
$
–
12
186
–
–
–
–
(1,004)
–
–
970
–
(490)
$
5
85
–
(71)
$
2,314
(1,009)
(8)
(6,177)
(22)
$
9
–
(64)
(3,555)
1 During the period ended December 31, 2018, there were no transfers between Level 1 and Level 2 for financial instruments measured at fair value. The
Company’s policy is to recognize transfers at the end of the reporting period.
2 Marketable securities consist of equity and fixed income securities. The Company determines the fair value of equity securities based on the bid price of
identical instruments in active markets. The Company values fixed income securities using quoted prices of instruments with similar terms and credit risk.
3 Investments at FVTOCI are comprised of shares in Sinofert and other (Note 21) (2017 – ICL, Sinofert and other). The Company’s investment in ICL was sold
during 2018 (Note 10).
4 Carrying amount of liability includes net unamortized debt issue costs.
NUTRIEN 2018 120 ANNUAL REPORT
IN MILLIONS OF US DOLLARS EXCEPT AS OTHERWISE NOTED
NOTE 13 FINANCIAL INSTRUMENTS AND RELATED RISK MANAGEMENT CONTINUED
Financial assets (liabilities)
Gross
Offset
Net
Amounts
Presented
Gross
Offset
Net
Amounts
Presented
2018
2017
Derivative instrument assets
Natural gas derivatives 1
Derivative instrument liabilities
Natural gas derivatives 2
Other long-term debt instruments 3
$
$
31
$
(27)
$
4
$
11
$
(2)
$
9
(92)
(150)
(211)
$
26
150
149
(66)
–
(62)
$
(74)
(150)
10
150
(64)
–
$ (213)
$ 158
$ (55)
1 Cash margin deposits of $NIL (2017 – $(1)) were held related to legally enforceable master netting arrangements.
2 Cash margin deposits of $18 (2017 – $38) were placed with counterparties related to legally enforceable master netting arrangements.
3 Back-to-back loan arrangements that are not subject to any financial test covenants but are subject to certain customary covenants and events of default,
including, for other long-term debt, an event of default for non-payment or other debt in excess of $25. Non-compliance with such covenants could result
in accelerated payment of the related debt. The Company was in compliance with these covenants as at December 31, 2018.
Natural gas derivatives outstanding:
2018
2017
Notional 1
Maturities
Average
Contract
Price 2
Fair Value
of Assets
(Liabilities)
Notional 1
Maturities
Average
Contract
Price 2
Fair Value
of Assets
(Liabilities)
Natural gas
NYMEX swaps
AECO swaps 3
22
26
2019 – 2022
2019
$4.26
$1.92
$(35)
$(25)
27
–
2018 – 2022
–
$4.89
–
$(54)
$ –
1 In millions of British thermal units (“MMBtu”).
2 US dollars per MMBtu.
3 AECO swaps are only included in 2018 as a result of the Merger as described in Note 3.
NOTE 14 RECEIVABLES
Trade accounts receivable mainly consist of amounts owed to Nutrien by its customers, the largest
individual customer being the related party, Canpotex.
Accounting Policies
Trade accounts receivable are recognized initially at fair value and subsequently
measured at amortized cost less provision for impairment of trade accounts
receivable. When a trade account receivable is uncollectible, it is written off
against the provision. Subsequent recoveries of amounts previously written off
are credited to the consolidated statements of earnings.
Vendors may offer various incentives to purchase products for resale. Vendor
rebates and prepay discounts are accounted for as a reduction of the prices of
the suppliers’ products. Rebates based on the amount of materials purchased
reduce cost of goods sold as inventory is sold. Rebates are offset based on sales
volumes to cost of goods sold if the rebate has been earned based on sales volumes
of products.
Rebates that are probable and can be reasonably estimated are accrued.
Rebates that are not probable or estimable are accrued when certain milestones
are achieved. Rebates not covered by binding agreements or published
vendor programs are accrued when conclusive documentation of right of receipt
is obtained.
Accounting Estimates and Judgments
Determining when amounts are deemed
uncollectible requires judgment.
Estimation of rebates can be complex in
nature as vendor arrangements are diverse.
The amount of the accrual is determined by
analyzing and reviewing historical trends to
apply negotiated rates to estimated and
actual purchase volumes. Estimated
amounts accrued throughout the year could
also be impacted if actual purchase volumes
differ from projected volumes.
S
E
T
O
N
D
N
A
S
T
N
E
M
E
T
A
T
S
L
A
C
N
A
N
I
F
I
NUTRIEN 2018 121 ANNUAL REPORT
IN MILLIONS OF US DOLLARS EXCEPT AS OTHERWISE NOTED
NOTE 14 RECEIVABLES CONTINUED
Supporting Information
Trade accounts – third parties
– Canpotex (Note 30)
Less provisions for impairment of trade accounts receivable
Rebates
Income taxes (Note 9)
Other non-trade accounts
December 31, 2018
December 31, 2017
$ 2,628
208
(90)
2,746
169
248
179
$ 3,342
$
$
314
82
(6)
390
–
24
75
489
NOTE 15 INVENTORIES
Inventories consist of Retail inventory (crop nutrients, crop protection products, seed and merchandise
products) and products from the Potash, Nitrogen, and Phosphate and Sulfate segments in varying stages
of the production process.
Accounting Estimates and Judgments
Judgment is used to allocate production
overhead to inventories and to determine
net realizable value, including the
appropriate measure and inputs of a
combination of interrelated demand and
supply variables.
Accounting Policies
Inventories are valued monthly at the lower of cost and net realizable value. Costs
are allocated to inventory using the weighted average cost method and include:
direct acquisition costs, direct costs related to units of production and a systematic
allocation of fixed and variable production overhead, as applicable.
Net realizable value is based on:
For products purchased for resale,
finished products, intermediate
products and raw materials
(cid:129) selling price of the finished product
(in ordinary course of business);
(cid:129) less the estimated costs of completion;
and
(cid:129) less the estimated costs to make
the sale.
For materials and supplies
(cid:129) replacement cost.
A writedown is recognized if carrying amount exceeds net realizable value and may
be reversed if the circumstances which caused it no longer exist.
Supporting Information
December 31,
2018
December 31,
2017
Purchased for resale
Finished products
Intermediate products
Raw materials
Materials and supplies
$
3,545
501
218
275
378
$
$
4,917
$
–
260
202
62
264
788
Inventories expensed to cost of goods sold during the year was
$13,083 (2017 – $2,791).
NUTRIEN 2018 122 ANNUAL REPORT
IN MILLIONS OF US DOLLARS EXCEPT AS OTHERWISE NOTED
NOTE 16 PROPERTY, PLANT AND EQUIPMENT
The majority of the Company’s tangible assets are the buildings, machinery and equipment used to
produce or distribute its products and render its services. These assets are depreciated over their
estimated useful lives.
Accounting Policies
Accounting Estimates and Judgments
Property, plant and equipment (which
include certain mine development costs,
pre-stripping costs and assets under
construction) are carried at cost less
accumulated depreciation and any
recognized impairment loss.
Cost includes all expenditures directly
attributable to bringing the asset to the
location and installing it in working
condition for its intended use, including:
(cid:129) additions to, and betterments and
renewals of, existing assets;
(cid:129) borrowing costs incurred during
construction using a capitalization rate
based on the weighted average interest
rate of the Company’s outstanding debt;
and
(cid:129) a reduction for income derived from the
asset during construction.
Each component of an item of property,
plant and equipment with a cost that is
significant in relation to the item’s total
cost is depreciated separately. When the
cost of replacing part of an item of
property, plant and equipment is
capitalized, the carrying amount of the
replaced part is derecognized. The cost of
major inspections and overhauls is
capitalized and depreciated over the period
until the next major inspection or overhaul.
Maintenance and repair expenditures that
do not improve or extend productive life
are expensed in the period incurred.
Environmental costs related to current
operations are also capitalized if:
(cid:129) property life is extended;
(cid:129) capacity is increased;
(cid:129) contamination from future operations is
mitigated or prevented; or
(cid:129) related to legal or constructive asset
retirement obligations.
Judgment involves determining:
(cid:129) costs, including income or expenses derived from an asset under
construction, that are eligible for capitalization;
(cid:129) timing to cease cost capitalization, generally when the asset is
capable of operating in the manner intended by management, but
also considering the circumstances and the industry in which the
asset is to be operated, normally predetermined by management with
reference to such factors as productive capacity;
(cid:129) the appropriate level of componentization (for individual components
for which different depreciation methods or rates are appropriate);
(cid:129) repairs and maintenance that qualify as major inspections and
overhauls; and
(cid:129) useful life over which such costs should be depreciated.
Certain property, plant and equipment directly related to the Potash,
Nitrogen, and Phosphate and Sulfate segments are depreciated using
the units-of-production method based on the shorter of estimates of
reserves or service lives. Pre-stripping costs are depreciated on a
units-of-production basis over the ore mined from the mineable
acreage stripped. Land is not depreciated. The remaining assets are
depreciated on a straight-line basis.
The following estimated useful lives have been applied to the majority of
property, plant and equipment assets as at December 31, 2018:
Useful Life Range
(years)
Weighted Average Useful
Life (years) 1
Land improvements
Buildings and improvements
Machinery and equipment
5 to 80
2 to 60
1 to 80
1 Weighted by carrying amount as at December 31, 2018.
35
38
25
Estimated useful lives, expected patterns of consumption, depreciation
method and residual values are reviewed at least annually with the
effect of any changes in estimate being accounted for on a prospective
basis.
Uncertainties are inherent in estimating reserve quantities, particularly
as they relate to assumptions regarding future prices, the geology of the
Company’s mines, the mining methods used, and the related costs
incurred to develop and mine its reserves. Changes in these
assumptions could result in material adjustments to reserve estimates,
which could result in impairments or changes to depreciation expense in
future periods.
S
E
T
O
N
D
N
A
S
T
N
E
M
E
T
A
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S
L
A
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A
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F
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Accounting policies, estimates and judgments related to impairment of long-lived assets are described in Note 32.
NUTRIEN 2018 123 ANNUAL REPORT
IN MILLIONS OF US DOLLARS EXCEPT AS OTHERWISE NOTED
NOTE 16 PROPERTY, PLANT AND EQUIPMENT CONTINUED
Supporting Information
Land and
Improvements
Buildings and
Improvements
Machinery
and
Equipment
Mine
Development
Costs
Assets Under
Construction
$
Carrying amount – December 31, 2017
Merger impact (Note 3)
Other acquisitions
Additions
Disposals
Transfers
Foreign currency translation
Other adjustments
Depreciation
Impairment
612
396
10
41
(3)
10
(9)
–
(33)
(6)
$ 4,184
2,695
31
61
(14)
30
(16)
44
(195)
(776)
$
6,744
4,042
66
327
(30)
538
(15)
(6)
(1,032)
(752)
$
979
–
–
42
–
18
–
10
(65)
(275)
$
452
326
–
975
–
(596)
(7)
(7)
–
–
Total
$ 12,971
7,459
107
1,446
(47)
–
(47)
41
(1,325)
(1,809)
Carrying amount – December 31, 2018
$ 1,018
$ 6,044
$
9,882
$
709
$ 1,143
$ 18,796
Balance as at December 31, 2018
comprised of:
Cost
Accumulated depreciation
$ 1,294
(276)
$ 7,617
(1,573)
$ 16,806
(6,924)
$ 1,954
(1,245)
$ 1,143
–
$ 28,814
(10,018)
Carrying amount
$ 1,018
$ 6,044
9,882
$
709
$ 1,143
$ 18,796
$
$
$
$
602
528
(634)
–
–
(44)
452
452
–
452
$ 13,318
625
–
20
(687)
(305)
$ 12,971
$ 20,142
(7,171)
$ 12,971
$
$
6,859
9
521
5
(487)
(163)
$ 1,027
88
(21)
15
(98)
(32)
$
Carrying amount – December 31, 2016
Additions
Transfers
Other adjustments
Depreciation
Impairment
Carrying amount – December 31, 2017
$
618
–
63
–
(19)
(50)
612
$ 4,212
–
71
–
(83)
(16)
$ 4,184
$
6,744
$
979
Balance as at December 31, 2017
comprised of:
Cost
Accumulated depreciation
Carrying amount
$
$
868
(256)
612
$ 4,837
(653)
$ 12,000
(5,256)
$ 1,985
(1,006)
$ 4,184
$
6,744
$
979
Depreciation of property, plant and equipment was included in
the following:
December 31,
2018
December 31,
2017
Freight, transportation and
distribution
Cost of goods sold
Selling expenses
General and administrative
expenses
$
Depreciation recorded in
inventory
15
1,016
259
35
1,325
46
$
–
668
–
–
668
19
$
1,371
$
687
NUTRIEN 2018 124 ANNUAL REPORT
IN MILLIONS OF US DOLLARS EXCEPT AS OTHERWISE NOTED
NOTE 16 PROPERTY, PLANT AND EQUIPMENT CONTINUED
After a strategic portfolio review was completed in 2018, it was
determined the New Brunswick Potash operations would no
longer be part of the Company’s medium-term or long-term
strategic plans. As a result, the New Brunswick Potash
operations will be taken out of care and maintenance and
permanently shut down. The decision was considered a
significant change in the expected manner of use and the
related assets were moved from the Potash cash-generating
unit (“CGU”) to the New Brunswick CGU. Indicators of
impairment were identified, and the Company conducted an
impairment assessment of the New Brunswick CGU where the
estimated recoverable amount was determined to be $50,
based on fair value less costs of disposal (“FVLCD”). Since the
estimated recoverable amount was lower than the carrying
value, an impairment loss of $1,809 ($1,320 net of tax) was
recorded in the Potash segment. The estimated recoverable
amount was determined to be the salvage value of the assets
based on the estimated fair market value of similar used
assets and past experience, a Level 3 fair value measurement.
There were no reversals of impairment in 2018.
In 2017, an impairment loss of $305 ($234, net of tax) was
recognized in costs of goods sold under the Phosphate and
Sulfate segment. This was primarily due to an indicator of
impairment identified in the White Springs and Feed Plants
CGU, as a result of reduced efficiency of conversion of rock to
finished product, shifts in production mix and deteriorating
price expectations. The White Springs and Feed Plants CGU
had a recoverable amount of $96 at December 31, 2017
based on value in use. The recoverable amount was calculated
using an after-tax discount rate of 8 percent based on the
estimated weighted average cost of capital of a listed entity
with similar assets.
NOTE 17 GOODWILL AND OTHER INTANGIBLE ASSETS
Intangible assets, including goodwill, are identifiable, represent future economic benefits and are
controlled by the Company. Goodwill is not amortized but is subject to annual impairment review.
Accounting Policies
Goodwill is carried at cost, is not amortized, and represents the excess of the cost
of an acquisition over the fair value of the Company’s share of the net identifiable
assets of the acquired subsidiary at the date of acquisition.
An intangible asset is recognized when it is:
(cid:129) reliably measurable;
(cid:129) identifiable (separable or arises from contractual rights);
(cid:129) probable that expected future economic benefits will flow to the Company; and
(cid:129) controllable by the Company.
Amortization is recognized in net earnings as an expense related to the function of
the intangible asset.
The following expenses are not recognized as an asset:
(cid:129) costs to maintain software programs; and
(cid:129) development costs that do not meet the capitalization criteria.
The following estimated useful lives have been applied to finite-
lived intangible assets as at December 31, 2018:
Accounting Estimates and Judgments
Goodwill is allocated to CGUs or groups of
CGUs for impairment testing based on the
level at which it is monitored by
management, and not at a level higher than
an operating segment. The allocation is
made to those CGUs or groups of CGUs
expected to benefit from the business
combination in which the goodwill arose.
Judgment is applied in determining when
expenditures are eligible for capitalization
as intangible assets.
Estimation is applied to determine
expected useful lives used in the straight-
line amortization of intangible assets with
finite lives.
Customer relationships
Technology
Trade names 1
Other
Useful Life Range
(years)
6 to 15
3 to 7
10 to 20
1 to 30
1 Certain trade names have indefinite useful lives as there are no
regulatory, legal, contractual, cooperative, economic or other factors that
limit their useful lives.
Useful lives are reviewed, and adjusted if appropriate, at least
annually.
NUTRIEN 2018 125 ANNUAL REPORT
S
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O
N
D
N
A
S
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N
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M
E
T
A
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S
L
A
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N
A
N
I
F
I
IN MILLIONS OF US DOLLARS EXCEPT AS OTHERWISE NOTED
NOTE 17 GOODWILL AND OTHER INTANGIBLE ASSETS CONTINUED
Supporting Information
Following is a reconciliation of intangible assets:
Carrying amount – December 31, 2017
Merger impact (Note 3)
Other acquisitions (Note 3)
Additions
Disposals
Foreign currency translation
Amortization 1
Carrying amount – December 31, 2018
Balance as at December 31, 2018
comprised of:
Cost
Accumulated amortization
Carrying amount
Carrying amount – December 31, 2016
Additions
Amortization 1
Carrying amount – December 31, 2017
Balance as at December 31, 2017
comprised of:
Cost
Accumulated amortization
Carrying amount
Goodwill
$
97
11,185
197
–
–
(48)
–
$ 11,431
$ 11,438
(7)
$ 11,431
97
$
–
–
97
$
$
$
104
(7)
97
$
$
$
$
$
$
$
$
Customer
Relationships 2
Technology
Trade
Names
–
1,708
1
–
–
(20)
(135)
1,554
1,691
(137)
1,554
–
–
–
–
$
–
44
–
79
–
1
(7)
$ 117
$ 124
(7)
$ 117
–
$
–
–
–
$
$
$
–
122
–
–
–
(4)
(28)
90
$
$
$ 118
(28)
90
–
–
–
–
$
Other
$
69
474
7
19
(27)
(6)
(87)
$ 449
Total Other
Intangibles
$
69
2,348
8
98
(27)
(29)
(257)
$ 2,210
$ 586
(137)
$ 449
83
$
1
(15)
69
$
$ 2,519
(309)
$ 2,210
83
$
1
(15)
69
$
–
–
–
$
$
–
–
–
$
$
–
–
–
$ 123
(54)
69
$
$
$
123
(54)
69
1 Amortization of $225 was included in selling expenses during the year ended December 31, 2018 (2017 – $NIL).
2 The remaining amortization period of customer relationships at December 31, 2018, was approximately 8 years.
Goodwill Impairment Testing
Goodwill by groups of CGUs as at December 31 is as follows:
sources as well as industry and market trends. For each group of
CGUs, terminal growth rates used and corresponding
breakeven discount rates per annum that equate the
recoverable amount to the carrying amount are as follows:
Retail
Potash
Nitrogen
Phosphate and Sulfate
2018
2017
$
6,882
154
4,097
298
$ 11,431
$
$
–
–
97
–
97
The Company performed its annual impairment test on
goodwill during the fourth quarter and did not identify any
impairment.
In calculating the recoverable amount for goodwill, the Company
used the FVLCD methodology based on discounted cash flows
(five-year projections and a terminal year thereafter) and
incorporated assumptions an independent market participant
would apply. The Company adjusted discount rates for each group
of CGUs for the risk associated with achieving its forecasts
(five-year projections) and for the currency in which the Company
expects to generate cash flows. FVLCD is a Level 3 measurement.
The Company uses its market capitalization and comparative
market multiples to corroborate discounted cash flow results.
The key assumptions with the greatest influence on the
calculation of the recoverable amounts are the discount rates,
terminal growth rates and cash flow forecasts for each group of
CGUs as derived from the Company’s strategic plan. These key
assumptions were based on historical data from internal
Terminal
Growth Rate
Breakeven
Discount Rate
Retail
Potash
Nitrogen
Phosphate and Sulfate
2.5%
2.5%
2.0%
2.0%
8.3%
13.1%
12.8%
11.2%
For Retail, sensitivities of the key assumptions are as follows:
Percentage
Point Change
Change
in Recoverable
Amount
Discount rate
Terminal growth rate
Forecasted EBITDA over
forecast period
+0.1%
-0.1%
+0.1%
-0.1%
+5.0%
-5.0%
$ (365)
381
$ 320
(307)
$ 1,488
(1,477)
NUTRIEN 2018 126 ANNUAL REPORT
IN MILLIONS OF US DOLLARS EXCEPT AS OTHERWISE NOTED
NOTE 18 OTHER ASSETS
Other assets as at December 31 were comprised of:
Deferred income tax assets (Note 9)
Ammonia catalysts – net of accumulated amortization of $79 (2017 – $61)
Long-term income tax receivable (Note 9)
Accrued pension benefit asset (Note 28)
Other – net of accumulated amortization of $38 (2017 – $35)
2018
2017
$
$
216
81
36
27
165
525
$
18
42
64
24
98
$
246
NOTE 19 PAYABLES AND ACCRUED CHARGES
Trade and other payables and accrued charges mainly consist of amounts owed to suppliers and
prepayments made by customers planning to purchase the Company’s products for the upcoming
growing season.
Payables and accrued charges as at December 31 were comprised of:
Trade accounts
Customer prepayments
Dividends
Accrued compensation
Current portion of asset retirement obligations and accrued environmental costs (Note 20)
Accrued interest
Current portion of share-based compensation (Note 29)
Current portion of derivatives
Income taxes (Note 9)
Current portion of pension and other post-retirement benefits (Note 28)
Other payables and other accrued charges
2018
2017
$
$
3,053
1,625
526
425
156
105
87
45
47
13
621
6,703
$
$
255
–
84
98
72
33
13
29
16
35
201
836
S
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T
O
N
D
N
A
S
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N
E
M
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T
A
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A
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N
A
N
I
F
I
NUTRIEN 2018 127 ANNUAL REPORT
IN MILLIONS OF US DOLLARS EXCEPT AS OTHERWISE NOTED
NOTE 20 ASSET RETIREMENT OBLIGATIONS AND ACCRUED ENVIRONMENTAL COSTS
A provision is an estimated liability with uncertainty over the timing or amount that will be paid. The most
significant asset retirement and environmental remediation provisions relate to costs to restore potash
and phosphate sites to their original, or another specified, condition.
Accounting Policies
Provisions are:
(cid:129) recognized for present legal or constructive obligations arising from past events
where a future outflow of resources is probable, provided that amount can be
reliably estimated;
(cid:129) measured at the present value of the cash flow expected to be required to settle
the obligation; and
(cid:129) reviewed at the end of each reporting period for any changes, including the
discount rate, foreign exchange rate and amount or timing of the underlying
cash flows, and adjusted against the carrying amount of the provision and any
related asset; otherwise, it is recognized in net earnings.
A gain or loss may be incurred upon settlement of the liability.
As a result of the Merger, the Company recognized contingent liabilities, which
represents additional environmental costs that are present obligations of the
Company although cash outflows of resources are not probable. These contingent
liabilities are subsequently measured at the higher of the amount initially
recognized and the best estimate of the expenditures to be incurred.
Asset retirement obligations and accrued environmental costs include:
(cid:129) reclamation and restoration costs at the Company’s potash and phosphate
mining operations, including management of materials generated by mining
and mineral processing, such as various mine tailings and gypsum;
(cid:129) land reclamation and revegetation programs;
(cid:129) decommissioning of underground and surface operating facilities;
(cid:129) general cleanup activities aimed at returning the areas to an environmentally
acceptable condition; and
(cid:129) post-closure care and maintenance.
Accounting Estimates and Judgments
Estimates for provisions take into account:
(cid:129) most provisions will not be settled for a
number of years;
(cid:129) environmental laws and regulations and
interpretations by regulatory authorities
could change or circumstances affecting
the Company’s operations could change,
either of which could result in significant
changes to current plans; and
(cid:129) the nature, extent and timing of current
and proposed reclamation and closure
techniques in view of present
environmental laws and regulations.
It is reasonably possible that the ultimate
costs could change in the future and that
changes to these estimates could have a
material effect on the Company’s financial
statements.
The Company uses appropriate technical
resources, including outside consultants, to
develop specific site closure and post-
closure plans in accordance with the
requirements of the various jurisdictions in
which it operates. Other than certain land
reclamation programs, settlement of the
obligations is typically correlated with mine
life estimates.
The pre-tax risk-free discount rate and expected cash flow payments for asset retirement obligations and accrued environmental
costs at December 31, 2018 were as follows:
Potash sites
Phosphate sites
Other
Asset Retirement Obligations
Accrued Environmental Costs
Risk-Free
Rate (%) 1
3.64 – 5.00
1.60 – 5.43
1.22 – 6.50
Cash Flow
Payments
(years) 2
52 – 430
1 – 483
1 – 49
Risk-Free
Rate (%) 1
n/a
2.08 – 4.27
2.05 – 4.27
Cash Flow
Payments
(years)
n/a
1 – 30
1 – 30
1 Risk-free discount rates reflect current market assessments of the time value of money and the risks specific to the timing and jurisdiction of the obligation.
2 Time frame in which payments are expected to principally occur from December 31, 2018, with the majority of phosphate payments taking place over the
next 80 years. Changes in years can result from changes to the mine life and/or changes in the rate of tailing volumes.
n/a = not applicable
NUTRIEN 2018 128 ANNUAL REPORT
IN MILLIONS OF US DOLLARS EXCEPT AS OTHERWISE NOTED
NOTE 20 ASSET RETIREMENT OBLIGATIONS AND ACCRUED ENVIRONMENTAL COSTS CONTINUED
Sensitivity of asset retirement obligations and accrued environmental costs to changes in the discount rate on the recorded liability
as at December 31, 2018 was as follows:
Asset retirement obligations
Potash sites
Phosphate sites
Other
Accrued environmental costs
Phosphate sites
Other
Undiscounted
Cash Flows
Discounted
Cash Flows
$
$
675 1
1,636
101
321
318
130
1,125
40
246
288
Discount Rate
+0.5%
-0.5%
$
(88)
$
88
(12)
15
1 Represents total undiscounted cash flows in the first year of decommissioning for operating sites and cash flows for all years for sites that were or would be
permanently shut down. For operating sites, excludes subsequent years of tailings dissolution, fine tails capping, tailings management area reclamation, post
reclamation activities and monitoring, and final decommissioning, which are estimated to take an additional 90-375 years.
Supporting Information
Following is a reconciliation of asset retirement and environmental restoration obligations:
Asset
Retirement
Obligations
Accrued
Environmental
Costs
Total
Balance – December 31, 2017
Merger impact 1
Recorded in earnings
Capitalized to property, plant and equipment
Settled during the year
Foreign currency translation
$
702
608
64
9
(57)
(31)
$
21
525
12
–
(12)
(12)
Balance – December 31, 2018
$
1,295
$
534
Balance as at December 31, 2018 comprised of:
Current liabilities
Payables and accrued charges (Note 19)
Non-current liabilities
Asset retirement obligations and accrued environmental costs
$
$
122
1,173
$
$
34
500
$
$
$
$
723
1,133
76
9
(69)
(43)
1,829
156
1,673
1 Asset retirement obligations of $201 and accrued environmental costs of $376 represent contingent liabilities recognized as a result of the Merger. Refer to
Note 3.
S
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T
O
N
D
N
A
S
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N
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M
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T
A
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S
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A
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N
A
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F
I
NUTRIEN 2018 129 ANNUAL REPORT
IN MILLIONS OF US DOLLARS EXCEPT AS OTHERWISE NOTED
NOTE 21 INVESTMENTS
Nutrien holds interests in associates and joint ventures, the most significant being Canpotex, MOPCO,
Profertil and Agrichem. The Company’s most significant investment accounted for as FVTOCI is Sinofert.
Accounting Policies
Investments in Equity-Accounted Investees
Investments in which the Company exercises significant influence (but does not
control) or has joint control (as joint ventures) are accounted for using the equity
method. Significant influence is the power to participate in the financial and
operating policy decisions of the investee, commonly referred to as associates.
The Company’s significant policies include:
Significant Policy
Statement of
Comprehensive Income
Investment
Accounting Estimates and Judgments
Investments in Equity-Accounted
Investees and Investments at FVTOCI
Judgment is necessary in determining:
(cid:129) when significant influence exists; and
(cid:129) if objective evidence of impairment exists
for equity-accounted investees and, if so,
the amount of impairment.
Proportionate share of net earnings
(loss) adjusted for any fair value
adjustments at acquisition date and
differences in accounting policies
Net earnings (loss)
Increase (decrease)
Gain (loss) on disposal
Net earnings (loss)
Increase (decrease)
Proportionate share of post-
acquisitions movements in OCI (loss)
OCI (loss)
Increase (decrease)
Impairment (loss) reversal 1
Net earnings (loss)
Increase (decrease)
Dividends received
–
(Decrease)
1 An impairment test is performed when there is objective evidence of impairment, such as
significant adverse changes in the environment in which the equity-accounted investee operates
or a significant or prolonged decline in the fair value of the investment below its carrying
amount.
Investments at FVTOCI
The fair value of investments designated as FVTOCI is recorded in the consolidated
balance sheets, with unrealized gains and losses, net of related income taxes,
recorded in AOCI.
The Company’s significant policies include:
(cid:129) the cost of investments sold is based on the weighted average method; and
(cid:129) realized gains and losses on these investments remain in OCI, but the cumulative
balance can be transferred to another equity reserve, such as retained earnings.
NUTRIEN 2018 130 ANNUAL REPORT
IN MILLIONS OF US DOLLARS EXCEPT AS OTHERWISE NOTED
NOTE 21 INVESTMENTS CONTINUED
Supporting Information
Equity-accounted investees and investments at FVTOCI as at December 31 were comprised of:
Name
Principal Activity
Principal Place
of Business
and Incorporation
2018
2017
2018
2017
Proportion of Ownership
Interest and Voting Rights Held
Carrying Amount
EQUITY-ACCOUNTED
INVESTEES
MOPCO 1
Profertil
Canpotex
Agrichem 4
Nitrogen Producer
Nitrogen Producer
Marketing & Logistics
Fertilizer Producer
& Marketer
Egypt
Argentina
Canada
Brazil
26%
50%
50%2
80%
–%3
–%3
33%
–%
$
$
236
192
–
103
161
$
692
$
–
–
–
–
30
30
Other associates
and joint ventures
Total equity-accounted investees
INVESTMENTS
AT FVTOCI
Sinofert 5
Other
Fertilizer Supplier
& Distributor
China/Bermuda
22%
–%
22%
–%
$
180
6
$ 258
4
Total investments at FVTOCI
$
186
$ 262
1 The Company has representation on the MOPCO Board of Directors providing significant influence over MOPCO. The Company recorded its share of
MOPCO’s earnings on a one-quarter lag, adjusted for any material transactions for the current quarter, as the financial statements of MOPCO are not
available on the date of issuance of the Company’s financial statements. Future conditions, including those related to MOPCO in Egypt, which has been
subject to political instability and civil unrest, may restrict the Company’s ability to obtain dividends from MOPCO. The Company is also exposed to currency
risk related to fluctuations in the Egyptian pound against the US dollar.
2 Upon closing of the Merger on January 1, 2018 as described in Note 3, the classification of the investment changed from an associate to a joint venture.
3 Investments in MOPCO and Profertil were acquired as part of the Merger as described in Note 3.
4 As contractually agreed, the Company has joint control with the other shareholder of Agrichem. Subsequent to 2018, the Company acquired the remaining
interest in Agrichem making it a wholly owned subsidiary that will be consolidated.
5 The Company’s 22 percent ownership of Sinofert does not constitute significant influence as the Company does not have any representation on the Board
of Directors of Sinofert. The Company elected for this investment to be accounted for as FVTOCI.
Additional financial information of the Company’s proportionate interest in equity-accounted investees for the years ended
December 31 was as follows:
Earnings from continuing operations and net earnings
Other comprehensive income
Total comprehensive income
Associates
Joint Ventures
2018
2017
2018
2017
$
$
24
–
24
$
$
–
–
–
$
$
16
–
16
$
$
9
–
9
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NUTRIEN 2018 131 ANNUAL REPORT
IN MILLIONS OF US DOLLARS EXCEPT AS OTHERWISE NOTED
NOTE 22 SHORT-TERM DEBT
The Company uses its $4.5 billion commercial paper program for its short-term cash requirements. The
commercial paper program is backstopped by an unsecured revolving term credit facility. Short-term
facilities are renegotiated periodically.
Short-term debt as at December 31 was comprised of:
Commercial paper
Other credit facilities 1
2018
2017
$
$
391
238
629
$
$
730
–
730
1 Credit facilities are unsecured and consist of US dollar-denominated debt of $153, euro-denominated debt of $22 and debt of $63 in other currency
denominations.
The amount available under the commercial paper program is
limited to the availability of backup funds under the unsecured
revolving term credit facility. As at December 31, 2018, the
Company was authorized to issue commercial paper up to
$4,500 (2017 – $2,500). The Company also had other facilities
available from which it could draw short-term debt, including a
$500 uncommitted revolving demand facility, a $500 accounts
receivable securitization program (limit is reduced to $300 from
January to March each year), and $520 of other facilities mostly
denominated in foreign currencies.
During 2018, the legacy $75 unsecured line of credit was
replaced with the $500 uncommitted revolving credit facility.
Principal covenants and events of default under the $4,500
unsecured revolving term credit facility are described in
Note 23.
Under the accounts receivable securitization program, the
Company sells certain trade receivables to a special purchase
vehicle, which is a consolidated entity within the Company. The
Company controls and retains substantially all of the risks and
rewards of the receivables sold to the special purchase vehicle.
Should the Company wish to draw funds under the program,
the sold accounts receivable balances may be used as capacity
for collateralized borrowings from a third-party financial
institution. At December 31, 2018, no loan drawdowns were
made from this program.
NOTE 23 LONG-TERM DEBT
The Company’s sources of borrowing for funding purposes are primarily senior notes, debentures
and long-term credit facilities. The Company has access to the capital markets through its base
shelf prospectus.
Accounting Policy
Issue costs of long-term debt obligations are capitalized to long-term obligations and are amortized to expense over the term of
the related liability using the effective interest method.
NUTRIEN 2018 132 ANNUAL REPORT
IN MILLIONS OF US DOLLARS EXCEPT AS OTHERWISE NOTED
NOTE 23 LONG-TERM DEBT CONTINUED
Supporting Information
Long-term debt as at December 31 was comprised of:
Rate of Interest
Maturity
2018
2017
Senior notes 1
Notes issued 2009
Notes issued 2009
Notes issued 2014
Notes issued 2015
Notes issued 2016
Notes issued 2006
Notes issued 2010
Debentures 1
Debentures issued 2008
Debentures issued 2012
Debentures issued 2013
Debentures issued 2015
Debentures issued 1997
Debentures issued 2015
Debentures issued 2006
Debentures issued 2010
Debentures issued 2013
Debentures issued 2014
Other
6.500%
4.875%
3.625%
3.000%
4.000%
5.875%
5.625%
6.750%
3.150%
3.500%
3.375%
7.800%
4.125%
7.125%
6.125%
4.900%
5.250%
$
May 15, 2019
March 30, 2020
March 15, 2024
April 1, 2025
December 15, 2026
December 1, 2036
December 1, 2040
January 15, 2019
October 1, 2022
June 1, 2023
March 15, 2025
February 1, 2027
March 15, 2035
May 23, 2036
January 15, 2041
June 1, 2043
January 15, 2045
Add net unamortized fair value adjustments 2
Less net unamortized debt issue costs
Less current maturities
Less current portion of net unamortized fair value adjustments 2
Add current portion of net unamortized debt issue costs
500
500
750
500
500
500
500
500
500
500
550
125
450
300
500
500
500
30
8,205
444
(55)
8,594
(1,008)
(1)
6
(1,003)
$
500
500
750
500
500
500
500
–
–
–
–
–
–
–
–
–
–
–
3,750
–
(43)
3,707
–
–
4
4
$
7,591
$
3,711
1 Each series of senior notes and debentures is unsecured and has no sinking fund requirements prior to maturity. Each series is redeemable and has various
provisions that allow redemption prior to maturity, at the Company’s option, at specified prices.
2 Associated with the Merger on January 1, 2018.
During 2018, the Company exchanged an aggregate of $7,578
of legacy companies’ senior notes and debentures for the same
amount of new notes issued by Nutrien (the “Nutrien Notes”).
The Nutrien Notes have interest rates and maturities identical
to those of the applicable exchanged series of senior notes or
debentures. A small portion of senior notes and debentures,
excluding the 7.800 percent debentures due in 2027 (the “2027
debentures”), were not exchanged and remain obligations of
the issuing subsidiary. The indentures governing these
remaining subsidiary senior notes and debentures have been
amended to remove certain covenants and events of default
provisions. In addition, none of the 2027 debentures were
exchanged but debt holders consented to amend the financial
reporting covenant in the indenture governing the 2027
debentures to allow the Company’s financial reports, rather
than reports of the issuing subsidiary, to satisfy its financial
reporting obligations thereunder.
The Nutrien Notes have various provisions that allow for
redemption prior to maturity, at the Company’s option, at
specified prices. The Company is subject to certain customary
covenants including limitation on liens, merger and change of
control covenants, and customary events of default. The
Company was in compliance with these covenants as at
December 31, 2018.
S
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NUTRIEN 2018 133 ANNUAL REPORT
IN MILLIONS OF US DOLLARS EXCEPT AS OTHERWISE NOTED
NOTE 23 LONG-TERM DEBT CONTINUED
The debt exchange is accounted for as a modification of debt without substantial modification of terms as the financial terms of the
Nutrien Notes were identical to senior notes and debentures and there is no substantial difference between the present value of cash
flows under the Nutrien Notes compared to the notes and debentures. Accordingly, there is no gain or loss on the exchange. The
transaction costs from the debt exchange of $19 were recorded to the carrying amount of the long-term debt and will be amortized
over the life of the Nutrien Notes.
Details of the Company’s credit facility was as follows:
Credit facility
Borrowings outstanding
Commercial paper outstanding, backstopped by the credit facility
(Note 22)
1 Subject to extensions, at the request of Nutrien, which shall not exceed five years.
2018
2017
$4,500 – maturity April 10, 2023 1
$3,250 – maturity May 31, 2021
$250 – maturity May 31, 2020
$
$
NIL
391
$
$
NIL
730
During 2018, the Company replaced the legacy $3,500 unsecured revolving credit facility and the legacy $2,500 multi-jurisdictional
unsecured revolving credit facility with a new Nutrien $4,500 unsecured revolving term credit facility (“Nutrien Credit Facility”).
Principal covenants and events of default under the Nutrien Credit Facility include a debt to capital ratio of less than or equal to 0.65:1
and other customary events of default and covenant provisions. Non-compliance with such covenants could result in accelerated
repayment and/or termination of the credit facility. The Company was in compliance with all covenants as at December 31, 2018.
NOTE 24 SHARE CAPITAL
Authorized
The Company is authorized to issue an unlimited number of common shares without par value and an unlimited number of preferred
shares. The common shares are not redeemable or convertible. The preferred shares may be issued in one or more series with rights
and conditions to be determined by the Board of Directors. No preferred shares have been issued.
Issued
Balance – December 31, 2017 (Pre-Merger)
Conversion ratio
PotashCorp shares converted to Nutrien shares
Agrium shares – December 31, 2017 (Pre-Merger)
Conversion ratio
Agrium shares converted to Nutrien shares
Fractional shares cancelled 1
Balance – January 1, 2018 (Post-Merger)
Issued under option plans and share-settled plans
Repurchased
Balance – December 31, 2018
Number of
Common Shares
(Pre-Merger)
840,223,041
0.40
138,165,765
2.23
Number of
Common Shares
(Post-Merger)
Consideration
336,089,216
$
1,806
308,109,656
(1,399)
644,197,473
670,201
(36,332,197)
15,898
–
17,704
34
(998)
608,535,477
$
16,740
1 No fractional shares of Nutrien were issued. Each PotashCorp shareholder and Agrium shareholder that would otherwise have been entitled to receive a
fraction of a Nutrien share received, in lieu thereof, a cash amount, without interest, determined by reference to the volume weighted average trading price
of Nutrien shares on the Toronto Stock Exchange on the first five trading days on which such shares traded on such exchange following January 2, 2018.
Share Repurchase Program
On February 20, 2018, the Company’s Board of Directors approved a share repurchase program of up to 5 percent of the Company’s
outstanding common shares over a one-year period through a normal course issuer bid. On December 14, 2018, the normal course
issuer bid was increased to permit the repurchase of up to 8 percent of the Company’s outstanding common shares. Purchases of
common shares commenced on February 23, 2018 and will expire on the earlier of February 22, 2019, the date on which the
Company has acquired the maximum number of common shares allowable or the date on which the Company determines not to
make any further repurchases.
NUTRIEN 2018 134 ANNUAL REPORT
IN MILLIONS OF US DOLLARS EXCEPT AS OTHERWISE NOTED
NOTE 24 SHARE CAPITAL CONTINUED
On February 20, 2019, the Company’s Board of Directors approved the renewal of the share repurchase program of up to 5 percent
of the Company’s outstanding common shares over a one-year period through a normal course issuer bid.
Purchases under the normal course issuer bid will be made through open market purchases at market price as well as by other means
as may be permitted by applicable securities regulatory authorities, including private agreements.
The following table summarizes the Company’s share
repurchases:
Common shares repurchased for cancellation
Average price per share
Repurchase resulting in a reduction of:
Share capital
Contributed surplus 1
Retained earnings 1
Total Cost
2018
36,332,197
50.97
998
23
831
1,852
$
$
$
1 The excess of net cost over the average book value of the shares.
As of February 20, 2019, an additional 5,933,135 common
share were repurchased for cancellation at a cost of $297 and
an average price per share of $50.10.
Dividends Declared
During 2018, the Company declared a dividend of $0.40 per
share for the three months ended March 31, June 30 and
September 30. During the three months ended December 31,
2018, two dividends of $0.43 per share were declared. The first
declared dividend of $0.43 per share was payable January 17,
2019 to shareholders of record December 31, 2018, and the
second declared dividend of $0.43 per share is payable April 18,
2019 to shareholders of record on March 29, 2019.
NOTE 25
CAPITAL MANAGEMENT
The objective of Nutrien’s capital allocation policy is to balance between the return of capital to
shareholders, improvement in the efficiency of the Company’s existing assets, and delivery on the
Company’s growth opportunities, while maintaining a strong balance sheet and flexible capital structure
to optimize the cost of capital at an acceptable level of risk. Nutrien’s goal is to pay a stable and growing
dividend with a target payout that represents 40 to 60 percent of free cash flow after sustaining capital
through the agricultural cycle.
The Company monitors its capital structure and, based on
changes in economic conditions, may adjust the structure by
adjusting the amount of dividends paid to shareholders,
repurchasing shares, issuing new shares, issuing new debt or
retiring existing debt.
The Company uses a combination of short-term and long-term
debt to finance its operations. It typically pays floating rates of
interest on short-term debt and credit facilities, and fixed rates
on Nutrien Notes.
S
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NUTRIEN 2018 135 ANNUAL REPORT
IN MILLIONS OF US DOLLARS EXCEPT AS OTHERWISE NOTED
NOTE 25 CAPITAL MANAGEMENT CONTINUED
Adjusted net debt and adjusted shareholders’ equity are
included as components of the Company’s capital structure.
The calculation of adjusted net debt, adjusted shareholders’
equity and adjusted capital is set out in the following table:
2018
2017
$
629
$
730
Short-term debt
Current portion of long-term
debt
Long-term debt
Total debt
Cash and cash equivalents
Net debt
Unamortized fair value
adjustments
Adjusted net debt
Total shareholders’ equity
Accumulated other
1,003
7,591
9,223
(2,314)
6,909
(444)
6,465
24,425
comprehensive (income) loss
291
Adjusted shareholders’ equity
24,716
Adjusted capital
$ 31,181
$ 12,603
The Company monitors the following ratios:
Ratios
Adjusted net debt to adjusted
EBITDA
Adjusted EBITDA to adjusted
finance costs
Adjusted net debt to adjusted
2018
1.64
8.15
2017
(Note 33)
4.28
4.75
capital
20.7%
34.3%
–
3,711
4,441
(116)
4,325
–
4,325
8,303
(25)
8,278
Other components of ratios above are calculated as follows:
2018
2017
(Notes 33)
Net (loss) earnings from
continuing operations
Finance costs
Income taxes
Depreciation and amortization
$
EBITDA
Impairment of property, plant and
equipment
Merger and related costs
Share-based compensation
Defined Benefit Plans Curtailment
Gain
(31)
538
(93)
1,592
2,006
1,809
170
116
(157)
$
154
238
(183)
692
901
–
84
26
–
Adjusted EBITDA
$ 3,944
$ 1,011
Finance costs
Unwinding of discount on asset
$
retirement obligations
Borrowing costs capitalized to
property, plant and equipment
Interest on net defined benefit
pension and other post-
retirement plan obligations
2018
538
2017
238
$
(51)
12
(15)
(17)
11
(19)
Adjusted finance costs
$
484
$
213
The Company maintains a base shelf prospectus, which permits
issuance through April 2020 in Canada and the United States,
of common shares, debt, and other securities up to $11,000.
Issuance of securities under the base shelf prospectus requires
filing a prospectus supplement and is subject to the availability
of funding in capital markets. During the year ended
December 31, 2018, the Company filed a prospectus
supplement to exchange $8,175 of the senior notes of
PotashCorp and debentures of Agrium – for the Nutrien Notes
issued by the Company, as discussed in Note 23.
NUTRIEN 2018 136 ANNUAL REPORT
IN MILLIONS OF US DOLLARS EXCEPT AS OTHERWISE NOTED
NOTE 26 COMMITMENTS
A commitment is an agreement that is enforceable and legally binding to make a payment in the future
for the purchase of goods or services. These amounts are not recorded in the consolidated balance sheets
since the Company has not yet received the goods or services from the supplier. The amounts below are
what the Company is committed to pay based on current expected contract prices.
Accounting Policies
Leases entered into are classified as either finance or operating leases. Leases that
transfer substantially all of the risks and rewards of ownership of property to the
Company are accounted for as finance leases. They are capitalized at the
commencement of the lease at the lower of the fair value of the leased property
and the present value of the minimum lease payments. Property acquired under
a finance lease is depreciated over the shorter of the period of expected use on
the same basis as other similar property, plant and equipment and the lease term.
Leases in which a significant portion of the risks and rewards of ownership
are retained by the lessor are classified as operating leases. Rental payments under
operating leases are expensed in net earnings on a straight-line basis over the
period of the lease.
Refer to Note 32 for details pertaining to the impact of the adoption of IFRS 16
in 2019.
Accounting Estimates and Judgments
Judgment is required in considering a
number of factors to ensure that leases to
which the Company is party are classified
appropriately as operating or financing. Such
factors include whether the lease term is for
the major part of the asset’s economic life
and whether the present value of minimum
lease payments amounts to substantially all
of the fair value of the leased asset.
As at December 31, 2018, substantially all
of the leases to which the Company is party
have been classified as operating leases.
Supporting Information
Lease Commitments
The Company has various long-term operating lease
agreements for land, buildings, port and distribution facilities,
equipment, ocean-going transportation vessels, railcars,
vehicles and application equipment. The majority of lease
agreements are renewable at the end of the lease period at
market rates. Rental expenses for operating leases for the year
ended December 31, 2018 were $301 (2017 – $87).
Purchase Commitments
In 2018, the Company entered into a new long-term natural
gas purchase agreement in Trinidad, which will commence
January 1, 2019 and is set to expire December 31, 2023. The
contract provides for prices that vary primarily with ammonia
market prices, and annual escalating floor prices. The
commitments included in the following table are based on floor
prices and minimum purchase quantities.
Profertil has long-term gas contracts denominated in US dollars
and expiring in 2019, which account for approximately
100 percent of Profertil’s gas requirements. YPF S.A., the
Company’s joint venture partner in Profertil, supplies
approximately 70 percent of the gas under these contracts.
Commitments include the Company’s proportionate share of
this joint venture.
The Carseland facility has a power co-generation agreement,
expiring on December 31, 2026, which provides the Company
60 megawatt-hours of power per hour. The price for the power
is based on a fixed charge adjusted for inflation and a variable
charge based on the cost of natural gas provided to the facility
for power generation.
Agreements for the purchase of sulfur for use in the production
of phosphoric acid provide for specified purchase quantities
and prices based on market rates at the time of delivery.
Commitments included in the following table are based on
expected contract prices.
As part of the agreement to sell the Conda Phosphate
operations (“CPO”), the Company entered into long-term
strategic supply and offtake agreements which extend to 2023.
Under the terms of the supply and offtake agreements, the
Company will supply 100 percent of the ammonia requirements
of CPO and purchase 100 percent of the monoammonium
phosphate (“MAP”) product produced at CPO. The MAP
production is estimated at 330,000 tonnes per year.
Capital Commitments
The Company has various long-term contractual commitments
related to the acquisition of property, plant and equipment, the
latest of which expires in 2022. The commitments included in
the following table are based on expected contract prices.
Other Commitments
Other commitments consist principally of pipeline capacity,
technology service contracts, throughput and various rail and
vessel freight contracts, the latest of which expires in 2026, and
mineral lease commitments, the latest of which expires in 2038.
NUTRIEN 2018 137 ANNUAL REPORT
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IN MILLIONS OF US DOLLARS EXCEPT AS OTHERWISE NOTED
NOTE 26 COMMITMENTS CONTINUED
Minimum future commitments under these contractual arrangements were as follows at December 31, 2018:
Within 1 year
1 to 3 years
3 to 5 years
Over 5 years
Total
Long-term
debt,
Principal and
Estimated
Interest
$ 1,341
1,112
1,576
8,689
Operating
Leases
$
216
316
212
343
Purchase
Commitments
Capital
Commitments
Other
Commitments
$
$ 1,364
949
945
138
37
18
2
–
57
$
$
114
123
61
20
318
Total
$ 3,072
2,518
2,796
9,190
$ 17,576
$ 1,087
$ 12,718
$ 3,396
$
NOTE 27 GUARANTEES
Accounting Policies
Guarantees are not recognized in the consolidated balance
sheets, but are disclosed and include contracts or
indemnifications that contingently require the Company to
make payments to the guaranteed party based on:
(cid:129) changes in an underlying;
(cid:129) another entity’s failure to perform under an agreement; and
(cid:129) failure of a third party to pay its indebtedness when due.
Guarantees are recorded by the Company and recognized as a
financial instrument in the consolidated balance sheets when
any of the triggering events above result in the Company
becoming primarily liable to the contract.
Supporting Information
In the normal course of business, the Company provides
indemnification agreements to counterparties in transactions
such as purchase and sale contracts, service agreements,
director/officer contracts and leasing transactions. The terms of
these indemnification agreements:
(cid:129) may require the Company to compensate counterparties for
costs incurred as a result of various events, including
environmental liabilities and changes in (or in the
interpretation of) laws and regulations, or as a result of
litigation claims or statutory sanctions that may be suffered
by a counterparty as a consequence of the transaction;
(cid:129) will vary based upon the contract, the nature of which
prevents the Company from making a reasonable estimate of
the maximum potential amount that it could be required to
pay to counterparties; and
(cid:129) have not historically resulted in the Company making any
significant payments and, as at December 31, 2018, no
amounts have been accrued in the consolidated financial
statements (except for accruals relating to the underlying
potential liabilities).
Various commitments (such as railcar leases) related to a
certain investee have been directly guaranteed by the Company
under certain agreements with third parties. The Company
would be required to perform on these guarantees in the event
of default by the guaranteed parties. No material loss is
anticipated by reason of such agreements and guarantees. In
relation to significant guarantees, the Company has guaranteed
the gypsum stack capping, closure and post-closure obligations
of its wholly owned subsidiaries, PCS Phosphate Company, Inc.
(“PCS Phosphate”) in White Springs, Florida and PCS Nitrogen
Inc. (“PCS Nitrogen”) in Geismar, Louisiana, respectively,
pursuant to the financial assurance regulatory requirements in
those states. In addition to the foregoing guarantees associated
with US mining operations, the Company has guaranteed the
performance of certain remediation obligations of PCS Joint
Venture, Ltd., a wholly owned subsidiary, at the Lakeland,
Florida and Moultrie, Georgia sites.
The Company has accrued costs associated with the retirement
of long-lived tangible assets in the consolidated financial
statements to the extent that a legal or constructive liability to
retire such assets exists. See Note 20 for details.
The Company expects to be able to satisfy all applicable credit
support requirements without disrupting normal business
operations.
NUTRIEN 2018 138 ANNUAL REPORT
IN MILLIONS OF US DOLLARS EXCEPT AS OTHERWISE NOTED
NOTE 28 PENSION AND OTHER POST-RETIREMENT BENEFITS
The Company offers pension and other post-retirement benefits to qualified employees: defined benefit
pension plans; defined contribution pension plans; and health, disability, dental and life insurance (referred
to as other defined benefit) plans. Substantially all employees participate in at least one of these plans.
Accounting Policies
Accounting Estimates and Judgments
For employee retirement and other defined benefit plans:
(cid:129) accrued liabilities are recorded net of plan assets;
(cid:129) costs including current and past service costs, gains or losses
on curtailments and settlements, and remeasurements are
actuarially determined on a regular basis using the projected
unit credit method; and
Estimates and judgments are required to determine discount
rates, health care cost trend rates, projected salary increases,
retirement age, longevity and termination rates. These
assumptions are determined by management and are reviewed
annually by the Company’s independent actuaries.
The Company’s discount rate assumption is impacted by:
(cid:129) past service cost is recognized in net earnings at the earlier of
(cid:129) the weighted average interest rate at which each pension
when i) a plan amendment or curtailment occurs; or
ii) related restructuring costs or termination benefits are
recognized.
Remeasurements, recognized directly in OCI in the period they
occur, are comprised of actuarial gains and losses, return on
plan assets (excluding amounts included in net interest) and the
effect of the asset ceiling (if applicable).
When a plan amendment occurs before a settlement, the
Company recognizes past service cost before any gain or loss
on settlement.
Defined contribution plan costs are recognized in net earnings
for services rendered by employees during the period.
and other post-retirement plan liability could be effectively
settled at the measurement date;
(cid:129) country specific rates; and
(cid:129) the use of a yield curve approach. 1
1 Based on the respective plans’ demographics, expected future pension
benefits and medical claims, payments are measured and discounted to
determine the present value of the expected future cash flows. The cash
flows are discounted using yields on high-quality AA-rated non-callable
bonds with cash flows of similar timing where there is a deep market for
such bonds. Where the Company does not believe there is a deep market
for such bonds (such as for terms in excess of 10 years in Canada), the
cash flows are discounted using a yield curve derived from yields on
provincial bonds rated AA or better to which a spread adjustment is added
to reflect the additional risk of corporate bonds.
The significant assumptions used to determine the benefit obligations and expense for the Company’s significant plans as at and for
the year ended December 31 were as follows:
Assumptions used to determine the benefit obligations 1 :
Discount rate, %
Rate of increase in compensation levels, %
Medical cost trend rate – assumed, %
Medical cost trend rate – year reaches ultimate trend rate
Mortality assumptions 3
Life expectancy at 65 for a male member currently at age 65
Life expectancy at 65 for a female member currently at age 65
Average remaining service period of active employees (years)
Average duration of the defined benefit obligations 4 (years)
Pension
Other
2018
2017
2018
2017
4.22
4.75
n/a
n/a
20.6
22.8
9.7
13.7
3.65
5.00
n/a
n/a
20.7
22.7
9.0
15.7
4.17
n/a
6.10 – 4.502
2037
3.65
n/a
5.60 – 4.502
2037
20.4
22.8
5.1
15.1
20.0
22.4
12.2
19.0
S
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D
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A
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1 The current year’s expense is determined using the assumptions that existed at the end of the previous year.
2 The Company assumed a graded medical cost trend rate starting at 6.10 percent in 2018, moving to 4.50 percent by 2037 (2017 – starting at 5.60 percent,
moving to 4.50 percent by 2037).
3 Based on actuarial advice in accordance with the latest available published tables, adjusted where appropriate to reflect future longevity improvements for
each country.
4 Weighted average length of the underlying cash flows.
n/a = not applicable
NUTRIEN 2018 139 ANNUAL REPORT
IN MILLIONS OF US DOLLARS EXCEPT AS OTHERWISE NOTED
NOTE 28 PENSION AND OTHER POST-RETIREMENT BENEFITS CONTINUED
Of the most significant assumptions, a change in discount rates has the greatest potential impact on the Company’s pension and
other post-retirement benefit plans, with sensitivity to change as follows:
Change in
Assumption
As reported
Discount rate
1.0 percentage point _
1.0 percentage point a
Supporting Information
2018
2017
Benefit
Obligations
$
1,797
271
(218)
Expense in Income
Before Income Taxes
$
(87)
24
(22)
Benefit
Obligations
$
1,831
326
(251)
Expense in Income
Before Income Taxes
$
75
20
(18)
Description of Defined Benefit Pension Plans
The Company sponsors defined benefit pension plans as follows:
Plan Type
Contributions
United States
Canada
(cid:129) non-contributory;
(cid:129) guaranteed annual pension payments for life;
(cid:129) benefits generally depend on years of service and
compensation level in the final years leading up to age 65;
(cid:129) benefits available starting at age 55 at a reduced rate; and
(cid:129) plans provide for maximum pensionable salary and
maximum annual benefit limits.
(cid:129) made to meet or exceed minimum funding requirements
of the Employee Retirement Income Security Act of 1974
(“ERISA”) and associated Internal Revenue Service
regulations and procedures.
(cid:129) made to meet or exceed minimum funding requirements
based on provincial statutory requirements and
associated federal taxation rules.
Supplemental Plans
in US and Canada for
Senior Management
(cid:129) non-contributory;
(cid:129) unfunded; and
(cid:129) supplementary pension benefits.
(cid:129) provided for by charges to earnings sufficient to meet
the projected benefit obligations; and
(cid:129) payments to plans are made as plan payments to retirees
occur.
The Company’s defined benefit pension plans discussed above are funded with separate funds that are legally separated from the
Company and administered through an employee benefits or management committee in each country, which is composed of
employees of the Company. The employee benefits or management committee is required by law to act in the best interests of the
plan participants and, in the US and Canada, is responsible for the governance of the plans, including setting certain policies
(e.g., investment and contribution) of the funds. The current investment policy for each country’s plans generally does not include
any asset/liability matching strategies or currency hedging strategies. Plan assets held in trusts are governed by local regulations and
practice in each country, as is the nature of the relationship between the Company and the trustees and their composition.
Description of Other Post-Retirement Plans
The Company provides health care plans for certain eligible
retired employees in the US, Canada and Trinidad. Eligibility for
these benefits is generally based on a combination of age and
years of service at retirement. Certain terms of the plans
include:
(cid:129) coordination with government-provided medical insurance
in each country;
(cid:129) certain unfunded cost-sharing features such as
co-insurance, deductibles and co-payments – benefits
subject to change;
(cid:129) for certain plans, maximum lifetime benefits;
(cid:129) at retirement, the employee’s spouse and certain dependent
children may be eligible for coverage;
(cid:129) benefits are self-insured and are administered through third-
party providers; and
(cid:129) generally, retirees contribute towards annual cost of the plans.
The Company provides non-contributory life insurance plans
for certain retired employees who meet specific age and service
eligibility requirements.
Risks
The defined benefit pension and other post-retirement plans
expose the Company to broadly similar actuarial risks. The most
significant risks as discussed below include investment risk,
interest rate risk, longevity risk and salary risk. These plans are
not exposed to any other significant, unusual or specific risks.
Investment Risk
A deficit will be created if plan assets underperform the
discount rate used in the defined benefit obligation valuation.
To mitigate investment risk, the Company employs:
(cid:129) a total return on investment approach whereby a diversified
mix of equities and fixed income investments is used to
maximize long-term return for a prudent level of risk; and
(cid:129) risk tolerance established through careful consideration of plan
liabilities, plan funded status and corporate financial condition.
Other assets such as private equity and hedge funds are not used
at this time. The Company’s policy is not to invest in commodities,
precious metals, mineral rights, bullions, or collectibles.
Investment risk is measured and monitored on an ongoing basis
through quarterly investment portfolio reviews, annual liability
measurements and periodic asset/liability studies.
NUTRIEN 2018 140 ANNUAL REPORT
IN MILLIONS OF US DOLLARS EXCEPT AS OTHERWISE NOTED
NOTE 28 PENSION AND OTHER POST-RETIREMENT BENEFITS CONTINUED
Interest Rate Risk
A decrease in bond interest rates will increase the pension
liability; however, this is generally expected to be partially offset
by an increase in the return on the plan’s debt investments.
Longevity Risk
An increase in life expectancy of plan participants will increase
the plan’s liability.
Salary Risk
An increase in the salary of the plan’s participants will increase
the plan’s liability.
Financial Information
Movements in the pension and other post-retirement benefit assets (liabilities)
Balance – December 31, 2017
Merger impact 1
Components of defined benefit expense recognized in earnings
Current service cost for benefits earned during the year
Interest (expense) income
Past service cost, including curtailment gains and settlements 2
Foreign exchange rate changes and other
Subtotal of components of defined benefit expense recognized in earnings
Remeasurements of the net defined benefit liability recognized in OCI
during the year
Actuarial gain arising from:
Changes in financial assumptions
Changes in demographic assumptions
Loss on plan assets (excluding amounts included in net interest)
Subtotal of remeasurements
Cash flows
Contributions by plan participants
Employer contributions
Benefits paid
Subtotal of cash flows
Balance – December 31, 2018 3
Balance comprised of:
Non-current assets
Other assets (Note 18)
Current liabilities
Payables and accrued charges (Note 19)
Non-current liabilities
Pension and other post-retirement benefit liabilities
Obligation
Plan Assets
Net
$
(1,831)
(347)
$
1,380
205
$
(67)
(77)
157
39
52
210
11
–
221
(6)
–
114
108
–
62
–
(27)
35
–
–
(149)
(149)
6
53
(114)
(55)
$
(1,797)
$
1,416
$
$
$
$
(451)
(142)
(67)
(15)
157
12
87
210
11
(149)
72
–
53
–
53
(381)
27
(13)
(395)
1 The Company acquired Agrium’s pension and other post-retirement benefit obligations, representing the fair values at the acquisition date as described in
Note 3.
2 In 2018, as part of the Company’s continuous assessment of its operations, participation in certain company defined benefit pension and other post-
retirement benefit plans was suspended and/or discontinued effective January 1, 2020 based on age and years of service. As a result, the Company
recognized a Merger-related Defined Benefit Plans Curtailment Gain of $157.
3 Obligations arising from funded and unfunded pension plans are $(1,466) and $(331), respectively. Other post-retirement benefit plans have no plan assets
and are unfunded.
NUTRIEN 2018 141 ANNUAL REPORT
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IN MILLIONS OF US DOLLARS EXCEPT AS OTHERWISE NOTED
NOTE 28 PENSION AND OTHER POST-RETIREMENT BENEFITS CONTINUED
Balance – December 31, 2016
Components of defined benefit expense recognized in earnings
Remeasurements of the net defined benefit liability recognized in OCI during the
year
Cash flows
Balance – December 31, 2017 1
Balance comprised of:
Non-current assets
Other assets (Note 18)
Current liabilities
Payables and accrued charges (Note 19)
Non-current liabilities
Pension and other post-retirement benefit liabilities
Obligation
Plan Assets
Net
$ (1,698)
(131)
$
1,246
56
$
(452)
(75)
(57)
55
123
(45)
66
10
$ (1,831)
$
1,380
$
(451)
$
$
$
24
(35)
(440)
1 Obligations arising from funded and unfunded pension plans are $(1,445) and $(386), respectively. Other post-retirement benefit plans have no plan assets
and are unfunded.
Plan Assets
The fair value of plan assets of the Company’s defined benefit pension plans, by asset category, was as follows as at December 31:
2018
2017
Quoted Prices
in Active
Markets for
Identical Assets
(Level 1)
Other
(Level 2 & 3)
Total
Quoted Prices
in Active
Markets for
Identical Assets
(Level 1)
Other
(Level 2 & 3)
Total
$
6
$
54
$
60
$
13
$
33
$
46
454
175
187
–
(25)
797
65
65
329
97
9
619
$
519
240
516
97
(16)
565
151
190
–
(20)
$ 1,416
$
899
$
2
29
244
173
–
481
567
180
434
173
(20)
$ 1,380
Cash and cash equivalents
Equity securities and equity funds
US
International
Debt securities 1
International balanced fund
Other
Total pension plan assets
$
1 Debt securities included US securities of 52 percent (2017 – 62 percent), International securities of 31 percent (2017 – 18 percent) and Mortgage-backed
securities of 17 percent (2017 – 20 percent).
Letters of credit secured certain of the Canadian unfunded defined benefit plan liabilities as at December 31, 2018.
The Company expects to contribute approximately $97 to all pension and post-retirement plans during 2019. Total contributions
recognized as expense under all defined contribution plans for 2018 was $75 (2017 – $19).
NUTRIEN 2018 142 ANNUAL REPORT
IN MILLIONS OF US DOLLARS EXCEPT AS OTHERWISE NOTED
NOTE 29 SHARE-BASED COMPENSATION
The Company has share-based compensation plans for eligible employees and directors as part of their
remuneration package, including Stock Options, PSUs, Restricted Share Units (“RSUs”) and Deferred Share
Units (“DSUs”). In addition, in connection with the completion of the Merger, the Company assumed the
legacy compensation plans and outstanding awards of PotashCorp and Agrium, which include Stock
Options, PSUs, RSUs and Stock Appreciation Rights (“SARs”).
Accounting Policies
Accounting Estimates and Judgments
The accounting for share-based compensation plans is fair value-based.
Judgment involves determining:
The grant date is the date the Company and the employee have a shared
understanding of the terms and conditions of the arrangement, at which time the
Company confers on the employee the right to cash equity instruments, provided
the specified vesting conditions, if any, are met.
For those awards with performance conditions that determine the number
of options or units to which employees will be entitled, measurement of
compensation cost is based on the Company’s best estimate of the outcome
of the performance conditions.
For plans settled through the issuance of equity:
(cid:129) fair value for stock options is determined on grant date using the Black-
Scholes-Merton option-pricing model;
(cid:129) fair value for PSUs is determined on grant date by projecting the outcome of
performance conditions;
(cid:129) compensation expense is recorded over the period the plans vest
(corresponding increase to contributed surplus);
(cid:129) forfeitures are estimated throughout the vesting period based on past
experience and future expectations, and adjusted upon actual vesting; and
(cid:129) when exercised, the proceeds and amounts recorded in contributed surplus are
recorded in share capital.
For plans settled in cash:
(cid:129) a liability is recorded based on the fair value of the awards each period;
(cid:129) expense accrues from the grant date over the vesting period; and
(cid:129) fluctuations in fair value of the award and related compensation expense are
recognized in the period the fluctuation occurs.
(cid:129) the grant date; and
(cid:129) the fair value of share-based
compensation awards at the grant date.
Estimation involves determining:
(cid:129) stock option-pricing model assumptions
as described in the weighted average
assumptions table below;
(cid:129) forfeiture rate for options granted;
(cid:129) projected outcome of performance
conditions for PSUs, including the relative
ranking of the Company’s total
shareholder return, including expected
dividends, compared with a specified peer
group using a Monte Carlo simulation
option-pricing model and the outcome of
the Company’s synergies relative to the
target; and
(cid:129) the number of dividend equivalent units
expected to be earned.
PSUs vest based on the achievement of
performance conditions over a three-year
performance cycle. Changes to vesting
assumptions may change based on
non-market vesting conditions at the end of
each reporting period.
RSUs are not subject to performance
conditions and vest at the end of the three-
year vesting period.
Changes to vesting assumptions are
reflected in earnings immediately for
compensation cost already recognized.
S
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NUTRIEN 2018 143 ANNUAL REPORT
IN MILLIONS OF US DOLLARS EXCEPT AS OTHERWISE NOTED
NOTE 29 SHARE-BASED COMPENSATION CONTINUED
Supporting Information
During the year ended December 31, 2018, the Company issued stock options under its 2018 stock option plan, PSUs and RSUs
under its 2018 PSU/RSU plan and DSUs under its 2018 DSU plan, in each case to eligible employees and directors. In 2018, the
outstanding legacy share-based compensation plans of PotashCorp and Agrium were also assumed by, and settled in or with
reference to shares of, Nutrien on the basis of the exchange ratios described in Note 3.
As at December 31, 2018, the Company had the following awards available to be granted under the 2018 stock option plan, the
2018 PSU/RSU plan and the 2018 DSU plan:
Plan Features
Form of Payment
Stock Options
PSUs 1
RSUs 2
DSUs
Eligibility
Granted
Vesting Period
Maximum Term
Settlement
Officers and
eligible employees
Officers and other
eligible employees
Eligible employees
Annually
Annually
Annually
Non-executive
directors
At the discretion
of the Board
of Directors
25% per year over
four years
On third anniversary
of grant date
On third anniversary
of grant date
Fully vest upon
grant
10 years
Shares
n/a
n/a
n/a
Cash
Cash
In cash on director’s
departure from
Board of Directors
1 PSUs granted vest based on total shareholder return over a three-year performance cycle, compared to average total shareholder return of a peer group of
companies over the same period. The value of each PSU granted is based on the average closing price of the Company’s common shares on the NYSE during
the last month of the three-year cycle.
2 RSUs granted are not subject to performance conditions and vest at the end of the three-year period.
n/a = not applicable
In addition, as at December 31, 2018, the Company had the following awards outstanding under one or more assumed legacy plans
of PotashCorp and/or Agrium under which no new awards will be granted:
Plan Features
Form of Payment
Stock Options
PSUs 3,4
RSUs 5
SARs 6
Vesting Period
Maximum Term
25% per year over four years 1
On third anniversary of grant date 2
On third anniversary of grant date
On third anniversary of grant date
25% per year over four years
10 years
n/a
n/a
10 years
Settlement
Shares
Cash /Shares
Cash
Cash
1 Under the assumed legacy Agrium stock option plan.
2 Under the assumed legacy PotashCorp long-term incentive plan and performance option plans.
3 Under the assumed legacy PotashCorp long-term incentive plan, PSUs granted in 2017 and 2016 were comprised of three tranches, with each tranche
vesting based on achievement of a combination of performance metrics over separate performance periods ranging from one to three years and such PSUs
will be settled in shares for grantees who are subject to the Company’s share ownership guidelines and in cash for all other grantees.
4 Under the assumed legacy Agrium long-term incentive plan, PSUs granted in 2017 and 2016 vest over a three-year performance cycle based on the
achievement of performance metrics and will be settled in cash.
5 Under the assumed legacy Agrium long-term incentive plan, RSUs granted in 2017 and 2016 are not subject to performance conditions, vest at the end of
the three-year period and will be settled in cash.
6 Under the assumed legacy Agrium SARs plan, effective January 1, 2015, tandem stock appreciation rights (“TSARs”) were no longer issued to eligible officers
and employees. TSARs granted in Canada prior to January 1, 2015 have similar terms and vesting conditions to SARs and also provide the holder with the
ability to choose between (a) receiving the price of the Company’s shares on the date of exercise in excess of the exercise price of the right and (b) receiving
common shares by paying the exercise price of the right. The Company’s past experience and future expectation is that substantially all option holders will
elect to exercise their options as a SAR, surrendering their options and receiving settlement in cash. TSARs are included with the SARs disclosure.
n/a = not applicable
NUTRIEN 2018 144 ANNUAL REPORT
IN MILLIONS OF US DOLLARS EXCEPT AS OTHERWISE NOTED
NOTE 29 SHARE-BASED COMPENSATION CONTINUED
The weighted average fair value of stock options granted was estimated as of the date of the grant using the Black-Scholes-Merton
option-pricing model. The weighted average grant date fair value of stock options per unit granted in 2018 was $9.71. The weighted
average assumptions for both legacy companies by year of grant that impacted current year results are as follows:
Assumptions
Based On
Exercise price per option
Expected annual dividend yield
Expected volatility
Risk-free interest rate
Average expected life of options
Quoted market closing price 2
Annualized dividend rate 3
Historical volatility 4
Zero-coupon government issues 5
Historical experience
Year of Grant
2018
$
44.50
3.58%
29%
2.79%
7.5 years
2017 1
$
46.47
2.93%
28%
1.95%
6.2 years
1 The weighted average assumptions used by both legacy companies were presented due to the multi-year impact on share-based compensation expense.
2 Of common shares on the last trading day immediately preceding the date of the grant.
3 As of the date of grant.
4 Of the Company’s stock over a period commensurate with the expected life of the option.
5 Implied yield available on equivalent remaining term at the time of the grant.
The exercise price is not less than the quoted market closing price of the Company’s common shares on the last trading day
immediately preceding the date of the grant, and an option’s maximum term is 10 years. In general, options granted under assumed
legacy PotashCorp performance option plans vested according to a schedule based on legacy PotashCorp’s three-year average
excess consolidated cash flow return on investment over the weighted average cost of capital.
A summary of the status of the stock option plans as at December 31, 2018 and 2017 and changes during the years ending on those
dates is as follows:
Number of Shares Subject to Option
Weighted Average Exercise Price
2018
(Pre-Merger)
2018
(Post-Merger)
2017
2018
(Pre-Merger)
2018
(Post-Merger)
2017
PotashCorp outstanding, beginning of
year
17,170,654
19,470,014
$
32.24
$
31.15
PotashCorp shares converted to Nutrien
shares (Conversion ratio 0.40)
Agrium outstanding shares—beginning
6,868,262
$
80.60
of year
1,380,868
100.08
Agrium shares converted to Nutrien
shares (Conversion ratio 2.23)
Balance – beginning of year
Granted
Exercised
Forfeited or cancelled
Expired
Outstanding, end of year
3,079,321
9,947,583
1,875,162
(647,331)
(1,793,077)
(338,100)
19,470,014
1,482,829
(22,100)
(1,221,314)
(2,538,775)
$
44.88
69.54 $
44.50
42.86
82.84
154.94
9,044,237
17,170,654
$
58.41 $
31.15
18.71
17.78
34.55
20.06
32.24
The aggregate grant-date fair value of all stock options granted during 2018 was $18. The average share price during 2018 was
$51.80 per share.
S
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D
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NUTRIEN 2018 145 ANNUAL REPORT
IN MILLIONS OF US DOLLARS EXCEPT AS OTHERWISE NOTED
NOTE 29 SHARE-BASED COMPENSATION CONTINUED
The following table summarizes information about stock options outstanding as at December 31, 2018 with expiry dates ranging
from May 2019 to February 2028:
Options Outstanding
Options Exercisable
Range of Exercise Prices
$ 37.00 to $ 41.00
$ 44.00 to $ 52.00
$ 64.00 to $ 75.00
$ 80.00 to $ 88.00
$ 91.00 to $110.00
$130.00 to $131.00
Number
2,064,621
3,996,110
834,091
959,275
1,040,300
149,840
9,044,237
Weighted
Average
Remaining
Life in Years
Weighted
Average
Exercise
Price
$
38.59
46.88
71.57
82.30
99.04
130.78
7
8
4
4
4
2
7
Weighted
Average
Exercise
Price
$
38.22
48.75
71.57
82.30
99.04
130.78
Number
966,606
1,542,489
834,091
959,275
1,040,300
149,840
$
58.41
5,492,601
$
68.01
Other Plans
The Company offers its 2018 DSU plan to non-employee directors, which allows each to choose to receive, in the form of DSUs, all or
a percentage of the director’s fees, which would otherwise be payable in cash. Each DSU fully vests upon award but is distributed only
when the director has ceased to be a member of the Board. Vested units are settled in cash based on the common share price at that
time. As at December 31, 2018, the total number of DSUs held by participating directors was 456,848.
For all plans, share-based awards granted in 2018 and
outstanding as at December 31, 2018 were:
Compensation expense for all employee and director share-
based compensation plans was as follows:
Units Granted
Units Outstanding
2018
2017
Stock Options
PSUs
RSUs
DSUs
SARs
1,875,162
619,799
437,474
61,062
–
9,044,237
1,752,281
889,005
456,848
2,388,402
Stock Options
PSUs
RSUs
DSUs
SARs
$
23
83
14
–
(4)
$
116
$
$
7
16
–
3
–
26
NOTE 30 RELATED PARTY TRANSACTIONS
The Company has a number of related parties with the most significant being Canpotex, key management
personnel and post-employment benefit plans.
Accounting Policies
Supporting Information
A person or entity is considered a related party if it is:
(cid:129) an associate or joint venture of Nutrien;
(cid:129) a member of key management personnel, consisting of the
Company’s directors and executives as disclosed in the
Company’s 2018 Annual Information Form;
(cid:129) a post-employment benefit plan for the benefit of Nutrien
employees; or
(cid:129) a person that has significant influence over Nutrien.
Sale of Goods
The Company sells potash from its Canadian mines for use
outside Canada and the US exclusively to Canpotex. Sales are at
prevailing market prices and are settled on normal trade terms.
Sales to Canpotex for the year ended December 31, 2018 were
$1,657 (2017 – $988). Canpotex’s proportionate sales volumes
by geographic area are shown in Note 4.
The receivable outstanding from Canpotex is shown in Note 14
and arose from sale transactions described above. It is
unsecured and bears no interest. There are no provisions held
against this receivable.
NUTRIEN 2018 146 ANNUAL REPORT
IN MILLIONS OF US DOLLARS EXCEPT AS OTHERWISE NOTED
NOTE 30 RELATED PARTY TRANSACTIONS CONTINUED
Key Management Personnel Compensation
Compensation to key management personnel was comprised of:
Salaries and other short-term benefits
Share-based compensation
Post-employment benefits
Termination benefits 1
2018
2017
$
$
19
53
3
23
98
$
$
14
9
3
–
26
1 Primarily includes costs incurred with respect to departure of five key management personnel in 2018 following completion of the Merger.
Transactions with Post-Employment Benefit Plans
Disclosures related to the Company’s post-employment benefit plans are shown in Note 28.
NOTE 31 CONTINGENCIES AND OTHER MATTERS
Contingent liabilities, which are not recognized in the consolidated financial statements but may be
disclosed, are possible obligations as a result of uncertain future events outside the control of the
Company, or present obligations not recognized because the amount cannot be sufficiently measured or
payment is not probable.
Accounting Policies
Accounting Estimates and Judgments
Generally, a contingent liability arises from past events and is:
(cid:129) a possible obligation whose existence will be confirmed only
by one or more uncertain future events or non-events
outside the control of the Company; or
(cid:129) a present obligation not recognized because it is not
probable an outflow of resources will be required to settle the
obligation, or a reliable estimate of the amount cannot be
made.
Contingent liabilities are not recognized in the financial
statements but are disclosed unless the possibility of an outflow
of resources embodying economic benefits is remote. Where
the Company is jointly and severally liable for an obligation, the
part of the obligation that is expected to be met by other parties
is treated as a contingent liability.
The following judgments are required to determine the
Company’s exposure to possible losses and gains related to
environmental matters and other various claims and lawsuits
pending:
(cid:129) prediction of the outcome of uncertain events (i.e., being
virtually certain, probable, remote or undeterminable);
(cid:129) determination of whether recognition or disclosure in the
consolidated financial statements is required; and
(cid:129) estimation of potential financial effects.
Where no amounts are recognized, such amounts are
contingent and disclosure may be appropriate. While the
amount disclosed in the consolidated financial statements may
not be material, the potential for large liabilities exists and,
therefore, these estimates could have a material impact on the
Company’s consolidated financial statements.
Supporting Information
Canpotex
Nutrien is a shareholder in Canpotex, which markets Canadian
potash outside of Canada and the United States. Should any
operating losses or other liabilities be incurred by Canpotex, the
shareholders have contractually agreed to reimburse it for such
losses or liabilities in proportion to each shareholder’s
productive capacity. Through December 31, 2018, there were
no such operating losses or other liabilities.
Mining Risk
The risk of underground water inflows and other underground
risks is insured on a limited basis, subject to insurance market
availability.
Legal and Other Matters
The Company is engaged in ongoing site assessment and/or
remediation activities at a number of facilities and sites, and
anticipated costs associated with these matters are added to
accrued environmental costs in the manner described in Note 20.
NUTRIEN 2018 147 ANNUAL REPORT
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NOTE 31 CONTINGENCIES AND OTHER MATTERS CONTINUED
Environmental Remediation
The Company has established provisions for environmental
site assessment and/or remediation matters to the extent that
expenses associated with those matters are considered likely
to be incurred by the Company. Except for the uncertainties
described below, the Company does not believe that its
future obligations with respect to these matters are reasonably
likely to have a material adverse effect on its consolidated
financial statements.
Legal matters with significant uncertainties include the
following:
(cid:129) The US Environmental Protection Agency (“EPA”) has an
ongoing enforcement initiative directed at the phosphate
industry related to the scope of an exemption for mineral
processing wastes under the US Resource Conservation and
Recovery Act (“RCRA”). This initiative affects the Conda
Phosphate plant previously owned by Nu-West Industries, Inc.
(“Nu-West”), a wholly owned subsidiary of Agrium, and the
Nutrien phosphoric acid facilities in Aurora, North Carolina;
Geismar, Louisiana; and White Springs, Florida. All of these
facilities received US EPA notices of violation (“NOVs”) that
remain outstanding for alleged violations of RCRA and various
other environmental laws. Notwithstanding the sale of the
Conda Phosphate operations in January of 2018, Nu-West
remains responsible for environmental liabilities attributable
to its historic activities and for resolution of the NOVs. All of
the facilities have been and continue to be involved in
ongoing discussions with the US EPA, the US Department of
Justice (“DOJ”) and the related state agencies to resolve these
matters. Due to the nature of the allegations, Nutrien is
uncertain as to how the matters will be resolved. Based on
settlements with other members of the phosphate industry,
Nutrien expects that a resolution could involve any or all of
the following: 1) penalties, which Nutrien currently believes
will not be material; 2) modification of certain operating
practices; 3) capital improvement projects; 4) providing
financial assurance for the future closure, maintenance and
monitoring costs for the phosphogypsum stack system; and,
5) addressing findings resulting from RCRA section 3013
site investigations undertaken voluntarily in response to
the NOVs.
(cid:129) In August 2015, the US EPA finalized amendments to the
hazardous air pollutant emission standards for phosphoric
acid manufacturing and phosphate fertilizer production
(“Final Rule”). Required emissions testing at the Company’s
Aurora facility in 2016 indicated alleged exceedances of the
mercury emission limits that were established by the Final
Rule. The Company has communicated with the relevant
agencies about this issue and petitioned the US EPA to
reconsider the mercury emission limits. The facility also
entered into an agreed order with the North Carolina
Department of Environmental Quality in November 2016 to
resolve the alleged mercury exceedances and provide a plan
and schedule for evaluating alternative compliance strategies.
Given the pending legal issues and the Company’s evaluation
of alternative compliance strategies, the resulting cost of
compliance with the various provisions of the Final Rule
cannot be predicted with reasonable certainty at this time.
(cid:129) The Company operates in countries which are parties to the
Paris Agreement adopted in December 2015 pursuant to the
United Nations Framework Convention on Climate Change.
Each country that is a party to the Paris Agreement submitted
an Intended Nationally Determined Contribution (“INDC”)
toward the control of greenhouse gas emissions. The impacts
on the Company’s operations of these INDCs and other national
and local efforts to limit or tax greenhouse gas emissions
cannot be determined with any certainty at this time.
In addition, various other claims and lawsuits are pending
against the Company in the ordinary course of business.
While it is not possible to determine the ultimate outcome of
such actions at this time, and inherent uncertainties exist in
predicting such outcomes, it is the Company’s belief that
the ultimate resolution of such actions is not reasonably
likely to have a material adverse effect on its consolidated
financial statements.
The breadth of the Company’s operations and the global
complexity of tax regulations require assessments of
uncertainties and judgments in estimating the taxes it will
ultimately pay. The final taxes paid are dependent upon many
factors, including negotiations with taxing authorities in various
jurisdictions, outcomes of tax litigation and resolution of
disputes arising from federal, provincial, state and local tax
audits. The resolution of these uncertainties and the associated
final taxes may result in adjustments to the Company’s
tax assets and tax liabilities.
The Company owns facilities that have been either
permanently or indefinitely shut down. It expects to incur
nominal annual expenditures for site security and other
maintenance costs at certain of these facilities. Should the
facilities be dismantled, certain other shutdown-related
costs may be incurred. Such costs are not expected to have a
material adverse effect on the Company’s consolidated
financial statements and would be recognized and recorded
in the period in which they are incurred.
NUTRIEN 2018 148 ANNUAL REPORT
IN MILLIONS OF US DOLLARS EXCEPT AS OTHERWISE NOTED
NOTE 32 ACCOUNTING POLICIES, ESTIMATES AND JUDGMENTS
Accounting Policies, Estimates and Judgments
The following table discusses the significant accounting policies, estimates, judgments and assumptions, in addition to those disclosed
elsewhere in these consolidated financial statements, that the Company has adopted and made and how they affect the amounts
reported in the consolidated financial statements. Certain of the Company’s policies involve accounting estimates and judgments
because they require the Company to make subjective or complex judgments about matters that are inherently uncertain and because
of the likelihood that materially different amounts could be reported under different conditions or using different assumptions.
Topic
Accounting Policies
Principles of
Consolidation
These consolidated financial statements include the accounts of the
Company and entities controlled by it (its subsidiaries). Control is achieved
by having each of:
(cid:129) power over the investee to direct the relevant activities of the investee;
(cid:129) exposure, or rights, to variable returns from involvement with the
investee; and
(cid:129) the ability for the Company to use its power over the investee to affect
the amount of the Company’s returns.
The existence and effect of potential voting rights that are currently
exercisable or convertible are considered when assessing whether the
Company controls another entity.
Subsidiaries are fully consolidated from the date on which control is
transferred to the Company. They are deconsolidated from the date that
control ceases.
Principal (wholly owned)
Operating Subsidiaries:
(cid:129) Potash Corporation of
Saskatchewan Inc.
(cid:129) Agrium Inc.
Canada
Canada
(cid:129) Agrium Canada Partnership
Canada
(cid:129) Agrium Potash Ltd.
Canada
Location
Principal Activity
Mining and/or processing of
crop nutrient products and
corporate functions
Manufacturer and distributor
of crop nutrients and
corporate functions
Manufacturer and distributor
of crop nutrients
Manufacturer and distributor
of crop nutrients
(cid:129) Agrium U.S. Inc.
United States Manufacturer and distributor
(cid:129) Nutrien Ag Solutions Argentina
Argentina
S.A. (Argentina)
of crop nutrients
Crop input retailer
(cid:129) Cominco Fertilizer Partnership
United States Manufacturer and distributor
(cid:129) Nutrien Ag Solutions, Inc.
United States
of crop nutrients
Crop input retailer
(cid:129) Nutrien Ag Solutions (Canada)
Canada
Crop input retailer
Inc.
(cid:129) Landmark Operations Ltd.
Australia
Crop input retailer
(cid:129) Loveland Products, Inc.
United States
(cid:129) PCS Sales (Canada), Inc.
Canada
Crop input developer and
retailer
Marketing and sales of the
Company’s products
(cid:129) PCS Sales (USA), Inc.
United States Marketing and sales of the
(cid:129) PCS Phosphate Company, Inc.
– PCS Purified Phosphates
Company’s products
United States Mining and/or processing of
phosphate products in the
states of North Carolina,
Illinois, Missouri and Nebraska
NUTRIEN 2018 149 ANNUAL REPORT
Accounting Estimates and Judgments
Judgment involves:
(cid:129) assessing control, including if
the Company has the power to
direct the relevant activities of
the investee; and
(cid:129) determining the relevant
activities and which party
controls them.
Consideration is given to:
(cid:129) voting rights;
(cid:129) the relative size and dispersion
of the voting rights held by other
shareholders;
(cid:129) the extent of participation by
those shareholders in appointing
key management personnel or
board members;
(cid:129) the right to direct the investee to
enter into transactions for the
Company’s benefit; and
(cid:129) the exposure, or rights, to
variability of returns from the
Company’s involvement with the
investee.
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NOTE 32 ACCOUNTING POLICIES, ESTIMATES AND JUDGMENTS CONTINUED
Topic
Accounting Policies
Accounting Estimates and Judgments
Long-Lived Asset
Impairment
(cid:129) PCS Nitrogen Fertilizer, L.P.
United States
(cid:129) PCS Nitrogen Ohio, L.P.
United States
(cid:129) PCS Nitrogen Trinidad Limited
Trinidad
Production of nitrogen
products in the states of
Georgia and Louisiana, and of
phosphate products in the
state of Louisiana
Production of nitrogen
products in the state of Ohio
Production of nitrogen
products in Trinidad
(cid:129) White Springs Agricultural
Chemicals, Inc.
(“White Springs”)
United States Mining and processing of
phosphate products in the
state of Florida
Intercompany balances and transactions are eliminated on consolidation.
At the end of each reporting period, the Company reviews conditions to
determine whether there is any indication that an impairment exists that
could potentially impact the carrying amounts of both its long-lived assets
to be held and used and its identifiable intangible assets with finite lives.
When such indicators exist, impairment testing is performed. Regardless,
goodwill is tested at least annually (in the fourth quarter).
To assess impairment, assets are grouped at the smallest levels for which
there are separately identifiable cash inflows that are largely independent
of the cash inflows from other assets or groups of assets (this can be at the
asset or CGU level).
Where impairment indicators exist for the asset or CGU:
(cid:129) the recoverable amount is estimated (the higher of FVLCD and value
in use);
(cid:129) to assess value in use, the estimated future cash flows are discounted to
their present value (using a pre-tax discount rate that reflects current
market assessments of the time value of money and the risks specific to
the asset or CGU for which the estimates of future cash flows have not
been adjusted);
(cid:129) the impairment loss is the amount by which the carrying amount
exceeds its recoverable amount; and
(cid:129) the impairment loss is allocated first to reduce the carrying amount
of any related goodwill and then pro rata to each asset in the unit (on
the basis of the carrying amount).
Non-financial assets, other than goodwill, that previously suffered an
impairment loss are reviewed at each reporting date for possible reversal
of the impairment.
Judgment involves:
(cid:129) identifying the appropriate asset
or CGU;
(cid:129) determining the appropriate
discount rate for assessing value
in use; and
(cid:129) making assumptions about
future sales, margins and market
conditions over the long-term
life of the assets or CGUs.
The Company cannot predict if an
event that triggers impairment will
occur, when it will occur or how it
will affect reported asset amounts.
Asset impairment amounts
previously recorded could be
affected if different assumptions
were used or if market and
other conditions change. Such
changes could result in non-cash
charges materially affecting the
Company’s consolidated financial
statements.
Impairments were recognized
during 2018 and 2017 as shown in
Note 16.
NUTRIEN 2018 150 ANNUAL REPORT
IN MILLIONS OF US DOLLARS EXCEPT AS OTHERWISE NOTED
NOTE 32 ACCOUNTING POLICIES, ESTIMATES AND JUDGMENTS CONTINUED
Topic
Accounting Policies
Fair Value
Measurements
Fair value is the price that would be received to sell an asset or paid
to transfer a liability in an orderly transaction between market
participants at the measurement date, regardless of whether that
price is directly observable or estimated using another valuation
technique.
Fair value measurements are categorized into levels based on the
degree to which inputs are observable and their significance:
Level 1
Level 2
Level 3
Unadjusted quoted
prices (in active
markets accessible
at the measurement
date for identical
assets or liabilities).
Quoted prices (in
markets that are not
active or based on
inputs that are
observable for
substantially the full
term of the asset or
liability).
Prices or valuation
techniques that
require inputs that
are both
unobservable and
significant to the
overall
measurement.
Accounting Estimates and Judgments
Fair value estimates:
(cid:129) are at a point-in-time and may change
in subsequent reporting periods due to
market conditions or other factors;
(cid:129) can be determined using multiple
methods, which can cause values (or a
range of reasonable values) to differ;
and
(cid:129) may require assumptions about costs/
prices over time, discount and inflation
rates, defaults and other relevant
variables.
Determination of the level hierarchy is
based on the Company’s assessment of
the lowest level input that is significant to
the fair value measurement and is subject
to estimation and judgment.
Restructuring
Charges
Plant shutdowns, sales of business units or other corporate
restructurings may trigger restructuring costs. Incremental costs
for employee termination, contract termination and other exit
costs are recognized as a liability and an expense when:
Restructuring activities are complex, can
take several months to complete and
usually involve reassessing estimates
throughout the process.
The consolidated financial statements
are presented in US dollars, which was
determined to be the functional currency
of the Company and the majority of
its subsidiaries.
(cid:129) a detailed formal plan for restructuring has been demonstrably
committed to;
(cid:129) withdrawal is without realistic possibility; and
(cid:129) a reliable estimate can be made.
Foreign Currency
Transactions
Items included in the consolidated financial statements of the
Company and each of its subsidiaries are measured using the
currency of the primary economic environment in which the
individual entity operates (“the functional currency”).
Foreign exchange gains and losses resulting from the settlement
of foreign currency transactions, and from the translation at
period-end exchange rates of monetary assets and liabilities
denominated in foreign currencies, are recognized and presented
in the consolidated statements of earnings within other expenses,
as applicable, in the period in which they arise.
Translation differences from non-monetary assets and liabilities
carried at fair value are recognized as part of changes in fair value.
Translation differences on non-monetary financial assets such as
investments in equity securities classified as FVTOCI are included
in OCI. Non-monetary assets measured at historical cost are
translated at the average monthly exchange rate prevailing at the
time of the transaction, unless the exchange rate in effect on the
date that the transaction occurred is available and it is apparent
that such rate is a more suitable measurement.
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NUTRIEN 2018 151 ANNUAL REPORT
IN MILLIONS OF US DOLLARS EXCEPT AS OTHERWISE NOTED
NOTE 32 ACCOUNTING POLICIES, ESTIMATES AND JUDGMENTS CONTINUED
Standards, Amendments and Interpretations Effective and Applied
The International Accounting Standards Board (“IASB”) and IFRS Interpretations Committee (“IFRIC”) have issued certain standards
and amendments or interpretations to existing standards that were effective and applied by the Company. The standards disclosed
below had a material impact or disclosure impact to the Company’s consolidated financial statements.
Standard
Description
Impact
IFRS 15, Revenue
from Contracts
With Customers
Issued to provide guidance on the
recognition of revenue from contracts
with customers, including multiple-
element arrangements and
transactions not previously addressed
comprehensively, and enhance
disclosures about revenue.
IFRS 9, Financial
Instruments
Issued to replace International
Accounting Standards (“IAS”) 39,
providing guidance on the
classification, measurement and
disclosure of financial instruments and
introducing a new hedge accounting
model.
Financial Instrument
Financial assets
Cash and cash equivalents
Receivables
Derivatives
Derivatives designated as hedges
Prepaid expenses and other current assets – marketable securities
Investments – equity securities
Investments – equity securities
Financial liabilities
Short-term and long-term debt
Payables and accrued charges, excluding derivatives
Adopted using the modified retrospective method effective January 1,
2018, with required disclosures included in Note 4. No cumulative
adjustment is required to the opening balance of retained earnings.
The Company elected to use the practical expedient related to the
adjustment of the promised consideration for the effects of a
significant financing component as the expected period between
when control over a promised good or service is transferred and when
the customer pays for that good or service is less than 12 months.
The Company sells certain retail products to end-customers with a
right of return. Therefore, a refund liability and a right to the returned
goods (included in inventory) are now recognized separately for the
products expected to be returned.
On adoption of IFRS 9, in accordance with transitional provisions, the
Company has not restated prior periods but has reclassified the
financial assets held at January 1, 2018, retrospectively, based on the
new classification requirements and the characteristics of each
financial instrument at the transition date. For financial liabilities, IFRS
9 retains most of the IAS 39 requirements. The Company did not
designate any financial liabilities at fair value through profit or loss;
therefore, the adoption of IFRS 9 did not impact the Company’s
accounting policies for financial liabilities. Refer to Note 13 for details.
In addition, there was no change in the classification of the derivative
instruments. The Company adopted the new general hedge
accounting model under IFRS 9. This requires the Company to ensure
that the hedge accounting relationships are aligned with its risk
management objective and strategy and to apply a more qualitative
and forward-looking approach to assess hedge effectiveness. The
Company also reclassified realized cash flow hedges as a basis
adjustment to finished goods inventory, recorded directly through
accumulated other comprehensive income (net of income taxes).
Category under IAS 39
Category under IFRS 9
FVTPL
Loans and receivables
FVTPL
FV – hedging
instrument
FVTPL
Available-for-sale
FVTPL
Amortized cost
Amortized cost
FVTPL
Amortized cost
FVTPL
FV – hedging
instrument
FVTPL
FVTOCI
FVTPL
Amortized cost
Amortized cost
IFRS 9 replaces the incurred loss model in IAS 39 with an expected credit loss model. This applies to financial assets measured at
amortized cost. Under IFRS 9, credit losses are recognized earlier than under IAS 39. This change did not have a material impact to
the Company’s receivables.
NUTRIEN 2018 152 ANNUAL REPORT
IN MILLIONS OF US DOLLARS EXCEPT AS OTHERWISE NOTED
NOTE 32 ACCOUNTING POLICIES, ESTIMATES AND JUDGMENTS CONTINUED
Standards, Amendments and Interpretations Not Yet Effective and Not Applied
The IASB and IFRIC have issued the following standards, amendments or interpretations to existing standards that were not yet
effective and not applied as at December 31, 2018.
Standard
Description
IFRS 16, Leases
Issued to supersede IAS 17 and related
standards, this standard requires the
Company to apply a new model for
lessee accounting under which all
leases will be recorded as a
right-of-use (“ROU”) asset on the
balance sheet and a corresponding
lease liability. Lease costs will be
recognized in the income statement
over the lease term as depreciation of
the ROU asset and finance charges on
the lease liability.
ROU assets represent the right to use
an asset for the lease term, and lease
liabilities represent the obligation to
make lease payments arising from a
lease. ROU assets and liabilities are
recognized at commencement of a
lease based on the present value of
lease payments over the lease term.
The standard requires capitalizing the
lease payments and expected residual
value guarantees over the initial
non-cancellable period plus periods
covered by renewal, purchase and
termination options where such are
reasonably certain of exercise. The
standard requires capitalization using
the interest rate implicit in the lease at
commencement, or if the implicit rate
is not available, an incremental
borrowing rate, adjusted for term,
security, asset value, and the
borrower’s economic environment.
Effective Date 1
January 1, 2019,
applied using the
modified
retrospective
method (which in the
Company’s case
results in prospective
application)
measuring the ROU
asset equal to the
lease liability, and
using the Company’s
incremental
borrowing rate to
determine the
present value of
future lease
payments. The
Company has chosen
to apply practical
expedients, including
recognition
exemptions for
short-term and low-
value leases, and to
grandfather the lease
definition on
transition.
Expected Impact
The Company has substantially completed its
implementation, including review of contracts,
aggregation of data to support the evaluation
of the accounting impacts of applying the new
standard and assessment of the need for
changes to systems and processes, including
internal controls. Adoption will have a material
effect on the consolidated financial statements,
resulting in increases in assets and liabilities in a
subcategory of property, plant and equipment,
ROU, and a new subcategory of long-term debt
“Lease Liabilities”.
Compared with the existing accounting for
operating leases, the classification and timing of
expenses will change, causing a) reclassification
of current operating lease payments out of cost
of goods sold and expenses to depreciation and
finance costs; and b) reclassification from cash
flow from operating activities to cash flow from
financing activities. Many commonly used
financial ratios and performance metrics as
currently defined will also change. The Company
does not expect a material impact to
consolidated net earnings.
The Company’s assessment will not result in
recognition of any material non-lease
components, additional lease components,
residual value guarantees or purchase or
termination options. The Company’s assessment
included: a) assessment of non-lease contracts
for terms that resulted in control by the Company
of an identified asset with a right to obtain
substantially all the identified asset’s economic
benefits; and b) assessment of all relevant facts
and circumstances in determining the lease term,
including whether the Company was reasonably
certain to exercise renewal or purchase options
based on market and other business conditions,
and costs and impacts of renewing.
The adoption will result in an increase to
property, plant and equipment and long-term
debt of approximately $1 billion at January 1,
2019. Impact on future earnings is not
expected to be significant.
1 Effective date for annual periods beginning on or after the stated date.
The following amended standards and interpretations are not
expected to have a material impact on the Company’s
consolidated financial statements:
The following amended standards and interpretations are
being reviewed by the Company to determine the potential
impact on the Company’s consolidated financial statements:
(cid:129) IFRIC 23, Uncertainty Over Income Tax Treatments
(cid:129) Amendments to IAS 28, Long-term Interests in Associates and
Joint Ventures
(cid:129) Conceptual Framework for Financial Reporting
(cid:129) IFRS 17, Insurance Contracts
(cid:129) Amendments to IAS 1 and IAS 8, Definition of Material
(cid:129) Amendments to IAS 19, Employee Benefits
(cid:129) Amendments to IFRS 3, Business Combinations
(cid:129) Amendments to IAS 12, Income Taxes
(cid:129) Amendments to IAS 23, Borrowing Costs
NUTRIEN 2018 153 ANNUAL REPORT
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IN MILLIONS OF US DOLLARS EXCEPT AS OTHERWISE NOTED
NOTE 33 COMPARATIVE FIGURES
As described in Note 1, the comparative figures are PotashCorp only. To conform with Nutrien’s new method
of presentation, comparative figures were reclassified and additional 2017 information was provided, with
no impact to net earnings, total assets and liabilities, and cash provided by operating activities.
The following additional information is retrospectively included in the 2017 comparatives to conform with current year presentation:
(cid:129) Note 4 Segment Information, the first table on page 106 contains an analysis by segment of selling expenses, general and
administrative expenses, other operating expenses and EBITDA.
(cid:129) Note 25 Capital Management includes a line item for EBITDA and adjusted EBITDA was revised to conform with Nutrien’s definition.
Refer to Notes 4, 5, 6, 7, 12 and 25 for further information specific to this additional information and the reclassifications within
the tables.
Consolidated Statement of Earnings
Consolidated Statements of Shareholders’ Equity
Cost of goods sold
Selling and
administrative
expenses
Selling expenses
General and
administrative
expenses
Provincial mining and
other taxes
Merger and related
costs
Other expenses
For the Year Ended December 31, 2017
Previously
Reported
$ (3,335)
Reclassification
Amounts
19
$
Reported after
Reclassifications
$
(3,316)
(214)
–
–
(151)
(84)
(17)
$ (3,801)
$
214
(29)
(185)
5
84
(108)
–
–
(29)
(185)
(146)
–
(125)
(3,801)
$
Consolidated Statement of Comprehensive Income
Other
Cash flow hedges
Net fair value loss
during the period
Reclassification of
net gain to
earnings
For the Year Ended December 31, 2017
Previously
Reported
3
$
Reclassification
Amounts
17
$
Reported after
Reclassifications
$
20
(17)
34
20
$
17
(34)
–
$
–
–
20
$
Consolidated Statement of Cash Flows
For the Year Ended December 31, 2017
Previously
Reported
Reclassification
Amounts
Reported after
Reclassifications
Pension and other
post-retirement
benefits
Net undistributed
earnings of equity-
accounted
investees
Asset retirement
obligations and
accrued
environmental costs
Other long-term
liabilities and
miscellaneous
$
64
$
(64)
$
(1)
7
21
91
$
1
(7)
70
–
$
–
–
–
91
91
$
Other
Net loss on derivatives
designated as cash
flow hedges
Loss on currency
translation of
foreign operations
Other
Net loss on derivatives
designated as cash
flow hedges
Loss on currency
translation of
foreign operations
As at December 31, 2017
Previously
Reported
(5)
$
Reclassification
Amounts
(41)
$
Reported after
Reclassifications
$
(46)
(43)
–
(48)
43
(2)
–
$
$
–
(2)
(48)
$
As at December 31, 2016
Previously
Reported
(8)
$
Reclassification
Amounts
(58)
$
Reported after
Reclassifications
$
(66)
(60)
–
(68)
60
(2)
–
$
$
–
(2)
(68)
$
Consolidated Balance Sheet
As at December 31, 2017
Intangible assets
Goodwill
Other intangible
assets
Investments in equity-
accounted
investees
Available-for-sale
investments
Investments
Short-term debt and
current portion of
long-term debt
Short-term debt
Payables and accrued
charges
Current portion of
derivative
instrument liabilities
Other non-current
Derivative instrument
liabilities
liabilities
Previously
Reported
166
$
–
Reclassification
Amounts
$
(166)
97
–
166
30
262
–
292
730
–
730
807
29
836
51
35
86
$
$
$
$
$
$
$
$
$
69
–
(30)
(262)
292
–
(730)
730
–
29
(29)
–
35
(35)
–
$
$
$
$
$
$
$
$
$
Reported after
Reclassifications
$
$
$
$
$
$
$
$
$
$
–
97
69
166
–
–
292
292
–
730
730
836
–
836
86
–
86
NUTRIEN 2018 154 ANNUAL REPORT
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NUTRIEN 2018 155 ANNUAL REPORT
Shareholder Information
Dividends
Offices
Dividend amounts paid to shareholders resident in
Nutrien’s registered head office is Suite 500,
Canada are adjusted by the exchange rate applicable on
122 – 1st Avenue South, Saskatoon, Saskatchewan,
the dividend record date. Dividends are normally paid in
Canada S7K 7G3. It also has corporate offices at 13131
January, April, July and October with record dates
Lake Fraser Drive SE, Calgary, Alberta, Canada T2J 7E8
normally set approximately three weeks in advance of
and 5296 Harvest Lake Drive, Loveland, Colorado,
the payment date. Future cash dividends will be paid out
US 80538.
of, and are conditioned upon, the company’s available
earnings. Shareholders who wish to have their dividends
deposited directly to their bank accounts should contact
the transfer agent and registrar, AST Trust Company
(Canada).
Ownership
On February 20, 2019, there were 471 holders of record
of the company’s common shares.
Common Share Prices
The company’s common shares are traded on the
Toronto Stock Exchange and the New York Stock
Exchange. Nutrien is included in the S&P/TSX 60 and the
S&P/TSX Composite indices.
Investor Relations
Investor Relations Department
Email: investors@nutrien.com
Phone: (403) 225-7451
Transfer Agent
You can contact AST Trust Company (Canada), the
corporation’s transfer agent, as follows:
Telephone:
1-800-387-0825
(toll-free within Canada and the US), or
1-416-682-3860
(from any country other than Canada and
the US)
By Fax:
1-514-985-8843 (all countries)
By Mail:
P.O. Box 1, 320 Bay Street
Toronto, ON M5H 4A6
Internet:
www.astfinancial.com
NYSE Corporate Governance
The certifications required by Section 302 of the
Sarbanes-Oxley Act of 2002 are filed as exhibits to our
2018 Annual Report on Form 40-F.
NUTRIEN 2018 156 ANNUAL REPORT
Appendix
Abbreviated Company Names and Sources
Name
AECO
Agrible
Agrium
Agrichem
APC
Argus
Canpotex
CME Group
CropLife
CRU
Source
Alberta Energy Company, Canada
Agrible, Inc., USA
Agrium Inc., Canada
Agrichem, Brazil
Arab Potash Company (Amman: ARPT), Jordan
Argus Media group, UK
Canpotex Limited, Canada
CME Group, USA
CropLife, USA
CRU International Limited, UK
FAO or FAOSTAT
Food and Agriculture Organization of the United Nations, Italy
Fertecon
Green Markets
GROWMARK
Fertecon Limited, UK
Green Markets, USA
GROWMARK, Inc. USA
ICL
IFA
IMEA
Moody’s
MOPCO
Nutrien
NYMEX
NYSE
Israel Chemicals Ltd. (Tel Aviv: ICL), Israel
International Fertilizer Industry Association, France
Instituto Mato-Grossense De Economia Agropecuária, Brazil
Moody’s Corporation (NYSE: MCO), USA
MISR Fertilizers Production Company S.A.E., Egypt
Nutrien Ltd. (TSX and NYSE: NTR), Canada
New York Mercantile Exchange, USA
New York Stock Exchange, USA
PotashCorp or PCS
Potash Corporation of Saskatchewan Inc., Canada
Profertil
Sinofert
SQM
S&P
TSX
USDA
Profertil S.A., Argentina
Sinofert Holdings Limited (HKSE: 0297.HK), China
Sociedad Química y Minera de Chile S.A. (Santiago Bolsa de Comercio Exchange, NYSE: SQM), Chile
Standard & Poor’s Financial Services LLC, USA
Toronto Stock Exchange, Canada
United States Department of Agriculture, USA
Waypoint
Waypoint Analytical, Inc, USA
NUTRIEN 2018 157 ANNUAL REPORT
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Scientific Terms
Potash
Nitrogen
Phosphate
Terms and Measures
KCI
NH3
UAN
MGA
DAP
MAP
SPA
H3PO4
potassium chloride, 60-63.2% K2 O (solid)
ammonia (anhydrous), 82.2% N (liquid)
nitrogen solutions, 28-32% N (liquid)
merchant grade acid, 54% P2 O5 (liquid)
diammonium phosphate, 46% P2 O5 (solid)
monoammonium phosphate, 52% P2 O5 (solid)
superphosphoric acid, 70% P2 O5 (liquid)
phosphoric acid (liquid)
Purified Phosphoric Acid
food and technical grade acid 75% & 85% H3PO4 (liquid)
LOMAG
AS
low magnesium super phosphoric Acid 70% P2O5 (liquid)
ammonium sulfate (solid)
Measures the potassium content of products having different chemical analyses
Measures the nitrogen content of products having different chemical analyses
Measures the phosphorus content of products having different chemical analyses
Product Measures
K2 O tonne
N tonne
P2 O5 tonne
Product tonne
Standard measure of the weights of all types of potash, nitrogen and phosphate products
Currency Abbreviations
CDN
USD
Exchange Rates
General Terms
Canadian dollar
United States dollar
CDN per USD at December 31, 2018–1.3642
Consumption vs demand
Product applied vs product purchased
Greenfield capacity
New operation built on undeveloped site
Latin America
South America, Central America, Caribbean and Mexico
MMBtu
MMT
Million British thermal units
Million metric tonnes
Nameplate capacity
Estimated theoretical capacity based on design specifications or Canpotex entitlements–does not
necessarily represent operational capability
North America
Canada and the US
Offshore
All markets except Canada and the US
Operational capability
Estimated annual achievable production level
USMCA
United States-Mexico-Canada Agreement
NUTRIEN 2018 158 ANNUAL REPORT
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