Ag Solutions to
Feed the Future
Annual Report 2019
Overview Managementʼs Discussion & Analysis Two Year Highlights Financial Statements Other Information 1-5 Corporate Overview
6-8 Letter from the President and CEO
9-67 Managementʼs Discussion & Analysis
12-20 Nutrienʼs Strategy
21-44 Operating Segment Performance & Outlook
45-56
Financial Overview
57-60 Enterprise Risk Management
61-67 Other and Appendix
68-69 Two Year Highlights
70-133 Financial Statements
134-137 Terms & 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 Letter from the President and CEO contain certain non-IFRS financial measures which do not have a standard
meaning under IFRS including:
• EBITDA, adjusted EBITDA and Potash adjusted EBITDA
• Adjusted net earnings per share
• Free cash flow and free cash flow including changes in non-cash working capital
• Retail EBITDA per US selling location
• Adjusted net debt
For definitions, further information and reconciliation of these measures to the most directly comparable measures under IFRS, see “Non-IFRS
Financial Measures” beginning on page 63.
See pages 134 and 135 for definitions, abbreviations and terms used in the annual report.
Overview Managementʼs Discussion & Analysis Two Year Highlights Financial Statements Other Information
Ag Solutions
to Feed the
Future
At Nutrien, we are committed
ground to grower. With a world-
to supporting growers across
class low-cost production
the globe that are faced with
platform, extensive distribution
the challenge of producing
network and direct relationships
more, high-quality food while
with growers, we are uniquely
at the same time being more
positioned to deliver value to all
productive, sustainable and
our stakeholders.
profitable. We are transforming
the agricultural industry by
developing and offering
growers innovative tools,
solutions and technology to
address this challenge.
We will continue to build the
best channels to reach and
serve our customers and stand
shoulder-to-shoulder with
them as we lead the industry
in providing Ag Solutions to
We operate across the
Feed the Future.
agricultural value chain from
2 Billion
ADDITIONAL PEOPLE
TO FEED BY 2050 1
1 Source: FAO
#1 >500K
NUMBER OF NUTRIEN
GROWER ACCOUNTS
AGRICULTURE RETAILER
AND CROP NUTRIENT
PRODUCER BY SIZE
1
Nutrien Annual Report 2019Overview Managementʼs Discussion & Analysis Two Year Highlights Financial Statements Other Information Why
Invest in
Nutrien?
The Path to Create Superior Long-Term Value
Nutrien is well-positioned
within the Ag sector with its
unique and value-enhancing
integrated business model.
We have a clear path to grow
returns for shareholders by
developing leading whole-acre
solutions, continually optimizing
our production profile and
lowering costs, while maintaining
significant leverage to a potential
upturn in the crop input market.
Broad Exposure to Ag Value Chain
Well positioned to deliver value with the
strength of our people, products, supply chain,
data and technology across the Ag value chain.
Superior Returns with Lower Risk
Our business model has historically displayed
earnings stability while still offering
significant leverage to the agriculture cycle.
Financial Strength & Flexibility
Diverse earnings, strong free cash flow and
balance sheet and integrated model facilitate
efficient allocation of capital.
2
Nutrien Annual Report 2019Overview Managementʼs Discussion & Analysis Two Year Highlights Financial Statements Other Information Nutrien is changing the meaning of an agricultural input supplier. We are developing
products, services and systems that position our company to make a step-change
in leading the next wave of agricultural sustainability, reducing our environmental
footprint and reinforcing our commitment to diversity and inclusion (D&I).
Integrated model has unique competitive
advantages with improved utilization rates
and supply chain efficiencies paired with
well-positioned assets globally.
29 Retail
37 Potash
29 Nitrogen
5 Phosphate
EBITDA Split (2019)
(percent)
Source: Nutrien
Adjusted EBITDA
($ billions)
Lower earnings volatility relative to our
$3.02
peers mitigates risk for Nutrien investors
and reduces the cost of capital.
$3.93
$4.03
2020F Range
$4.30
$3.80
2017
2018
2019
2020F
Source: Nutrien
Positioned to grow our business and return
meaningful cash to shareholders through a
disciplined “compete for capital” strategy.
Free Cash Flow
($ millions unless otherwise stated)
Free Cash Flow
($ millions unless otherwise stated)
Free cash flow
Free cash flow
2018
3.7% Dividend Yield1
Free cash flow (including changes in
non-cash working capital)
Free cash flow (including changes in
non-cash working capital)
3.8% Dividend Yield1
2019
2018
3.7% Dividend Yield1
2019
3.8% Dividend Yield1
$1,975
$1,975
$837
$837
Source: Nutrien
$2,647
$2,647
$2,157
$2,157
1 2018 and 2019 dividend yield calculated as dividend per share ($1.72/sh and $1.80/sh
Source: Nutrien
annualized respectively) divided by share price as at December 31, 2018 and
1 2018 and 2019 dividend yield calculated as dividend per share ($1.72/sh and $1.80/sh
December 31, 2019 respectively.
annualized respectively) divided by share price as at December 31, 2018 and
December 31, 2019 respectively.
3
Nutrien Annual Report 2019Overview Managementʼs Discussion & Analysis Two Year Highlights Financial Statements Other Information
2019
Financial
& Operating
Highlights
Growing, Performing, Sustaining
At Nutrien, we are growing our
business – efficiently and
sustainably – to create value for
our stakeholders. We are raising
expectations of what an
agriculture company can be by
improving our business today and
continually positioning ourselves
for tomorrow.
$4.0B
ADJUSTED
EBITDA
$2.2B
FREE CASH FLOW
318RETAIL LOCATIONS
ACQUIRED
2018
2019
$3.9B
$4.0B
2018
2019
$2.0B
$2.2B
2018
2019
53
318
$967K
RETAIL EBITDA/
US SELLING LOCATION
11.5%
PROPORTION OF NORTH AMERICAN SALES
THROUGH THE DIGITAL PLATFORM 1
$650M
ANNUAL RUN-RATE
SYNERGIES ACHIEVED
2018
2019
NA
$967,000
2018
2019
NA
11.5%
2018
2019
$521M
$650M
1.2Mmt
CAPTURED
CO2
13%
EMPLOYEE TURNOVER
25%
PROPORTION OF FEMALE
VICE PRESIDENTS AND ABOVE
2018
2019
1.1Mmt
1.2Mmt
2018
2019
14%
13%
2018
2019
19%
25%
1 North American digital Retail sales as a proportion of North American Retail sales that are available for purchase online.
Find out more at nutrien.com
4
Nutrien Annual Report 2019Overview Managementʼs Discussion & Analysis Two Year Highlights Financial Statements Other Information Financial &
Operating
Summary
Year ended December 31
(in millions of US dollars, unless otherwise noted)
2019
2018
Change (%)
Financial Performance
Sales
Gross Margin
EBITDA
Adjusted EBITDA
Retail EBITDA
Potash EBITDA
Potash Adjusted EBITDA
Nitrogen EBITDA
Phosphate EBITDA
Earnings (loss) 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 Debt/Adjusted EBITDA
Working Capital Ratio
Non-Financial Performance
Lost-Time Injury Frequency 1
Total Employees
Employee Turnover Rate 2
Community Investment
Environmental Incidents
1 Frequency based for every 200,000 hours worked.
2 2018 data was restated.
n/m – Not a meaningful variance change.
$
20,023
$ 19,636
5,441
3,661
4,025
1,231
1,593
1,593
1,239
194
1.70
2.17
650
2,157
47%
2.5x
1.2
0.34
22,300
13%
17
23
$
$
$
5,392
2,006
3,934
1,206
(203)
1,606
1,215
255
(0.05)
2.68
$
$
521
1,975
48%
1.6x
1.4
0.34
20,300
14%
17
22
$
+2
+1
+83
+2
+2
n/m
-1
+2
- 24
n/m
-19
n/m
+9
-1
+56
-14
–
+10
-1
–
+5
5
Nutrien Annual Report 2019Overview Managementʼs Discussion & Analysis Two Year Highlights Financial Statements Other Information
Letter from
the President
and CEO
Nutrien is built to deliver superior value through the agriculture
cycle. We are a company that has generated and expects to
generate more stable earnings than our peers and have made
accretive investments through the ups and downs of the market.
Through 2019, where challenging weather and escalating trade
issues created headwinds for our industry, we remained focused
on executing our strategic plan and demonstrating the strength
of our model.
Despite modest earnings growth
in 2019, we used the strength of
our cash flows and balance sheet
to return capital to shareholders
– and knowing that tremendous
opportunities often emerge during
challenging times – to invest in
future growth. We allocated capital
to expand our Retail business,
repurchase shares and increase our
dividend. We also made important
investments in our digital capabilities
which we believe will transform the
Ag retail industry and further enhance
our position as the global leader and
strengthen the competitiveness of
our crop nutrient businesses to better
succeed under any market condition.
Reflecting on 2019 – and looking
ahead to what we expect to be an
exciting new decade for the company
– I believe three things are clear:
Execution on our
strategic plan
I am extremely proud of how our
employees delivered in the face of
difficult market conditions in 2019.
the US this year due to excessive wet
weather. We were able to maintain
margins and grow market share due
to the strength of our sales, service
and supply chain network.
We completed our Merger initiatives,
We also made significant progress
including capturing $650 million in
on our Retail digital strategy including
run-rate synergies this past year. This
the launch of e-commerce capability
was 30 percent higher than our
and integrated farm-planning tools.
commitment to shareholders at the
The early performance indicators
time of the Merger and we captured it
of these digital tools are very positive.
well ahead of schedule. Our journey
For example, the proportion of sales
has just started, and we will continue
of product available for purchase
to look for opportunities to enhance
online reached over 20 percent
our competitive position by unlocking
in the third quarter and averaged
additional operational and supply chain
11.5 percent throughout the year.
efficiencies across our global network.
As we continue to enhance our
We delivered $4.0 billion in adjusted
EBITDA in 2019, up modestly from the
previous year. However, free cash flow
was $2.2 billion in 2019, and $2.6 billion
digital offerings, we expect to serve
our customers more efficiently, drive
down costs, reduce working capital
and grow our market share.
including changes in non-cash
After a strong start to 2019, our crop
• Management is focused on
working capital, both up significantly
nutrient businesses were impacted by
controlling our controllables;
from the previous year. With the benefit
challenging market conditions in the
• We have a clear roadmap to create
value for shareholders. This is
embedded in our culture and we
are executing in accordance with it;
and
• Our purpose-driven culture drives
us to be a leader of sustainability in
our industry.
of Merger synergies and a focus on
second half of the year. In Potash, we
controlling costs, we were able to
generated $1.6 billion of EBITDA over
offset pressure from lower fertilizer
the year, despite having to take
prices and reduced crop input demand
significant production downtime
in many of our key markets this year.
during the fourth quarter related to
Our Retail operations, Nutrien Ag
Solutions delivered strong performance,
despite trade uncertainties and losing
17 million acres of seeded cropland in
a temporary slowdown in demand.
Despite the near-term weakness in
market conditions, we expect demand
to rebound in 2020, and we remain
6
Nutrien Annual Report 2019Overview Managementʼs Discussion & Analysis Two Year Highlights Financial Statements Other Information Chuck Magro, President and Chief Executive Officer – Nutrien
well positioned to serve our
customers’ needs.
Path to delivering
long-term value
Safety is our top priority and we made
Nutrien is both integrated and
strides to further infuse a culture of
diversified and our business model
safety throughout our organization,
is designed for superior performance
including by holding our first ever
even during volatile market
global virtual Safety, Health &
conditions. Our strategy is centered
Environment summit. Despite progress
on growers and their needs. From
in several areas we still have work to
the essential nutrients we produce
do as we experienced one life altering
at our operations to the more than
incident this year. We will be relentless
3,400 crop consultants we have
in our commitment to improve our
working shoulder-to-shoulder with
safety performance and ensure
growers around the world, we
everyone goes home safe every day.
have one clear objective: help our
In Nutrien Ag Solutions, we have
an opportunity to transform the
industry through scale, efficiency
and digital leadership. We allocated
approximately $1.0 billion to grow
our Retail footprint and enhance our
offering of higher-margin proprietary
products in 2019. We expect to
continue to invest heavily in this
business over the next five years to
expand our network in core markets,
including additional growth in Brazil,
enhance our product and technology
offerings and drive organic growth.
" With the benefit of Merger
synergies and a focus on
controlling costs, we were
able to offset pressure from
lower fertilizer prices and
reduced crop input demand
in many of our key markets
this year."
customers to be more profitable,
Our focus in Potash is to strengthen
productive and sustainable.
our industry-leading position through
We have some of the world’s highest-
quality, lowest-cost crop nutrient
production assets, combined with
an unparalleled Ag Retail distribution
network. We leverage our unmatched
size, scale and platform to create
superior long-term shareholder value.
further network optimization. We have
unmatched volume optionality with
the ability to ramp-up approximately
6 million tonnes of production
capability at current sites with virtually
no incremental investment. We also
see a path to bring on additional
brownfield capacity quicker and
cheaper than anyone else should the
7
Nutrien Annual Report 2019Overview Managementʼs Discussion & Analysis Two Year Highlights Financial Statements Other Information market require. In Nitrogen, we are
This includes products such as our
investing approximately $200 million
Environmentally Smart Nitrogen
to complete high-return brownfield
(ESN), new ag-biological products and
projects and we successfully
our investment in digital tools that
converted our Redwater phosphate
help growers make more informed
facility to an ammonium sulfate facility
decisions. Our recent acquisitions
on time and on budget.
of Agrible and Waypoint enhance
Returning cash to shareholders is
also a priority for the company. We
allocated $5.7 billion to shareholders
through dividends and share buybacks
since the inception of Nutrien at
the beginning of 2018, which is
unmatched in our industry. The
our ability to provide real-time
sustainable solutions and agronomic
advice to our customers. Sustainable
agriculture will shape the strategy and
direction of our company – in fact,
we plan to be the leader in promoting
sustainable agriculture.
Summary
Nutrien was built to be the leading
global integrated Ag Solutions
provider with a unique platform for
generating growth and value. It was
also designed to withstand challenging
market conditions and capitalize on
favorable longer-term market trends.
We saw a confluence of factors that
created significant headwinds for
global crop input demand in 2019,
however, we expect the agriculture
fundamentals to improve in 2020
and set us back on the cyclical
stability of our Retail earnings supports
We also made important investments
recovery that we started to see in
a steady and growing dividend. We
at our production facilities including
2018. In the meantime, we remain
also repurchased over 11 percent of
emission controls at our nitrogen
focused on factors that we can control
our initial outstanding shares and will
facilities, investments in mining
in order to deliver long-term value
evaluate future share buybacks on a
automation, and expanding our
for all stakeholders.
compete-for-capital basis.
capacity of diesel exhaust fluid that
lower vehicle emissions.
Finally, we are a company that thinks
beyond our financial performance.
We will leverage these investments
We have a tremendous group of
across the value chain as we build a
people that work hard every day to
climate-smart agriculture strategy that
address some of the world’s biggest
is integrated into the long-term plans
sustainability challenges. By doing
for each of our business units. Later
so we play our part in delivering Ag
in 2020, we expect to provide more
Solutions to Feed the Future.
detail on our Environmental, Social
and Governance (ESG) strategy and
targets for reducing emissions across
our value chain.
Nutrien is committed to promoting
Thank You
a diverse and inclusive workforce
Chuck Magro
and our D&I strategy extends this
President and Chief Executive Officer
February 19, 2020
principle to our supply chain, local
communities and the agriculture
sector. We are committed to the
30% Club principles of promoting
gender diversity on our Board. We
have been recognized as a top
employer nationally and strive to
continue to develop our people and
our human resources processes.
Leader in Sustainability
Our purpose, grow our world from
the ground up, defines our people,
our strategy and the role we play as a
leader in sustainability. We have three
clear sustainability priorities: lead
innovation in sustainable agriculture,
reduce our environmental footprint,
and champion D&I in the Ag industry.
" We continue to make
significant investments in
the area of sustainability.
We have built a portfolio
of products and solutions
that help growers make
their operations more
sustainable."
8
Nutrien Annual Report 2019Overview Managementʼs Discussion & Analysis Two Year Highlights Financial Statements Other Information Managementʼs
Discussion &
Analysis
As at and for the year ended
December 31, 2019
12 Strategy
21
Operating Segment
Performance & Outlook
22-27 Retail
28-33 Potash
34-39 Nitrogen
40-43 Phosphate
44
Corporate & Others
45
Financial Overview
The following management’s discussion and analysis (“MD&A”) is the responsibility of management and is dated as of February 19, 2020. 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 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. This MD&A is based on the Company’s audited
consolidated financial statements for the year ended December 31, 2019 (“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 and, therefore, may not be comparable to similar measures presented by other
issuers. Such non-IFRS financial measures include:
• EBITDA, Adjusted EBITDA and Potash Adjusted EBITDA
• Adjusted net earnings and adjusted net earnings per share
• Adjusted EBITDA and adjusted net earnings per share guidance
• Free cash flow and free cash flow including changes
in non-cash working capital
• Gross margin excluding depreciation and amortization
per tonne - manufactured
• Potash cash cost of product manufactured
• Ammonia controllable cash cost of product manufactured
• Adjusted net debt
• Retail adjusted average working capital to sales
• Retail cash operating coverage ratio
• Retail normalized comparable store sales
• Retail EBITDA per US selling location
• Nutrien Financial receivables
• Debt-to-capital ratio (see disclosures on page 53)
For definitions, further information and reconciliation of these measures to the most directly comparable measures under IFRS, see “Non-IFRS Financial Measures” beginning on page 63.
Also see the cautionary statement on forward-looking information on page 62.
All references to per share amounts pertain to diluted net earnings (loss) per share. Financial data in this annual report are stated in millions of US dollars which is the functional currency
of Nutrien and the majority of its subsidiaries unless otherwise noted. N/m indicates information that is not meaningful.
See pages 134 and 135 for definitions, 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 Annual Information Form for the year ended
December 31, 2019, 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”).
The information contained on or accessible from our website or any other website is not incorporated by reference into this MD&A or any other report or document we file with or furnish to
applicable Canadian or US securities regulatory authorities.
9
Nutrien Annual Report 2019Overview Managementʼs Discussion & Analysis Two Year Highlights Financial Statements Other Information
Overview
Managementʼs Discussion & Analysis
Two Year Highlights
Financial Statements
Other Information
We will provide industry-leading Ag Solutions to Feed
the Future.
We have operations and
investments in 14 countries,
with over 22,000 employees
and more than 500,000 grower
accounts worldwide. We operate
the world’s premier Ag Retail
network, supplying growers with
the latest products, services and
technology. As the world’s largest
producer of fertilizers, we have
some of the highest-quality and
lowest-cost production assets.
Our extensive supply chain allows
us to deliver products to the
market with improved efficiency.
Nutrienʼs
Global
Profile
North
America
Redwater, AB
SASKATOON, SK
Fort Saskatchewan, AB
Joffre, AB
Carseland, AB
CALGARY, AB
Vanscoy, SK
Patience Lake, SK
Lanigan, SK
Cory, SK Allan, SK
Standard, AB
Granum, AB
Rocanville, SK
REGINA, SK
Winnipeg, MB
Kennewick, WA
Billings, MT
HAWAII
LOVELAND, CO
Biola, CA
Ontario, CA
Weeping Water, NE
Marseilles, IL
Greeley, CO
Fairbury, NE
Borger, TX
Joplin, MO
Osceola, AR
Greenville, MS
NORTHBROOK, IL
Lima, OH
Cincinnati, OH
New Madrid, MO
Denton, TX
Americus, GA
Aurora, NC
Augusta, GA
Geismar, LA
White Springs, FL
HAWAII
Retail
Potash
Nitrogen
Phosphate
Environmentally
Smart Nitrogen® (ESN)
Granulation Upgrade Facility
Loveland Products & Affiliated Facilities
Agrichem
Investments & Joint Ventures
OFFICES
10 Nutrien Annual Report 2019
Overview
Managementʼs Discussion & Analysis
Two Year Highlights
Financial Statements
Other Information
To view and download
our Industry Factbook,
visit https://www.nutrien.com/
resources
To view A Day in the Life of
Nutrien Ag Solutions, visit
https://www.nutrien.com/what-
we-do/our-business/retail
To view the Nutrien Potash
Facility Tour, visit
https://www.nutrien.com/what-
we-do/our-business/potash
Fact Book 2019
Point Lisas
Trinidad and Tobago
Point Lisas
Trinidad and Tobago
South
America
Agrichem, Ribeirão
Preto, Brazil
SÃO PAULO,
BRAZIL
Africa/Asia
MOPCO,
Damietta, Egypt
Australia
LAS CONDES, CHILE
Casilda, Argentina
MARTÍNEZ,
ARGENTINA
Profertil S.A.,
Bahía Blanca, Argentina
Agrichem, Ribeirão
Preto, Brazil
SÃO PAULO,
BRAZIL
Kwinana, Australia
FREMANTLE,
AUSTRALIA
EIGHT MILE PLAINS, AUSTRALIA
MACQUARIE PARK, AUSTRALIA
LAS CONDES, CHILE
Casilda, Argentina
MELBOURNE, AUSTRALIA
Melbourne, Australia
Dandenong, Australia
MARTÍNEZ,
ARGENTINA
Profertil S.A.,
Bahía Blanca, Argentina
Nutrien Annual Report 2019
11
Overview
Managementʼs Discussion & Analysis
Two Year Highlights
Financial Statements
Other Information
Nutrienʼs
Strategy
Nutrien’s strategy begins with the depth and breadth
of our unique portfolio of assets that span the crop
input and services value chain.
As the leading diversified and best positioned company in the crop
input Ag sector, our strategy focuses on creating value through the
cycle and developing a platform for growth while minimizing risks.
This creates cost, revenue and supply chain synergies that deliver
value for our customers and other stakeholders.
Building a unique
relationship with
the grower
Create the
best channel to
the customer
Own the leading
production assets and
proprietary offerings
We are the leading retailer of crop
We unlock value through integration
We own and operate the world’s
inputs and services across key Ag
and innovation across our supply
leading fertilizer assets with 25 million
markets where we operate with an
chain and our approach to market.
tonnes of sales in 2019, which have
award-winning digital platform and
The types of products and services
significant cost and/or market
over 3,400 agronomists serving
we offer require significant supply
advantaged positions. We have
growers from more than 2,000 retail
chain investments, particularly given
approximately 6 million tonnes of
locations across North America,
the seasonal nature of our industry.
additional available potash capacity
South America and Australia. We
In North America alone, we have
which we expect to draw upon in
enrich our relationships by offering
more than 1,800 distribution points
the coming years. We are optimizing
our customers a full suite of solutions
with approximately 6.3 million tonnes
our production assets to lower costs,
to meet their needs. Technology,
of storage capacity. We are further
investing in high-return nitrogen
innovation and data are integral to
solidifying our leading position in the
brownfield capacity expansions and
providing Ag Solutions to Feed the
marketplace and expanding our reach
implementing technologies across
Future, which is why we have a clear
to customers through a tuck-in
our business to reduce carbon
vision for developing the leading
acquisition and consolidation strategy
emissions. We also develop value-
digital agricultural platform supported
in North America, a growth strategy in
enhancing offerings that help
by our people, products, extensive
Brazil and integrating Ruralco into our
growers optimize yields and
distribution network
and systems.
business in Australia.
address challenges.
>2,000
RETAIL LOCATIONS
WORLDWIDE
>1,800
NORTH AMERICAN
DISTRIBUTION POINTS
>500,000
GROWER ACCOUNTS
>1,850
PROPRIETARY
PRODUCTS
~25Mmt
NUTRIENT
SALES
12
Nutrien Annual Report 2019 Overview
Managementʼs Discussion & Analysis
Two Year Highlights
Financial Statements
Other Information
Priorities &
Performance
We focus on several key priorities to support the
execution of our corporate strategy and deliver
superior long-term results for our stakeholders.
In each of these areas we set clearly defined targets and performance
metrics that measure our progress. Our strategy and performance
are supported by governance oversight and risk management by our
leaders and Board of Directors.
Sustainability
14-15
Growth & Capital Allocation
16-17
Be at the forefront of Ag related Environmental, Social
and Governance (ESG), including building a climate-smart
agricultural strategy
Grow our business and create value by more efficiently
allocating capital through the cycle
Innovation & Technology
18-19
Employees
Drive growth through innovation and digital solutions
Foster a purpose-driven culture that supports growth,
diversity and inclusion
20
13
Nutrien Annual Report 2019 Overview
Managementʼs Discussion & Analysis
Two Year Highlights
Financial Statements
Other Information
Sustainability
Sustainability
Initiatives
LEAD THE NEXT WAVE
OF SUSTAINABLE
AGRICULTURE
MINIMIZE OUR
ENVIRONMENTAL
FOOTPRINT
Acquired Actagro and Agrible
Baselining our environmental
– companies that focus on
impact, implementing
soil and plant health and
efficiency projects and
enable analysis of on-farm
developing a long-term
Find out more at
nutrien.com/sustainability
CHAMPION DIVERSITY
AND INCLUSIVE GROWTH
IN THE AGRICULTURE
INDUSTRY
Addressing D&I across
our company, value chain
and communities where
sustainability practices.
environmental strategy.
we operate.
Nutrien is integrating sustainability across the company by focusing on three
priorities that contribute to the United Nations Sustainable Development Goals.
2019 Performance
Actagro
SUSTAINABLE AG SOLUTIONS
ACQUISITION
1.2Mmt
CAPTURED CO2
25%
PROPORTION OF FEMALE
VICE PRESIDENTS AND ABOVE
14
Nutrien Annual Report 2019 Overview
Managementʼs Discussion & Analysis
Two Year Highlights
Financial Statements
Other Information
Sustainable Agriculture
Our goal is to lead the next wave of
sustainability in agriculture by developing
solutions for our customers that increase
crop yields, enhance their profitability and
enable greater environmental stewardship.
We aim to accomplish this goal through
three key areas:
1. Develop solutions that increase
nutrient availability and uptake by crops,
improving productivity and crop
resilience and reducing overall losses to
the environment. Our 2019 acquisition
of Actagro, a manufacturer of
environmentally sustainable soil and
plant health products and technologies,
Environmental Footprint
Nutrien is committed to reducing its
environmental footprint and has
established a baseline to understand our
current state and identify future areas of
opportunity and investment. Reducing
our footprint means we are focused on
air emissions, water usage and discharge,
and waste.
Climate change is a key focus for Nutrien
and we are committed to reducing
greenhouse gas (GHG) emissions within
our operations and across our value chain.
Fertilizer production, especially nitrogen
fertilizer, generates GHG emissions;
is expected to contribute to growth
and progress.
2. Enhance the data linkage between
growers and downstream partners, such
as food production companies and
carbon markets. Our goal is to increase
the data and analytical capabilities for
on-field sustainability information
tracking and enable insight and
connectivity through our industry-
leading Retail digital tools.
The acquisition of Agrible in 2018 adds
field-level predictive analytics to our
digital platform enabling farmers to
quantify their performance and pursue
opportunities for continuous
improvement. In 2019, we began the
integration of this tool into our digital
platform for a broad customer
roll-out.
3. Collaborate with our stakeholders
to enable the uptake of best practices.
This approach requires collaboration
at multiple levels, including with
government, regulatory agencies and
international and local non-
governmental organizations.
however, nitrogen is critical for healthy
crops and soil organic carbon. Agricultural
practices that increase yield on land
reduce pressure to convert additional land
to food production. Improved fertilizer use
efficiency contributes to soil health and
makes a positive impact to climate change
by sequestering carbon naturally. This
year, we obtained external assurance on
our 2018 baseline scope 1 and 2 GHG
emissions, which we expect to be
provided in our 2020 ESG Report. We are
also engaged in assessing our scope 3
GHG emissions inventory. Later in 2020,
we plan to provide more detail on our
climate strategy and targets for reducing
emissions across our value chain.
Water is important to our operations
and is primarily used in our fertilizer
production facilities and we are taking
action to reduce our water use and
increase water recycling. Examples include
recycling water in a closed-loop system,
using on-site collection ponds, and in
some cases, using non-potable water
sources to reduce intake
of fresh water.
Diversity and Inclusive Growth
Nutrien is committed to diversity and
inclusion within our workforce, our supply
chain, local communities and the
agricultural sector. D&I is an important
component of how we deliver on our
goal to be the leading integrated Ag
Solutions provider. We aspire to lead in
diversity and inclusion by focusing on a
world class approach which links inclusion
with our global sustainability agenda.
This means our strategy includes both
internal and external efforts and advocacy
and collaboration with multiple
stakeholders. A key component is our
focus on advancing our workforce diversity
efforts through attracting, developing and
engaging talent and creating an inclusive
culture. In addition, we work to advance
supplier diversity, partnerships and
community advocacy for inclusion. An
example of this is our Aboriginal
Engagement strategy which focuses on
opportunities in our workforce, supply
chain and community investment.
In 2019, Nutrien renewed its partnership
with the Saskatoon Tribal Council.
Through a memorandum of
understanding, Nutrien continues a
commitment to initiatives and events
that ensure our Indigenous partners
share in opportunities both as
employees and as suppliers.
15
Nutrien Annual Report 2019
Overview
Managementʼs Discussion & Analysis
Two Year Highlights
Financial Statements
Other Information
Growth & Capital Allocation
Growth &
Capital
Allocation
Initiatives
SAFE AND
RELIABLE ASSETS
Efficiently maintaining
our assets and managing
associated costs to provide
safe and reliable production
to optimize returns.
GROW
COMPETE FOR CAPITAL
Expanding our footprint
Prudently allocating
and optimizing our business
capital to the best risk
to provide stable and
adjusted opportunities
growing financial returns
to lead future growth
while minimizing risk and
and increase cash returns
protecting our balance sheet.
to shareholders.
Nutrien is focused on financial growth and creating long-term value through
capital allocation. We believe our integrated model provides greater opportunity
to allocate capital more efficiently through the cycle and provide superior financial
returns for shareholders.
2019 Performance
$1.0B
SUSTAINING CAPITAL
EXPENDITURES
~50%
OF CAPITAL DEPLOYMENT
TO DIVIDENDS AND SHARE
REPURCHASES
$3.0B
CASH USED FOR
DIVIDENDS AND SHARE
REPURCHASES
$2.0B
ACQUISITIONS,
INVESTMENTS AND GROWTH
PROJECT SPENDING
16
Nutrien Annual Report 2019 Overview
Managementʼs Discussion & Analysis
Two Year Highlights
Financial Statements
Other Information
1
2
3
4
Sustain
Our Assets
Protect
the Balance
Sheet
Stable,
Predictable
and Growing
Dividends
Compete
for Capital
Nutrien’s capital allocation
strategy is simple and
clear. The first priority is
to sustain our assets to
ensure that we have safe
and reliable operations.
Sustaining capital spending
totaled $1.0 billion in 2019,
which is in line with
our depreciation.1
The next priority is to
protect the balance sheet.
We target an investment-
grade credit rating
throughout the cycle
which provides reliable
access to capital and
financial flexibility, allowing
us to be opportunistic
when value-enhancing
opportunities arise.
We are focused on delivering
to shareholders a stable,
predictable and growing
dividend underpinned by
growth in our Retail business
unit. We have increased the
dividend twice since
Nutrien’s inception and
target a payout range of 40
to 60 percent of free cash
flow through the cycle.
We allocate the remaining
free cash flow on a
compete for capital basis.
Our internal approval
process and strict hurdle
rates ensure that we are
allocating capital to the best
alternatives on a risk
adjusted basis.
Nutrien’s long-term financial growth is primarily within our
control by investing in our world class Retail distribution
network, growing our crop nutrient production and
optimizing the combined network. Firstly, we are expanding
our Retail footprint in key regions and unlocking value by
leveraging the scale of our existing platform which is
expected to provide stable and growing earnings.
Secondly, we have a clear strategy and measurable goals for
optimizing crop nutrient production by reducing costs and
investing in low-cost and low-risk expansion projects. As we
optimize and expand capacity, earnings leverage to crop
nutrient price recovery increases significantly.
During low points of the cycle, we expect to focus on
growing our crop nutrient production, distributions to
shareholders and transformational opportunities. At the high
points of the cycle, we expect to focus on organic growth
opportunities and reducing leverage. The stability of Retail
allows us to keep growing this business and our dividend
throughout the cycle.
In 2019, we allocated approximately $1.0 billion to grow our
Retail footprint and product offering in the US and Australia.
We also returned $3.0 billion to shareholders through share
repurchases and dividends.
2019 Capital Allocation
(percent)
17 Dividends
17 Sustaining Capital
15 Investing & Other Capital
32 Share Repurchases
19 Acquisitions/Purchased Investments
Source: Nutrien
1 Depreciation excluding the impact of PPA adjustments as a result of the Merger and depreciation of right-of-use assets recognized upon adoption of IFRS 16 "Leases".
13 Sustaining Capital
15 Dividends
39 Share Repurchases
17
20 Acquisitions/Purchased Investments
12 Investing & Other Capital
Nutrien Annual Report 2019
Overview
Managementʼs Discussion & Analysis
Two Year Highlights
Financial Statements
Other Information
Innovation & Technology
Innovation &
Technology
Initiatives
RETAIL DIGITAL
PLATFORM
Our digital platform aims
to provide the leading
digital offering to growers.
NEXT GENERATION
POTASH
We are adopting innovative
mining tools and creating
ways to increase productivity,
lower costs and create a
safer work environment for
our people.
PRODUCT INNOVATION
Develop solutions that
increase nutrient
availability and uptake
by crops, improving
productivity and crop
resilience and reducing
overall losses to the
environment.
We invest in new products, processes and digital solutions to better serve our
customers, increase efficiency, improve employee safety and deliver environmental
benefits. Providing Ag Solutions to Feed the Future requires us to expand the
boundary of the current state of agriculture.
2019 Performance
11.5%
PROPORTION OF
NORTH AMERICAN SALES
THROUGH THE DIGITAL PLATFORM
$63
POTASH CASH COST OF PRODUCT
MANUFACTURED
PER TONNE
+150
NEW PROPRIETARY
PRODUCTS IN 2019
18
Nutrien Annual Report 2019 Overview
Managementʼs Discussion & Analysis
Two Year Highlights
Financial Statements
Other Information
Retail Digital Platform
We are investing over $60 million
per year to deliver the leading digital
platform in the Ag retail sector. The
platform provides our customers
with a one-stop shop for account
management, farm planning,
agronomic tools, ecommerce and
crop input financing.
North American Retail customers
representing approximately $6.6 billion
in annual sales are currently signed up
on the platform. Payments made
through the customer portal reached
$336 million in 2019.
As we continue to enhance our digital
offerings we expect to more efficiently
serve our customers, drive down
supply chain costs, reduce working
capital and increase our share of the
market while leading sustainable
agriculture initiatives in our industry.
Next Generation
Potash Program
Our goal is to operate the safest, most
efficient, lowest-cost potash operations
in the world. We launched a series of
initiatives to improve our potash
operations. Through operational
excellence, we aim to improve
processes from the mine face to the
mill and our logistic channels. We
expect to leverage data analytics and
automation to drive more value.
Our operations are implementing and
piloting initiatives with a focus on
autonomous mining, advanced
process control, dynamic scheduling,
connected workforce, and predictive
maintenance. We anticipate these
initiatives will enhance the safety of
our operations and will lower costs by
leveraging these technologies as we
ramp up production.
Product Innovation
We have invested in more than
1,850 proprietary products, including
patented technologies in crop
nutrients, crop protection, biocatalysts
and seed. We develop these products
at the more than 30 facilities dedicated
to innovation, breeding and associated
production.
Nutrien developed ESN, the market’s
leading controlled release nitrogen
product, and continues to focus on the
innovation of new fertilizer products
including ag-biologicals that provide
both agronomic and environmental
benefits. This year we also introduced
a Smart Nutrition MAP – a micronized
sulfur MAP which speeds sulfur
delivery to the plant and reduces the
potential for sulfur loss.
19
Nutrien Annual Report 2019 Overview
Managementʼs Discussion & Analysis
Two Year Highlights
Financial Statements
Other Information
Employees
Employees
Initiatives
LEADERSHIP AND
TALENT DEVELOPMENT
Launching a global
leadership development
framework which includes
development programming
for all levels of employees.
EMPLOYEE EXPERIENCE
Focusing on the experience
of Nutrien employees
informed by frequent and
focused listening events
upon which action is taken.
DIVERSITY & INCLUSION
Continued focus on
increasing diversity within
the organization and
increasing our employees’
experience of inclusion.
Our strategy is to attract, develop and engage skilled and diverse employees who are committed
to Grow Our World from the Ground Up. Our focus on employee development, D&I, engagement
and wellness nurtures the best ideas and attracts the best talent to help achieve our purpose.
Leadership and Talent
Development
2019 marked the implementation of a
customized Nutrien global Leadership
Development Program. The program
will be cascaded across Nutrien, and will
focus on developing authentic
leadership, leading in accordance with
Nutrien’s key principles, and increasing
leaders’ knowledge of Nutrien’s
integrated business model. Focused
efforts are underway to provide
supporting development programming
at all levels across Nutrien, to reinforce
and develop leadership behaviors
aligned with the organization’s values
and engagement principles.
2019 Performance
Employee Experience
Diversity & Inclusion
In 2019, we continued harmonization
of our people programs and focused
on managing and monitoring the
experience of our employees through
frequent listening activities. We
conducted nine formal listening events
with various employee groups involving
nearly 19,000 individuals and used the
results to prioritize our efforts to
improve the employee experience. In
2020, we will continue to use employee
listening as a driver to improve all
aspects of the employee experience,
with a targeted focus on the wellness
of our employees; physically, mentally,
financially, and through the community.
A diverse and inclusive workforce
provides a sense of belonging for our
employees, enhances our organizational
strength and better reflects our
customers and stakeholders. We have a
strategy of increasing representation of
underrepresented groups and ensuring
employees feel valued and respected.
In 2019 we set defined goals of having
30 percent female Vice Presidents by
the end of 2020 and 20 percent female
Senior Leaders by the end of 2022.
In 2020, we will increase our efforts to
attract women and individuals with
military experience in North America
and continue to focus on the
recruitment of Aboriginal people
in Canada.
13%
EMPLOYEE TURNOVER
19,000
INDIVIDUALS INVOLVED
IN LISTENING EVENTS
$17M
SPENT ON COMMUNITY
INVESTMENT
20
Nutrien Annual Report 2019 Operating Segment
Performance &
Outlook
We report our results in four operating
segments: Retail, Potash, Nitrogen
and Phosphate.
•
•
•
Our reporting structure reflects how we manage our
business. In the first quarter of 2019, our Executive
Leadership Team reassessed our product groupings
and decided to evaluate the performance of
ammonium sulfate as part of the Nitrogen segment,
rather than the Phosphate and Sulfate segment as
previously reported in 2018.
Net earnings (loss) from continuing operations
before finance costs, income taxes, and depreciation
and amortization ("EBITDA") is the primary profit
measure used to evaluate performance and allocate
resources in each of our operating segments.
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 operating segments.
22-27 Retail
28-33 Potash
34-39 Nitrogen
40-43
Phosphate
44 Corporate & Others
21
Nutrien Annual Report 2019Overview Managementʼs Discussion & Analysis Two Year Highlights Financial Statements Other Information
Retail
2%
RETAIL EBITDA GROWTH
IN 2019
318
NUMBER OF RETAIL
LOCATIONS ACQUIRED
IN 2019
$967K
RETAIL EBITDA
PER US SELLING
LOCATION
11.5%
PROPORTION OF
NORTH AMERICAN SALES
THROUGH THE
DIGITAL PLATFORM
22
Nutrien Annual Report 2019Overview Managementʼs Discussion & Analysis Two Year Highlights Financial Statements Other Information Overview
Managementʼs Discussion & Analysis
Two Year Highlights
Financial Statements
Other Information
Retail
Operating
Environment
R
Our Business
Our Retail business provides a complete set of crop input products and solutions, including
seed, crop protection, fertilizers and other crop inputs, as well as associated services,
agronomic advice, financing and leading-edge digital capabilities.
As the world’s largest retail distributor of crop
inputs, we operate more than 2,000 retail
locations across the US, Canada, Australia and
key areas of South America. Our operations
service more than 500,000 grower accounts
globally and over 100 crops, with corn,
soybeans, wheat and canola accounting for
the majority of our business.
We have more than 3,400 agronomists and field
experts working directly with growers to help
optimize crop yields and maximize economic
returns from their farm businesses. Our digital
platform aims to provide the leading digital
offering to growers, improve ease of doing
business and provide unprecedented insight for
our customers with the goal of adding advisory
value at each stage of the growing season.
Our experts help growers implement
sustainable management practices based
on a thorough understanding of soils, climate
conditions and crop requirements, and by
utilizing our portfolio of leading products
and services.
We also manufacture and sell a full range of
advanced proprietary crop protection products
and nutritionals that provide farmers with a
portfolio of useful and competitive choices to
successfully grow and protect their crops and
livestock. Proprietary products also provide
meaningfully higher margins than national
brand offerings as we procure and blend the
products at seven formulation facilities across
our key markets.
Our Strategy
We are focused on being the Ag Retailer of the future by creating the leading channel to the
customer and further enhancing our relationship with the grower.
We will leverage our position as the largest Ag
Retailer by combining a strong local presence
with the responsiveness of our world-class
supply chain and whole-acre solutions. In 2019,
we established a five-year strategy to enhance
our Retail platform and set out four key pillars
to guide our pathway to transforming our
relationship with the grower.
Further Consolidate the Retail Industry:
We expect to continue to make strategic
acquisitions in our key target markets and
leverage our scale, experience, supply chain and
whole-acre solutions to create additional value
for our customers.
Create the Leading Ag Retail Digital Platform:
We expect to offer growers the leading products,
agronomic services and digital interface. We
intend to further enhance our award-winning
digital platform by creating value-added features,
expanding our credit offering for growers and by
entering into strategic partnerships.
Drive Organic Growth and Increase Efficiency:
Through optimization of our supply chain and
leveraging unprecedented insight from our digital
platform, we expect to improve efficiency. We
intend to further strengthen Nutrien Financial
capabilities and provide customers with a
seamless purchasing and planning experience.
Enhance Proprietary Product Offering:
We aim to enhance our product portfolio
through innovation, collaboration and focused
acquisitions to provide comprehensive
solutions to growers including innovative and
sustainable specialty products.
23
Nutrien Annual Report 2019 Overview
Managementʼs Discussion & Analysis
Two Year Highlights
Financial Statements
Other Information
2019
Performance
In 2019, we finalized a number of accretive acquisitions including Ruralco, the third largest
Ag Retailer in Australia, and Actagro, a manufacturer of environmentally sustainable soil and
plant health products and technologies.
We also completed numerous tuck-in
to add new functionality that includes crop
acquisitions in North America and Australia,
planning, field level insight and crop input
and established an office in Brazil where we
recommendations. We offer to our customers
are building out our network. This includes
flexible financial solutions in support of
greenfield location builds and progressing on
Nutrien’s agricultural product and service
our pipeline of acquisition opportunities.
sales. We manage our credit portfolio through
We enhanced our award-winning digital
Nutrien Financial.
platform by adding online purchasing, account
During a notably difficult growing year, we
payment and management, and advisory
increased our Retail EBITDA per US selling
services. Through 2020 and 2021, we intend
location and grew our digital platform.
Digital Progress (2019 North America)
Purchasing of key crop protection products, order online or
have your agronomist do it on your behalf
Pay bills online, look up past purchases, see account balances,
downloadable for tax/banking purposes
>60%
Proportion of North American
revenue from customers signed
up on the Digital Platform
Notifications of new statements, invoices and licenses/permits
$260M
Retail sales ordered through
the digital platform
Latest weather outlook & grain market information
Farm insight app with current spray conditions, radar for rain
& temp, last 24 hours of rainfall, and national rainfall layers
$336M
Customer payments made
through the Customer Portal
Competitive
Landscape
The retail landscape in most developed agricultural markets is comprised of numerous
competitors of differing size and ownership structure.
Most markets are fragmented and we believe
In North America and Australia, we compete
scale and size are required in order to meet
with mid-sized national retailers, co-operatives
evolving grower needs. Growers want a full
and smaller independent operations. In
suite of products, services and solutions, rooted
Brazil, the market is characterized by smaller
in sound unbiased agronomic advice and
independent owners and represents an
analytics, stressing the importance of timely
opportunity for larger retailers, including
delivery and reliability of supply.
Nutrien, to enhance the product, service
and solution offerings to growers.
24
Nutrien Annual Report 2019 Overview
Managementʼs Discussion & Analysis
Two Year Highlights
Financial Statements
Other Information
R
2019 Market Conditions
Unprecedented precipitation in North America in the
of the US-China trade dispute and the African Swine
first half of 2019 impacted planting and pressured crop
Fever in China.
input demand.
Strong South American soybean and corn production in
Growers in the US claimed a record 20 million acres in
2019 offset some of the production losses in the US, but
Prevented Plantings in 2019, driven by record precipitation
Brazilian crop inventories ended the year historically low.
during the planting season. Not only did record area go
Tight soybean and corn inventories provided support for
unplanted, but many growers were unable to apply
local crop prices and in turn crop input demand.
pre-plant herbicide and fertilizers.
Drought continued to negatively impact Australian
Lower US acreage and poor early crop development
crop production, driving wheat yields approximately
conditions significantly reduced US corn and soybean
20 percent below long-term trend levels and creating a
production in 2019, which began to support crop prices.
headwind for Australian crop input demand. Considering
Strengthening crop prices were, however, capped by
the historical severity of the drought, both crop yields
weak global demand driven, in part, by continued impacts
and crop input demand have been very resilient versus
historical drought events.
Market Outlook
We expect a rebound in US crop acreage will support
Soybean production in Argentina and Brazil are expected
increased crop input demand in 2020.
to be at or near record levels, supported by favorable
We expect US growers will return to historic planting
acreage in 2020, including approximately 94 million acres
of corn and 85 million acres of soybeans. This alone
represents an increase of more than 14 million acres from
2019 levels.
Additionally, we anticipate higher North American fertilizer
application rates in 2020, driven by improved affordability
and lower than normal fall application in parts of the US
and Canada due to a delayed harvest and challenging fall
weather conditions. Grower sentiment is positive, and we
expect this to support higher than normal spring fertilizer
applications for all primary nutrients.
growing conditions. Additionally, we expect growers in
Brazil to increase Safrinha corn planting supported by
strong local prices. We expect strong production will result
in high nutrient removal and support crop input demand
in 2020.
Weather will continue to be an important factor as
higher planting in North America and South America will
require more normal weather conditions. Precipitation
in Australia has recently improved, however, conditions
during the winter crop growing season will be critical to
2020 crop production.
Key Crop Grower Cash Margins
(local currency margin/acre)
US
Corn
US
Key Crop Grower Cash Margins
Cotton
400
(local currency margin/acre)
US
Soybean
US
Wheat
CDN
Canola
BRZ
Soybeans
US
Corn
US
Soybean
US
Wheat
US
Cotton
CDN
Canola
BRZ
Soybeans
2 0 1 7-2 0 2 0 F
2 0 1 7-2 0 2 0 F
2 0 1 7-2 0 2 0 F
2 0 1 7-2 0 2 0 F
2 0 1 7-2 0 2 0 F
2 0 1 7-2 0 2 0 F
2 0 1 7-2 0 2 0 F
2 0 1 7-2 0 2 0 F
2 0 1 7-2 0 2 0 F
2 0 1 7-2 0 2 0 F
2 0 1 7-2 0 2 0 F
2 0 1 7-2 0 2 0 F
Source: USDA, IMEA, Doane, Nutrien
300
200
400
100
300
0
200
-100
100
0
-100
1,600
1,200
800
1,600
400
1,200
0
800
400
0
Retail EBITDA & Margin1
(percent) ($ millions)
Retail EBITDA Margin
Retail EBITDA
2020 EBITDA Guidance Range
$1,119
$1,033 $1,091
8.6% 8.5%
9.3%
$951 $986
8.3% 8.3%
$769
$524
7.5% 7.5%
$1,500
$1,145 $1,206 $1,231
$1,400
9.5%
9.6% 9.3%
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020F
Source: Nutrien
1 2011-2016 data is based upon Agrium Inc. financials and 2020F on the annual
guidance range provided on February 18, 2020.
Source: USDA, IMEA, Doane, Nutrien
25
Nutrien Annual Report 2019 Overview
Management’s Discussion & Analysis
Two Year Highlights
Financial Statements
Other Information
Retail
Financial
Performance
(millions of US dollars, except
as otherwise noted)
Sales
Crop nutrients 1
Crop protection products
Seed
Merchandise 2
Services and other
Cost of goods sold 2
Gross margin
Expenses 3
Earnings before finance costs and
taxes (“EBIT”)
Depreciation and amortization
Dollars
Gross Margin
Gross Margin (%)
2019
2018
%
Change
2019
2018
%
Change
2019
2018
4,989
4,983
1,712
598
939
4,577
4,862
1,687
584
810
13,221
12,520
9,981
3,240
2,604
636
595
9,485
3,035
2,328
707
499
1,032
1,173
336
109
590
923
1,155
333
103
521
3,240
3,035
12
2
1
6
13
7
21
24
20
18
63
25
20
24
20
18
64
24
9
2
1
2
16
6
5
7
12
(10)
19
2
EBITDA
1,231
1,206
1 Includes intersegment sales. See Note 3 to the financial statements.
2 Certain immaterial figures have been reclassified or grouped together for the
year ended December 31, 2018.
3 Includes selling expenses of $2,484 million (2018 – $2,303 million).
The most significant contributors to the changes in our Retail financial performance were as follows:
2019 vs 2018
Crop nutrients
Crop protection
products
Sales increased primarily due to higher volumes sold in the US due to acquisitions and from higher selling prices in the
first half of the year, more than offsetting reduced sales volumes due to unfavorable weather conditions particularly in
the US and Canada.
Gross margin percentage increased due to strategic purchasing and an increase in the proportion of higher-margin
specialty and proprietary products sold.
Sales increased primarily due to higher herbicide and fungicide applications in the US due to excessive moisture
experienced in the fall of 2018 as well as favorable changes in sales mix.
Gross margin percentage was flat as favorable changes in the product sales mix and strategic purchasing were offset by
the impact of higher competition in a condensed season and higher cost of raw materials sourced from China.
Seed
Sales increased primarily due to increased sales of higher-priced corn and cotton seeds which more than offset the
impact of lower total planted acreage in the US.
Merchandise
Sales increased due to our recent acquisition of Ruralco.
Services and other
Sales increased due to an increase in US application services required as a result of a condensed application season and
sales from recent acquisitions, including Ruralco.
Gross margin percentage was lower due to changes in product mix from the Ruralco acquisition more than offsetting
the increase in higher-margin US application services.
Selling expenses
Expense increased due to higher sales from acquisitions; however, expense as a percentage of sales was relatively flat.
EBITDA
EBITDA was higher primarily due to higher sales and gross margin and the impact of adopting IFRS 16 “Leases”, which
caused a decrease in lease expenses and a corresponding increase in depreciation and amortization, more than
offsetting higher selling expenses.
26 Nutrien Annual Report 2019
Overview
Management’s Discussion & Analysis
Two Year Highlights
Financial Statements
Other Information
R
Selected Retail Measures
Proprietary products margin as a percentage of product line margin (%)
Crop nutrients
Crop protection products
Seed
All Products
Crop nutrients sales volumes (tonnes – thousands)
North America
International
Total
Crop nutrients selling price per tonne
North America
International
Total
Crop nutrients gross margin per tonne
North America
International
Total
2019
2018
23
34
38
24
8,812
2,236
11,048
465
398
452
102
60
93
21
37
38
25
8,547
2,142
10,689
437
395
428
94
57
86
Financial performance measures
2019 Target
2019 Actuals
2018 Actuals
Retail EBITDA to sales (%) 1
Retail adjusted average working capital to sales (%) 1
Retail cash operating coverage ratio (%) 1
Retail EBITDA per US selling location (thousands of US dollars) 1
Retail normalized comparable store sales (%) 1
Retail digital platform sales to total sales 2
Retail grower engagement 3
10
20
60
9
23
62
967
(1)
11
5
10
21
59
n/a
(1)
n/a
n/a
1 Rolling four quarters ended December 31, 2019 and December 31, 2018 respectively.
2 Grower and employee orders directly from the digital platform.
3 Percent of North American Retail growers doing one or more significant activities on the digital platform, such as ordering products, making payments,
applying for Nutrien Finance or completing a farm plan.
Nutrien Financial
We offer flexible financing solutions to our customers in support of Nutrien’s agricultural product and service sales. Retail customers
in the United States are offered extended payment terms, typically up to one year, to facilitate the alignment of grower crop cycles
with cash flows. We manage our credit portfolio based on a combination of customer credit metrics, past experience with the
customer and by managing exposure to any single customer. Retail receivables segregated in Nutrien Financial have the lowest risk
of default of Retail receivables and typically offer lower financing costs for our customers. The balance of our Retail receivables are
subject to marginally higher credit risk.
(millions of US dollars)
Nutrien Financial receivables
As at December 31, 2019
Current
31-90 days
past due
>90 days
past due
Allowance 1
Total
799
24
3
(5)
821
1 Bad debt expense on the above receivables was $5 million for the year ended December 31, 2019.
Nutrien Annual Report 2019
27
Potash
73%
GROSS MARGIN PER
MANUFACTURED TONNE
(EXCL DEPRECIATION AND
AMORTIZATION)
$63
POTASH CASH COST OF
PRODUCT MANUFACTURED
PER TONNE
+6Mmt
AVAILABLE CAPACITY
28
Nutrien Annual Report 2019Overview Managementʼs Discussion & Analysis Two Year Highlights Financial Statements Other Information Overview
Managementʼs Discussion & Analysis
Two Year Highlights
Financial Statements
Other Information
Potash
Operating
Environment
K
Our Business
Nutrien is the world’s largest producer of potash with approximately 21 percent of global
potash capacity. We have access to decades of low-cost reserves from our six potash mines
in Saskatchewan.
In 2019, we produced 11.7 million tonnes
We have the most extensive distribution
of potash. We have approximately 6 million
network, including our own Retail operations,
tonnes of incremental available operational
warehouse and transportation assets and
capacity - a unique advantage in the
our investment in Canpotex, which provides
industry giving us the flexibility to respond
low-cost marketing and logistics to the
quickly and efficiently to both short-term
approximately 40 international markets
market requirements as well as long-term
it serves.
demand growth.
Nutrien’s potash mines represent some of
We also have the ability to add 5 million tonnes
the lowest-cost and highest-quality mines in
of incremental brownfield capacity that are
the world. We take great care to ensure our
estimated to be at much lower cost and which
mines run at optimal levels and to undertake
takes much less time to complete than a
preventative maintenance to maximize safety
greenfield project.
and to minimize unscheduled downtime.
Our Strategy
At Nutrien, we are strengthening our position as the world’s largest underground soft
rock miner and as the potash industry leader by optimizing our network, reducing costs,
implementing leading technologies and leveraging our extensive capacity to capture
market growth.
Network optimization:
Next Generation Potash:
We are optimizing our potash network to
We aim to be the safest and lowest-cost potash
capitalize on the production flexibility of our
producer through operational excellence,
six low cost mines and our global distribution
digitized operations and technology leadership.
network and to leverage the benefits of
We are adopting innovative mining tools and
Nutrien’s integrated model.
creating means to increase productivity, lower
costs and create a safer work environment
for our people.
Incremental capacity:
We will use our existing production
platform, which includes 6 million tonnes
of additional available capacity to capture
incremental share of new market demand.
We also have 5 million tonnes of incremental
brownfield capacity that we can develop in
half the time and at a fraction of the cost of
a conventional greenfield mine to meet longer
term demand growth.
29
Nutrien Annual Report 2019 Overview
Managementʼs Discussion & Analysis
Two Year Highlights
Financial Statements
Other Information
2019
Performance
We continue to enhance our network by effectively managing our supply chain and
optimizing volumes to minimize costs while meeting our customers’ needs.
In 2019 we progressed our Next Generation
advance projects to increase network flexibility,
Potash program by implementing and piloting
improve ore recovery and quality, and improve
several initiatives at our operations in the
efficiency as we increase volumes.
areas of digital tools, advance process control
and automation. We gained insight on how
these initiatives can improve safety, cost and
efficiency across our production network as
production increases. Additionally, we plan to
We remain focused on optimizing production
across our entire mine network which includes
improving productivity at our lower cost mines.
Potash Operational Capability
(million tonnes)
North America
Offshore via Canpotex
6 low-cost mines in Canada
5 offices around the world
+6 Mmt
12 Mmt1
Source: Nutrien
1 Represents 2019 finished product production.
Integration with our Retail network
Access to 4 different
marine terminals
~6,100 Railcars
>5,200 Railcars
~300 strategically located
distribution points
>550Kmt dry storage
capacity at port
100Kmt Hammond, IN warehouse
distribution facility
– strategically located for key markets
>225 vessel voyages each year
Competitive
Landscape
Potash is found in significant quantity and quality in a limited number of countries. Canada
has the largest known global potash reserves and accounts for approximately 35 percent of
global capacity.
More than 70 percent of the world’s potash
The demand growth rate for potash has
capacity is held by the six largest producers.
outpaced that of other primary nutrients,
Our primary competitors are located in Belarus,
averaging an approximately 2.5 percent CAGR
Canada, Germany, Israel, Jordan and Russia.
since 2000 despite demand in 2019 declining
Most major potash consuming countries in
Asia and Latin America have limited or no
indigenous production capability and rely
on imports to meet their needs. This is an
important difference between potash and other
major crop nutrient businesses. Trade typically
accounts for approximately three-quarters
of demand for potash, resulting in a globally
diversified marketplace.
from record levels seen in 2018. This growth is
driven by the increasing nutrient requirements
of higher yielding crops and improving soil
fertility practices, particularly in emerging
markets where potash has been historically
under-applied and crop yields lag.
30
Nutrien Annual Report 2019 Overview
Managementʼs Discussion & Analysis
Two Year Highlights
Financial Statements
Other Information
2019 Market Conditions
World potash demand softened in 2019 due to adverse
Chinese port inventories, which pressured imports in the
weather in North America, weak palm oil prices and a
second half of the year.
drawdown in customer inventories in late 2019.
The combination of weaker demand in these markets and
Global potash shipments in 2019 are estimated at
the delayed monsoon in India, led to increased levels of
approximately 64.5 million tonnes, down 3 percent from
competition in other markets like Brazil.
the previous year’s record level.
In response to a temporary slowdown in potash demand,
Challenging application conditions in the US reduced
several producers announced production curtailments
potash demand by 1 million tonnes, while historically low
which we estimate exceeded 3 million tonnes. New
palm oil prices in Southeast Asia reduced potash demand
projects in Canada and the Former Soviet Union (FSU)
by nearly 2 million tonnes in 2019. While there was no
continued to ramp up slowly, which contributed to a lower
Chinese potash contract in 2019, Chinese shipments were
global operating rate in 2019.
strong in the first half of 2019. This led to an increase in
K
Market Outlook
Improving potash market conditions with expected
Shipments to Southeast Asian countries are expected
shipment growth to most markets in 2020 .
to increase from 2019 levels, supported by a significant
We expect potash market fundamentals to improve as
growers in key markets look to increase planting and
replenish soil nutrients amid improved affordability. We
expect potash shipments to most markets will increase in
2020, while production curtailments in 2019 help to lower
improvement in palm oil prices and lower inventory.
We expect positive consumption trends to continue in
India, particularly with an improved monsoon season
and the long-term agronomic need to balance fertilizer
application rates.
previously built-up inventories.
Despite improved consumption trends in China and a
We anticipate North American demand to rebound as
planting acreage returns to recent historical levels and
growers look to replenish soil nutrients following several
shift to more potassium-intensive crops, we expect 2020
shipments will be limited by a drawdown of port inventories
and a delayed contract settlement.
missed application windows. In South America, elevated
We expect global potash operating rates to increase in 2020
crop production and yields removed significant nutrients
driven by a rebound in global demand and a slow-down in
from the soil. As growers prepare for another strong season
the pace of new project ramp-ups. We forecast global potash
of planting, we believe potash demand will be strong as they
shipments will be 66 to 68 million tonnes in 2020.
look to maximize returns.
US MidWest Potash Price
US MidWest Potash Price
($/tonne)
($/tonne)
$393
$393
$263
$263
$277
$277
$310
$310
$333
$333
2015
2015
2016
2016
2017
2017
2018
2018
2019
2019
Source: Fertilizer Week, Nutrien
Source: Fertilizer Week, Nutrien
23%
23%
$410
$410
10 Year
10 Year
Average
Average
(2010-2019)
(2010-2019)
Global Potash Supply & Demand
(Million Tonnes KCl)
Range
Demand
Operational Capability
80
60
40
20
0
2 0 0 2
2 0 0 4
2 0 0 6
2 0 0 8
2 0 1 0
2 0 1 2
2 0 1 4
2 0 1 6
2 0 1 8
2 0 2 0 F
2 0 2 2 F
2 0 2 4 F
Source: CRU, Fertecon, IFA, Nutrien
31
Nutrien Annual Report 2019 Overview
Management’s Discussion & Analysis
Two Year Highlights
Financial Statements
Other Information
Potash
Financial
Performance
(millions of US dollars, except
as otherwise noted)
Manufactured product 1
Net sales
North America
Offshore
Cost of goods sold
Gross margin – manufactured
Gross margin – other 2
Gross margin – total
Impairment of assets
Expenses 3
EBIT
Depreciation and amortization
EBITDA
Adjusted EBITDA
Dollars
Tonnes (thousands)
Average per Tonne
2019
2018
%
Change
2019
2018
%
Change
2019
2018
%
Change
978
1,625
2,603
1,103
1,500
1
1,501
–
298
1,203
390
1,593
1,593
1,007
1,657
2,664
1,182
1,482
2
1,484
1,809
282
(607)
404
(203)
1,606
(3)
(2)
(2)
(7)
1
(50)
1
(100)
6
n/m
(3)
n/m
(1)
4,040
7,481
11,521
4,693
8,326
13,019
(14)
(10)
(12)
Depreciation and amortization
Gross margin excluding
depreciation and amortization
– manufactured
Potash cash cost of product
manufactured
242
217
226
96
130
34
164
63
214
199
205
91
114
31
145
60
13
9
10
5
14
10
13
5
1 Includes intersegment sales. See Note 3 to the financial statements.
2 Includes other potash and purchased products and is comprised of net sales of $1 million (2018 – $3 million) less cost of goods sold of $Nil (2018 –
$1 million).
3 Includes provincial mining and other taxes of $287 million (2018 – $244 million).
The most significant contributors to the changes in our Potash financial performance were as follows:
2019 vs 2018
Sales volumes
Offshore volumes were lower due to a combination of lower demand in Southeast Asia due to lower palm oil prices in
2019 and a slowdown in demand in offshore markets in the fourth quarter as customers delayed purchases and drew
down inventories.
North American volumes were lower due to extreme weather in the US which impacted both the spring and fall
application seasons.
Net realized selling
price
Average selling prices increased in 2019 due to higher global benchmark prices in the first nine months of the year,
which offset weaker prices in the fourth quarter resulting from a slowdown in demand in the second half of the year.
Cost of goods sold per
tonne
Costs increased primarily due to lower production volumes resulting from the temporary production downtime at our
Allan, Lanigan and Vanscoy potash mines, taken in response to the decrease in global potash demand, and from
downtime at our Rocanville potash mine related to the Canadian National Railway strike. These impacts were partially
offset by favorable foreign exchange impacts.
Impairment of assets
In 2018, we recorded a non-cash impairment of property, plant and equipment as a result of the decision to safely shut
down our New Brunswick operations, which were no longer part of our medium or long-term strategic plans. See
Note 15 to the financial statements.
Provincial mining and
other taxes
We are subject to Saskatchewan provincial resource taxes, including the potash production tax and the resource
surcharge.
Expenses increased due to regulatory changes that raised taxes and from higher average potash selling prices, which are
the basis for certain taxes.
EBITDA
EBITDA increased primarily due to the impairment of assets in 2018 noted above. Adjusted EBITDA in 2019 was similar to
the prior year, as higher prices were offset by lower sales volumes and higher provincial mining taxes.
32 Nutrien Annual Report 2019
Overview
Management’s Discussion & Analysis
Two Year Highlights
Financial Statements
Other Information
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.
Potash Production
(million tonnes KCI)
Rocanville Potash
Allan Potash
Vanscoy Potash
Lanigan Potash
Cory Potash
Patience Lake Potash
Total
Shutdown weeks 3
K
2019
2018
% Change
31
27
22
10
10
33
31
18
10
8
(6)
(13)
22
–
25
Operational Capability 2
Production
2020
2019
2019
2018
Nameplate
Capacity 1
6.5
4.0
3.0
3.8
3.0
0.3
5.4
2.8
1.7
2.3
1.0
0.3
5.4
2.8
2.2
2.1
1.0
0.3
20.6
13.5
13.8
5.14
2.18
1.42
1.75
0.97
0.24
11.70
55
5.22
2.41
2.24
1.96
0.81
0.20
12.84
39
1 Represents estimates of capacity as at December 31, 2019. 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.
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.
3 Represents weeks of full production shutdown, excluding the impact of any periods of reduced operating rates and planned routine annual maintenance
shutdowns and announced workforce reductions.
Nutrien Annual Report 2019
33
Nitrogen
2%
NITROGEN EBITDA GROWTH
IN 2019
+350,000mt
ADDED AMMONIUM
SULFATE
CAPACITY IN 2019
91%
AMMONIA
OPERATING RATE
IN 2019
(EXCLUDES TRINIDAD AND JOFFRE)
34
Nutrien Annual Report 2019Overview Managementʼs Discussion & Analysis Two Year Highlights Financial Statements Other Information Overview
Managementʼs Discussion & Analysis
Two Year Highlights
Financial Statements
Other Information
Nitrogen
Operating
Environment
N
Our Business
Nutrien has a total of 7.1 million mt of ammonia capacity from nine major facilities in North
America and Trinidad with the ability to produce and sell more than 11 million tonnes of total
finished nitrogen products.
Our asset base is highly flexible, allowing us
Approximately half of our nitrogen sales are
to optimize product mix and profitability in
agriculture-related and the remainder is sold for
response to changing market conditions.
industrial purposes. A portion of our industrial
Our nitrogen plants in Canada and the US have
access to low-cost natural gas and benefit from
sales are linked to natural gas costs, reducing
variability in margins.
regional selling advantages. We also operate a
We have equity investments in two world-scale
large-scale nitrogen facility in Trinidad with gas
nitrogen facilities located in Argentina and
costs indexed primarily to ammonia prices,
Egypt that contribute to our nitrogen earnings.
providing margin stability.
We produce all key nitrogen products and have
flexibility to optimize product mix in response
to changing market conditions.
Our Strategy
We are growing our nitrogen business and enhancing our competitive position through
product and network optimization and strategic capacity expansion.
Network optimization:
safety of our operations and to decrease costs
We are optimizing our nitrogen network to
of turnarounds. Reliable and safe operations
best leverage the production flexibility of our
lower costs and improve utilization. We are also
nine low-cost facilities and our extensive
implementing a number of projects aimed to
distribution network to capitalize on the
reduce climate-related impact from production.
benefits of our integrated model that includes
our Retail business.
Brownfield capacity expansion:
We are increasing capacity through low-cost
Operational excellence:
and low-risk brownfield expansion and
We are leveraging best practices in engineering
debottleneck projects.
and maintenance to improve the reliability and
35
Nutrien Annual Report 2019 Overview
Managementʼs Discussion & Analysis
Two Year Highlights
Financial Statements
Other Information
2019
Performance
In 2019, we advanced several projects that will add a combined 350,000 mt of annual
ammonia and urea capacity, increase efficiencies and reduce emissions. The cost of these
projects is significantly lower than greenfield economics and are expected to be complete by
the end of 2021.
We continue to evaluate additional
debottleneck opportunities and are also
advancing engineering on two larger scale
brownfield projects that could add 1.2
million tonnes of annual capacity at a cost of
approximately $500 per tonne.
In 2019, we captured approximately 1.2 million
mt of CO2 equivalent and are aiming to increase
this by over 15 percent in 2020.
Nutrien Ammonia Production - 2019
(million tonnes)
Urea Cash Cost & Price Comparison
($/tonne)
Trinidad
US
W. Canada
Feedstock
Other Cost
8
6
4
2
0
2020 Gas Forecast
US$/MMBtu1
$3.00 - $4.00
$2.00 - $3.00
$1.00 - $2.00
29%
37%
34%
Ammonia Production
Source: CRU, Fertecon, Argus, Nutrien
1 Gas price indicative range from Nutrien Trinidad, AECO and NYMEX
2020 YTD PNW Urea Price
2020 YTD NOLA
Urea Price
400
400
300
300
200
200
100
100
0
0
W . C a n a d a 1
U S G ulf
W . E ur. H u b
W . E uro p ea n
Trinid a d
For m ula
C hin a
Bitu m in o us
C hin a G as
C hin a
A nthracite
U krain e
Source: CRU, Fertecon, Argus, Nutrien
1 Western Canadian cash cost is shown as FOB.
Competitive
Landscape
Production of nitrogen is the most geographically diverse of the three primary nutrients due
to the widespread availability of hydrogen sources.
Ammonia is primarily consumed close to the
The US remains one of the largest importers of
regions in which it is produced due to the
nitrogen and a key driver of global trade despite
high cost of transportation, whereas urea and
a significant increase in domestic capacity and
nitrogen solutions are more widely transported
production over the past few years.
and traded. We compete with other producers in
Canada, the US and several offshore suppliers.
36
Nutrien Annual Report 2019
Overview
Managementʼs Discussion & Analysis
Two Year Highlights
Financial Statements
Other Information
N
2019 Market Conditions
Weak global energy prices pressured nitrogen prices
markets. A stable pricing environment combined with
in 2019.
Nitrogen prices were strong going into 2019, which
incentivized high operating rates by marginal producers in
Europe and China. At the same time, natural gas and coal
prices began to decline in those regions which enhanced
their competitiveness.
Challenging weather in the US negatively impacted
agricultural ammonia demand in 2019 while new
marketable production capacity in the US, Russia and
Indonesia added supply. This caused supply to temporarily
declining feedstock costs led Chinese producers to increase
production and exports. Coal prices continued to decline
while the Chinese currency weakened, allowing operating
rates to remain high despite a declining price environment.
Although Chinese exports increased in 2019, they remain
well below recent historical levels.
Global UAN trade flows were disrupted by European Union
anti-dumping duties on imports from the US, Russia and
Trinidad. In addition, low European gas prices supported
higher marginal production which pressured prices.
outpace demand, leading to pricing pressure throughout
most of 2019.
Approximately 70 percent of our nitrogen production is
located in North America where natural gas prices remained
Global urea prices were relatively stable in the first half
of 2019, supported by steady demand in most major
subdued in 2019. In 2019, AECO benchmark gas prices were
$1.22/MMBtu and US NYMEX gas prices were $2.63/MMBtu.
Market Outlook
Limited new capacity and robust demand in North
on monsoon rains and may be influenced by any changes
America is expected to tighten nitrogen supply and
to the subsidy policy and maximum retail prices that
demand in 2020.
growers pay.
We expect that limited global nitrogen capacity additions
Outside of India, major nitrogen buyers have been
and ongoing industry closures will help to tighten the
purchasing hand-to-mouth due to the weak pricing
nitrogen market and partially offset the impact of lower
environment in the second half of 2019. We expect that
energy prices.
We expect North American nitrogen demand to be
once the Northern Hemisphere’s spring season begins, it
will support tightening in other markets as well.
supported by an increase in corn planting and below-
Overall, we project that global nitrogen demand will grow by
normal fall ammonia application in 2019, caused by a
two percent in 2020, supported by strength in North America
compressed application window. We expect this to also
and more normal growth in other major markets. We project
result in higher in-season applications as growers maximize
yields with affordable fertilizers.
that global productive capacity will increase by less than one
percent, driving higher operating rates in 2020.
India is expected to maintain elevated import levels as
it re-enters the market seasonally. Stability will depend
US NOLA Urea Price
($/tonne)
$317
$285
$270
$228
$228
27%
$344
2015
2016
2017
2018
2019
10 Year Average
(2010-2019)
Global Nitrogen Supply & Demand
(million tonnes nitrogen)
Demand
Operational Capability
180
120
60
0
2 0 1 2
2 0 1 3
2 0 1 4
2 0 1 5
2 0 1 6
2 0 1 7
2 0 1 8
2 0 1 9 E
2 0 2 0 F
2 0 2 1 F
2 0 2 2 F
2 0 2 3 F
2 0 2 4 F
Source: Fertilizer Week, Nutrien
Source: CRU, Nutrien
37
Nutrien Annual Report 2019
Overview
Management’s Discussion & Analysis
Two Year Highlights
Financial Statements
Other Information
Nitrogen
Financial
Performance
Dollars
Tonnes (thousands)
Average per Tonne
2019
2018 1
%
Change
2019
2018 1
%
Change
2019
2018 1
%
Change
(millions of US dollars, except
as otherwise noted)
Manufactured product 2
Net sales
Ammonia
Urea
Solutions, nitrates and
sulfates
Cost of goods sold
Gross margin – manufactured
Gross margin – other 2
Gross margin – total
(Income) Expenses
EBIT
Depreciation and amortization
743
932
706
2,381
1,749
632
68
700
(4)
704
535
903
895
729
2,527
1,777
750
70
820
47
773
442
2,971
3,037
4,262
10,270
3,330
3,003
4,265
10,598
(11)
1
–
(3)
Depreciation and amortization
Gross margin excluding depreciation
250
307
166
232
170
62
52
271
298
171
238
168
70
42
and amortization – manufactured
114
112
Ammonia controllable cash cost of
product manufactured
45
43
(8)
3
(3)
(3)
1
(11)
24
2
5
(18)
4
(3)
(6)
(2)
(16)
(3)
(15)
n/m
(9)
21
2
EBITDA
1,239
1,215
1 Restated for the reclassification of sulfate from the Phosphate segment. See Note 3 to the financial statements.
2 Includes intersegment sales. See Note 3 to the financial statements.
3 Includes other nitrogen (including ESN® and Rainbow) and purchased products and is comprised of net sales of $467 million (2018 – $438 million) less
cost of goods sold of $399 million (2018 – $368 million).
The most significant contributors to the changes in our Nitrogen financial performance were as follows:
2019 vs 2018
Sales volumes
Volumes were down slightly as adverse weather caused ammonia applications in North America to decline.
Net realized selling
price
Our average selling price for nitrogen products was down slightly from the prior year primarily due to lower global
benchmark prices. Our net realized selling price for urea increased slightly despite these market conditions due to the
benefit of higher US inland premiums in the spring when supply was impacted by elevated water levels on many of the
US river systems.
Cost of goods sold per
tonne
Costs were slightly higher as a decrease in our overall gas cost was offset by a lower proportion of sales from our lower-
cost facilities, increased maintenance costs and slightly lower operating rates.
Expenses
EBITDA
Expenses decreased primarily due to higher earnings from our equity-accounted investees Misr Fertilizers Production
Company S.A.E. in Egypt and Profertil S.A. in Argentina.
EBITDA was higher primarily due to the impact of adopting IFRS 16 “Leases”, which caused a decrease in lease expenses
and increases in depreciation and amortization, lower natural gas costs and higher earnings from our equity-accounted
investees, more than offsetting lower sales volumes and net realized selling prices.
Natural Gas Prices
(US dollars per MMBtu, except as otherwise noted)
Overall gas cost excluding realized derivative impact
Realized derivative impact
Overall gas cost
Average NYMEX
Average AECO
38 Nutrien Annual Report 2019
2019
2.47
0.11
2.58
2.63
1.22
2018
2.54
0.29
2.83
3.09
1.19
% Change
(3)
(62)
(9)
(15)
3
Overview
Management’s Discussion & Analysis
Two Year Highlights
Financial Statements
Other Information
Overall gas cost
Gas costs were lower due to lower average NYMEX gas prices and lower derivative losses more than
offsetting higher average AECO and contract gas prices.
N
2019 vs 2018
Selected Nitrogen Measures
Sales volumes (tonnes – thousands)
Fertilizer
Industrial and feed
Net sales (millions of US dollars)
Fertilizer
Industrial and feed
Net selling price per tonne
Fertilizer
Industrial and feed
2019
5,554
4,716
1,466
915
264
194
2018
5,680
4,918
1,444
1,083
254
220
Nitrogen Production
(million tonnes product)
Trinidad Nitrogen
Redwater Nitrogen
Augusta Nitrogen
Lima Nitrogen
Geismar Nitrogen
Fort Saskatchewan Nitrogen
Carseland Nitrogen
Joffre Nitrogen
Borger Nitrogen
Total
Ammonia operating rate 4
Ammonia 1
Production
Urea 2
Production
Annual
Capacity 3
2019
2018
Annual
Capacity 3
2019
2018
2.2
0.9
0.8
0.7
0.5
0.5
0.5
0.5
0.5
7.1
1.76
0.76
0.70
0.68
0.54
0.48
0.45
0.42
0.37
6.16
91
1.88
0.88
0.72
0.67
0.44
0.40
0.52
0.47
0.39
6.37
92
0.7
0.7
0.5
0.5
0.4
0.4
0.8
–
0.6
4.6
0.66
0.60
0.51
0.48
0.33
0.45
0.61
–
0.46
4.10
0.58
0.73
0.52
0.46
0.26
0.37
0.68
–
0.42
4.02
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 operating plant conditions.
4 Excludes Trinidad and Joffre.
Nutrien Annual Report 2019
39
Phosphate
89%
P205 OPERATING RATE
(EXCLUDES REDWATER)
$194M
2019 EBITDA
$421
AVERAGE REALIZED
NET SELLING PRICE
PER TONNE IN 2019
Phosphate
Operating
Environment
Our Business
Nutrien has two integrated phosphate facilities in the US, both located near key fertilizer
consuming markets and industrial customers.
We are the second largest phosphate producer in North America and sell approximately 3 million
tonnes of finished product.
Due to the high quality of our phosphate rock, we are able to produce a diverse mix of phosphate
products, including solid and liquid fertilizers, feed and industrial acids.
Our Strategy
We are focused on optimizing our phosphate business by increasing production at our
Aurora, North Carolina and White Springs, Florida facilities after converting our Redwater,
Alberta phosphate facility to an ammonium sulfate facility in 2019.
We will continue to advance continuous improvement initiatives at our sites and evaluate
opportunities to increase production of higher-margin product.
2019
Performance
In 2019, we successfully converted our Redwater, Alberta facility to produce only ammonium
sulfate – a milestone that eliminated, company-wide, our need to purchase phosphate rock.
We restarted a second dry phosphate production line at White Springs, Florida, at the end of 2018
and began supplying the Western Canadian market with dry phosphate produced at our US facilities.
40
Nutrien Annual Report 2019Overview Managementʼs Discussion & Analysis Two Year Highlights Financial Statements Other Information Overview
Managementʼs Discussion & Analysis
Two Year Highlights
Financial Statements
Other Information
Competitive
Landscape
Phosphate rock is found in significant quantity and quality in only a handful of geographic
locations, and few with a progressive ethical and sustainability record.
Many factors impact the viability of developing a
We compete with producers primarily from
rock deposit for mining. These include the quality
China, Morocco, Russia, Saudi Arabia and the
of the phosphate rock deposit, government
US. For the production of finished phosphate
stability, access to financing, environmental
products (DAP, MAP), access to low cost
requirements and proximity to target markets.
ammonia and sulfur is also a consideration.
Given the concentration of deposits in North
Africa and the Middle East, government stability
is a major consideration when evaluating
potential phosphate project developments.
Significant low-cost capacity has been
commissioned over the past few years, including
most notably in Morocco and Saudi Arabia.
P
2019 Market Conditions
Phosphate prices were under significant pressure
The negative momentum in the second half of 2019 led
throughout 2019 due to increased supply, including
to the lowest ammonium phosphate prices in more than
higher exports from China, and lower demand in the
a decade. This gradual decline over an extended period
US driven by weather factors and weak ammonia and
of time led buyers to purchase on a just-in-time basis,
sulfur input costs.
New capacity continued to ramp up in Morocco and Saudi
Arabia adding to global supply and lowering global operating
rates. Meanwhile weak demand in China led to stronger-
than-expected exports, particularly in the first half of the year.
which further pressured global demand. By the end of
2019, production margins were at unsustainably low levels,
which led to further production reductions and provided
some support to prices entering 2020.
Market Outlook
Phosphate prices began to recover in early 2020 due to
on production and exports from that key phosphate
global production curtailments and improved demand
producing region. India has drawn down its DAP
prospects ahead of the spring season in the Northern
inventories, which in combination with strong domestic
Hemisphere.
sales is expected to support import demand in 2020.
Chinese production and exports will be a key driver in
We expect that our phosphate business will continue
2020. Chinese production levels were already being
to benefit from a diversified portfolio and that liquid
pressured by poor economics, but the impact of the
phosphate fertilizers and purified phosphoric acid will
Coronavirus in Hubei province has had a negative impact
continue to be more stable than solid phosphates.
Global Phosphate Capability1 (2019)
(percent share)
Phosphate Sales Tonnes
(million tonnes P205)
Fertilizer
Industrial
Feed
36 China
15 Morocco
13 US
7 Russia
5 Saudi Arabia
24 Other
2.0
1.5
1.0
0.5
0.0
Source: Nutrien
Source: CRU, Fertecon, IFA, Nutrien
1 Based on operational capability.
2018
2019
2020F
41
Nutrien Annual Report 2019
Overview
Management’s Discussion & Analysis
Two Year Highlights
Financial Statements
Other Information
Phosphate
Financial
Performance
(millions of US dollars, except
as otherwise noted)
Manufactured product 2
Net sales
Fertilizer
Industrial and feed
Cost of goods sold
Gross margin – manufactured
Gross margin – other 3
Gross margin – total
Expenses
EBIT
Depreciation and amortization
EBITDA
Dollars
Tonnes (thousands)
Average per Tonne
2019
2018 1
%
Change
2019
2018 1
%
Change
2019
2018 1
%
Change
2,130
759
2,889
2,425
847
3,272
(12)
(10)
(12)
Depreciation and amortization
Gross margin excluding depreciation
and amortization – manufactured
371
561
421
422
(1)
82
81
410
500
434
406
28
59
87
(10)
12
(3)
4
n/m
39
(7)
790
426
1,216
1,218
(2)
(3)
(5)
38
(43)
237
194
995
424
1,419
1,329
90
(2)
88
26
62
193
255
(21)
–
(14)
(8)
n/m
50
n/m
46
n/m
23
(24)
1 Restated for the reclassification of Sulfate to the Nitrogen segment. See Note 3 to the financial statements.
2 Includes intersegment sales. See Note 3 to the financial statements.
3 Includes other phosphate and purchased products and is comprised of net sales of $152 million (2018 – $142 million) less cost of goods sold of $155 million
(2018 – $144 million).
The most significant contributors to the changes in our Phosphate financial performance were as follows:
Sales volumes
Net realized selling
price
Cost of goods sold per
tonne
EBITDA
2019 vs 2018
Volumes decreased due to adverse weather causing shortened spring and fall application seasons across North America
in 2019.
Our average realized phosphate prices were lower due to the impact of lower phosphate fertilizer prices globally and
increased freight, transportation and distribution costs from shipping more product from our US facilities to Canada
after the conversion of the Redwater facility. These factors more than offset the impact of higher realized industrial
and feed prices.
Costs increased due to lower sales volumes, and higher asset retirement obligation adjustments, which more than
offset lower phosphate rock and raw material costs.
EBITDA decreased as lower net realized selling prices, lower sales volumes and higher costs per tonne more than
offset the impact of adopting IFRS 16 “Leases”, which caused a decrease in lease expenses and increases in depreciation
and amortization.
42 Nutrien Annual Report 2019
Overview
Management’s Discussion & Analysis
Two Year Highlights
Financial Statements
Other Information
P
Phosphate Production
(million tonnes)
Aurora Phosphate
White Springs Phosphate
Total producing locations
Redwater Phosphate 3
Total
P2O5 operating rate 4
Phosphate Rock
Phosphoric Acid (P2O5)
Liquid Products
Solid Fertilizer Products
Production
Production
Production
Production
Annual
Capacity
2019
2018
Annual
Capacity
2019
2018
Annual
Capacity
2019
2018
Annual
Capacity
2019
2018
5.4
2.0
7.40
–
7.40
4.38
1.61
5.99
–
5.99
4.03
1.85
5.88
–
5.88
1.2
0.5
1.70
0.3
2.00
1.02
0.49
1.51
0.10
1.61
89
1.08
0.47
1.55
0.30
1.85
91
2.7 1
0.7 2
3.40
–
2.01
0.50
2.51
–
2.10
0.62
2.72
–
0.8
0.8
1.60
0.7
0.85
0.24
1.09
0.21
0.82
0.17
0.99
0.57
1 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.
2 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.
3 Phosphate operations at Redwater ceased in May 2019 and that facility is now used to produce ammonium sulfate for our Nitrogen operations.
4 Excludes Redwater. Comparative figures were restated to exclude Redwater.
In addition to the production above, annual capacity (in millions of tonnes) for phosphate feed and purified acid was 0.7 and 0.3,
respectively. 2019 production was 0.30 and 0.21, respectively, and 2018 production was 0.29 and 0.23, respectively.
Nutrien Annual Report 2019
43
Overview
Management’s Discussion & Analysis
Two Year Highlights
Financial Statements
Other Information
Corporate and Others Financial Performance
Effective January 1, 2019 we renamed the “Others” segment “Corporate and Others”. “Corporate and Others” is a non-operating
segment comprising corporate and administrative functions that provide support and governance to our operating business units.
Eliminations of sales between operating segments in 2019 were $(1,060) million (2018 – $(1,164) million) with gross margin of
$5 million (2018 – $(35) million). Eliminations are not part of the Corporate and Others segment.
Dollars (millions), except percentage amounts
Sales
Cost of goods sold
Gross margin
Selling expenses
General and administrative expenses
Provincial mining and other taxes
Share-based compensation
Impairment of assets
Other expenses
EBIT
Depreciation and amortization
EBITDA
Finance costs
Income tax expense (recovery)
2019
133
133
–
(18)
264
2
104
120
171
(643)
42
(601)
554
316
2018
% Change
150
150
–
(22)
284
2
116
–
106
(486)
54
(432)
538
(93)
(11)
(11)
–
(18)
(7)
–
(10)
n/m
61
32
(22)
39
3
n/m
The most significant contributors to the changes in our Corporate and Others financial performance were as follows:
2019 vs 2018
Impairment of Assets
In 2019 there were certain individually insignificant impairments of intangible assets and property, plant and equipment
related primarily to changes to our future plans for those assets.
Other Expenses
Other expenses increased primarily due to a defined benefit plans curtailment gain recognized in 2018 (see Note 23 to
the financial statements) with no comparative gain recognized in 2019 and higher acquisition and integration related
costs from our recent acquisition. These were partially offset by lower Merger and related costs.
There were no significant changes to finance costs as higher long-term interest costs from a higher long-term debt
balance and impact of the adoption of IFRS 16 “Leases” were partially offset by lower short-term interest costs due to
lower average commercial paper outstanding throughout the year.
Finance Costs
Weighted Average Debt Balances and Rates
Dollars (millions), except percentage amounts
Short-term balance 1
Short-term rate (%) 1
Long-term balance (excluding lease obligations)
Long-term rate (excluding lease obligations) (%)
Lease obligations balance
Lease obligations rate (%)
2019
1,324
4.5
8,534
4.7
1,024
3.4
2018
2,933
3.3
8,175
4.8
25
3.7
1 North American weighted average short-term debt balances were $1,063 (2018 – $2,719) and rates were 2.4 percent (2018 –
2.5 percent).
The decrease in the effective tax rates on earnings from continuing operations in 2019 compared to 2018 was a result of
the 2018 impairment of property, plant and equipment in Canada.
Income Tax Expense
(Recovery)
Effective Tax Rates and Discrete items
Dollars (millions), except percentage amounts
Actual effective tax rate on ordinary earnings (%)
Actual effective tax rate including discrete items (%)
Discrete tax adjustments that impacted the rate
2019
2018
24
24
(2)
72
75
4
44 Nutrien Annual Report 2019
Financial
Overview
46 Guidance and Sensitivities
47 Financial Highlights
48 Financial Condition Review
49 Liquidity and Capital Resources
52 Capital Structure and Management
53 Off-Balance Sheet Arrangements
53 Other Financial Information
55 Quarterly Results
57 Enterprise Risk Management
61 Controls and Procedures
62 Forward-Looking Statements
63 Appendix – Non-IFRS Financial
Measures
Overview
Management’s Discussion & Analysis
Two Year Highlights
Financial Statements
Other Information
2020 Guidance
Dollars (billions) unless otherwise noted
Adjusted net earnings per share (“Adjusted EPS”) 2
Adjusted EBITDA
Retail EBITDA
Potash EBITDA
Nitrogen EBITDA
Phosphate EBITDA (millions)
Potash sales tonnes (millions) 3
Nitrogen sales tonnes (millions) 3
Depreciation and amortization
Effective tax rate on continuing operations (%)
Sustaining capital expenditures
1 See the “Forward-Looking Statements” section.
2 Assumes 574 million shares outstanding for all EPS guidance and sensitivities.
3 Manufactured product only. Nitrogen sales tonnes excludes ESN® and Rainbow products.
2020 Guidance Ranges 1
Low
1.90
3.8
1.4
1.3
1.2
180
12.3
11.0
1.80
23
1.0
High
2.60
4.3
1.5
1.5
1.4
250
12.7
11.6
1.90
25
1.1
2020 Sensitivities
Price and Volume Sensitivities
Dollars (millions), except EPS amounts
Effect on
Adjusted
EPS
Adjusted
EBITDA
Input Cost Sensitivities
Dollars (millions), except EPS amounts
Effect on
Adjusted
EPS
Adjusted
EBITDA
NYMEX natural
gas price
changes by
$1/MMBTu
Canadian to
US dollar
changes by
$0.02
Nitrogen
± 0.21
± 165
Canadian operating
expenses included in net
earnings, excluding
provincial taxes
± 0.02
± 15
Price
Potash changes by $20/tonne
Ammonia changes by $20/tonne
Urea changes by $20/tonne
± 0.25
± 0.05
± 0.09
± 205
± 40
± 65
Volume
Potash changes by 100,000
tonnes
Nitrogen changes by 50,000 N
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.
± 0.01
± 10
± 0.02
± 0.07
± 0.08
± 0.03
± 15
± 55
± 60
± 20
46 Nutrien Annual Report 2019
Overview
Management’s Discussion & Analysis
Two Year Highlights
Financial Statements
Other Information
Financial Highlights
Dollars (millions) unless otherwise noted
Nutrien 2019 Nutrien 2018
PCS 2017
Sales
Net earnings (loss) from continuing operations
Basic net earnings (loss) per share from continuing operations
Diluted net earnings (loss) per share from continuing operations
Net earnings
Basic net earnings per share
Diluted net earnings per share
Total assets
Total non-current financial liabilities
Dividends declared per share
20,023
992
1.70
1.70
992
1.70
1.70
46,799
9,431
1.33
19,636
(31)
(0.05)
(0.05)
3,573
5.72
5.72
45,502
7,616
2.06
4,547
154
0.18
0.18
327
0.39
0.39
16,998
3,746
0.40
Sales
Net earnings and
earnings per share
from continuing
operations
Net earnings and
earnings per share
Assets and
non-current financial
liabilities
Nutrien 2019 vs Nutrien 2018
Nutrien 2018 vs PCS 2017
Sales increased primarily due to recent Retail
acquisitions and higher potash realized prices driven
by higher global benchmark pricing in the first half
of the year, more than offsetting lower potash and
nitrogen volumes.
Sales increased primarily due to the addition of
Agrium’s operations as a result of the Merger. Sales
also increased due to Retail acquisitions, higher
potash sales volumes and increases in potash, urea
and phosphate fertilizer prices.
We had earnings from continuing operations in
2019 compared to a loss from continuing
operations in 2018, which was impacted by a
non-cash impairment of property, plant and
equipment in the Potash segment of $1,809 million.
The repurchase of more than 36 million shares in
2019 positively impacted the 2019 per share
amount.
Net earnings and earnings per share were lower
than 2018 primarily due to the 2018 gain on sale of
our equity investments presented as discontinued
operations offset by the 2018 non-cash impairment
of property, plant and equipment in the Potash
segment.
The repurchase of more than 36 million shares in
2019 positively impacted the 2019 per share
amount.
We had 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 and higher gross
margin in all operating segments.
Net earnings, and the related per share amounts,
were higher in 2018 due to the gain on sale of our
equity investments presented as discontinued
operations, the addition of Agrium’s operations and
higher gross margin in all operating segments more
than offsetting the 2018 non-cash impairment of
property, plant and equipment in the Potash
segment.
Assets increased primarily due to Retail acquisitions
and the addition of right-of-use assets from
adoption of IFRS 16 “Leases”, partially offset by a
decrease in cash and cash equivalents.
Assets and financial liabilities increased primarily
due to the addition of Agrium’s assets and liabilities,
including related purchase price allocation
adjustments, acquired in the Merger.
Non-current financial liabilities increased primarily
due to additional lease liabilities recognized upon
the adoption of IFRS 16 “Leases”, Retail acquisitions
and the issuance of notes, partially offset by the
repayment of notes.
Other Comprehensive Income (Loss)
There was other comprehensive income of $36 million in 2019 compared to a loss of $302 million in 2018 primarily related to
translation of our Retail operations in Canada, Australia and Argentina to US dollars. The Canadian dollar strengthened relative to the
US dollar in 2019, while in 2018, the Canadian dollar, Argentine peso and Australian dollar weakened relative to the US dollar.
Nutrien Annual Report 2019
47
Overview
Management’s Discussion & Analysis
Two Year Highlights
Financial Statements
Other Information
Financial Condition Review
Balance Sheet Analysis
The most significant contributors to the changes in our balance sheet are analyzed below.
Assets
Liabilities
For information regarding changes in cash and cash equivalents,
refer to the “Sources and Uses of Cash” section on page 50 and
the consolidated statements of cash flows in our financial
statements.
Receivables increased due to the recent Retail acquisition in
Australia and a delayed fall application season in North America
that pushed back sales and collection of receivables.
Inventories increased due to the recent Retail acquisition in
Australia, partially offset by lower inventory levels in North
America in 2019. 2018 North American inventory purchases were
higher than average in anticipation of increasing inventory prices.
Prepaid expenses and other current assets increased due to
accelerated seasonal Retail prepaid inventory purchases to take
advantage of early payment discounts.
Property, plant and equipment increased due to the addition
of “right-of-use” assets of approximately $1 billion from the
adoption of IFRS 16, “Leases”. Property, plant and equipment also
increased due to recent Retail business acquisitions that closed
in 2019.
Goodwill and other intangible assets increased as a result of
additional goodwill and intangible assets from the recent Retail
acquisitions, primarily from Ruralco and Actagro.
Short-term debt increased due to commercial paper
issuances as part of our working capital management which
was impacted by short-term softness in the global market.
Long-term debt (including current portion) increased due to
the addition of $1.5 billion in notes issued in April 2019
exceeding the repayment of $1 billion in notes that matured
earlier in 2019.
Lease liabilities (including current portion) increased due to
the recognition of approximately $1 billion in lease liabilities
from the adoption of IFRS 16 “Leases”.
Payables and accrued charges increased as we had additional
vendor prepayment arrangements, whereby we made financial
commitments to vendors and financial institutions to prepay
for inventory in return for product discounts. The recent
acquisition in Australia also contributed to the increase.
Deferred income tax liabilities increased due to the deferred
tax provision recorded on higher earnings from continuing
operations.
Shareholders’ Equity
Share capital decreased due to share repurchases.
Retained earnings decreased due to the impact of share
repurchases and dividends declared exceeding net earnings.
We do not hold material cash and cash equivalents in currencies other than the US dollar, Canadian dollar and Australian dollar.
We held approximately $159 million US dollar equivalent in Australia. We do not depend on repatriation of cash from our foreign
subsidiaries to meet our liquidity and capital resources needs in North America.
48 Nutrien Annual Report 2019
Overview
Management’s Discussion & Analysis
Two Year Highlights
Financial Statements
Other Information
Liquidity and Capital Resources
Sources and 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 2019 significant liquidity sources are listed below along with our expected ongoing
primary uses of liquidity.
Primary uses of liquidity
(cid:129) operational expenses and prepayments
(cid:129) seasonal working capital requirements
(cid:129) sustaining and investing capital
2019
Included:
(cid:129) business acquisitions
(cid:129) dividends
(cid:129) principal payments of debt securities
(cid:129) share repurchases
Primary sources of liquidity
(cid:129) cash from operations (including
customer prepayments)
(cid:129) commercial paper issuances
(cid:129) credit facility drawdowns
(cid:129) debt capital markets
(cid:129) inventory prepayment arrangements
2019
Highlights:
(cid:129) Repurchased over 36 million common shares for cancellation at an
aggregate cost of $1,878 million and increased our current normal
course issuer bid (“NCIB”). At December 31, 2019 we had up to
12 million shares available to repurchase under the NCIB, which expires
on February 26, 2020. As of February 19, 2020, an additional 2,214,780
common shares were repurchased at a cost of $95 million. See Note 25
to the financial statements.
(cid:129) Repaid at maturity $1 billion of notes in the first half of 2019. See
Note 20 to the financial statements.
(cid:129) Issued $1.5 billion in notes
consisting of $750 million in 4.2%
notes due April 1, 2029 and
$750 million in 5.0% notes due
April 1, 2049. See Note 20 to the
financial statements.
(cid:129) Increased commercial paper
outstanding from $391 million to
$650 million.
(cid:129) Acquired Ruralco, an agriservices business in Australia with
approximately 250 Retail operating locations. In addition, we acquired
68 other Retail locations globally, which included Actagro, Van Horn,
Inc. and Security Seed and Chemical, Inc. in the US as well as completing
the remainder of the Agrichem acquisition in Brazil. See Note 4 to the
financial statements. Cash used to acquire Retail locations totaled
$911 million.
(cid:129) Paid over $1 billion in dividends to shareholders. We increased our
expected quarterly dividend from $0.43 per share to $0.45 per share
commencing for dividends declared in the third quarter of 2019.
Nutrien Annual Report 2019
49
Overview
Management’s Discussion & Analysis
Two Year Highlights
Financial Statements
Other Information
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. 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 $1.55 billion and a working capital ratio of 1.2 at December 31, 2019 and
an adjusted net debt to adjusted EBITDA ratio of 2.5.
Sources and Uses of Cash
Our cash flows from operating, investing and financing activities are summarized in the following table:
(millions of US dollars, except as otherwise noted)
Cash provided by operating activities
Cash (used in) provided by investing activities
Cash used in financing activities
Effect of exchange rate changes on cash and cash equivalents
(Decrease) increase in cash and cash equivalents
2019
2018
% Change
3,665
(2,798)
(2,479)
(31)
2,052
3,887
(3,705)
(36)
(1,643)
2,198
79
n/m
(33)
(14)
n/m
Cash and cash equivalents decreased by $1,643 million in
2019 compared to an increase of $2,198 million in 2018, due to:
(cid:129) Decrease of approximately $5.8 billion in cash receipts related
to the 2018 sale of SQM and APC equity investments and
cash acquired as a result of the Merger in 2018.
(cid:129) Increase in our acquisitions and capital expenditures by
approximately $900 million as we continue to grow our Retail
business and invest in technology and long-term assets.
(cid:129) These decreases were partially offset by an increase from our
financing activities as we borrowed an incremental
$500 million in long-term debt and reduced our short-term
debt repayments.
In addition, cash provided by operations was $3,665 million, an
increase of $1,613 million over 2018. Our payables and accrued
charges increased as a result of deferring payments related to
our inventory prepayment arrangements.
50 Nutrien Annual Report 2019
Overview
Management’s Discussion & Analysis
Two Year Highlights
Financial Statements
Other Information
Cash Requirements
The following aggregated information about our contractual obligations and other commitments summarizes our liquidity and
capital resource requirements as at December 31, 2019. The information presented in the table below does not include planned (but
not legally committed) cash requirements. Planned or anticipated cash requirements that may not yet be fully included in the table
below include annual investments in sustaining capital, share repurchases, dividends, acquisition of Retail and other businesses,
investments in technology such as our Retail digital platform, investments in our Next Generation Potash program and potential
investments in brownfield projects in Nitrogen and Phosphate. We do not currently have any significant projects in process that have
not generated revenue.
Dollars (millions) at December 31, 2019
Long-term debt obligations
Estimated interest payments on long-term debt
obligations
Lease liabilities
Estimated interest payments on lease liabilities
Purchase commitments
Capital commitments
Other commitments
Asset retirement obligations and environmental
costs 1
Other long-term liabilities 2
Payments Due by Period
Financial
Statement Note
Reference
Note 20, 27
Note 27
Note 21, 27
Note 27
Note 27
Note 27
Note 27
Note 24
Note 9, 12, 23
Total
8,704
5,688
1,122
180
2,290
50
437
3,002
3,688
Within
1 Year
508
386
217
32
877
43
118
206
101
1 to 3
Years
521
3 to 5
Years
1,250
747
318
46
766
7
137
301
114
673
204
30
438
–
58
334
116
Over 5
Years
6,425
3,882
383
72
209
–
124
2,161
3,357
Total
25,161
2,488
2,957
3,103
16,613
1 Commitments associated with our asset retirement obligations are the estimated cash outflows and are expected to occur over the next 485 years for
phosphate (with the majority taking place over the next 80 years) and between 40 and 440 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 2050.
2 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 Annual Report 2019
51
Overview
Management’s Discussion & Analysis
Two Year Highlights
Financial Statements
Other Information
Capital Structure and 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:
The credit facilities consist of a $4,500 million unsecured North American revolving term credit facility, a $500 million North
American uncommitted revolving demand facility and approximately $820 million of other credit facilities in the US, Europe,
Australia and South America. Included in the amount outstanding and committed is $650 million of commercial paper and
$326 million of other short-term debt. We have a $4,500 million credit limit under our commercial paper program, which is limited
to the availability of backup funds backstopped by the $4,500 million unsecured revolving term credit facility. Interest rates on
outstanding commercial paper ranged from 2.0 to 2.1 percent.
Our long-term debt consists primarily of notes and debentures with the following maturities and interest rates:
We also have lease obligations totaling $1,073 million (including current portion) with a weighted average effective interest rate
of 3 percent as at December 31, 2019.
52 Nutrien Annual Report 2019
Overview
Management’s Discussion & Analysis
Two Year Highlights
Financial Statements
Other Information
In July 2017, the head of the United Kingdom Financial Conduct Authority announced the desire to phase out the London Interbank
Offered Rate (“LIBOR”) by the end of 2021. We are in the process of identifying and updating existing contracts extending past 2021
that reference LIBOR, and we expect no material impact to our financial statements as a result of the transition.
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 such covenants as at December 31, 2019.
Debt-to-capital ratio 1
At December 31
0.33
0.65
Limit
2019
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), 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 0.33.
The accompanying table summarizes the limits and results of
certain covenants.
Credit Ratings
Our ability to access reasonably priced debt in the capital markets depends, 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.
As at December 31,
Moody’s
S&P
Long-term Debt Rating (Outlook)
Short-Term Debt Rating
2019
2018
Baa2 (stable)
BBB (stable)
Baa2 (stable)
BBB (stable)
2019
P-2
A-2
2018
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
Options to purchase common shares
February 19, 2020
570,736,961
9,163,502
For more information on our capital structure
and management, see Note 26 to the financial
statements.
For more information on our short-term debt
and long-term debt, see Note 19 and Note 20 to
the financial statements.
Off-Balance Sheet Arrangements
Principal off-balance sheet activities primarily include:
(cid:129) Certain non-financial derivatives that were entered into and
(cid:129) Agreement to reimburse losses of Canpotex (see Note 30 to
the financial statements).
(cid:129) Issuance of guarantee contracts (see Note 28 to the financial
statements).
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
Our most significant related party is Canpotex, which provides us with low-cost marketing and logistics for the offshore potash
markets that we serve. Refer to Note 29 to the financial statements for information on our related party transactions.
Nutrien Annual Report 2019
53
Overview
Management’s Discussion & Analysis
Two Year Highlights
Financial Statements
Other Information
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 12 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. 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.
Critical
Accounting
Estimate
Business combinations –
measurement of assets
acquired, and liabilities
assumed
Goodwill impairment
Financial
Statement
Reference 1
Note 4
Description
Significant judgment for our business combinations included identifying assets acquired and liabilities
assumed, and estimation of their fair values. Key assumptions used in estimation of fair value include
discount rates and revenue growth rates specific to the acquired assets or liabilities assumed. All
segments are impacted as all assets acquired, and liabilities assumed, from Agrium in the Merger were
required to be measured at fair value. In 2019, all of the significant business combinations were in the
Retail segment.
Note 16
and
Note 31
Operating segments other than Phosphate have goodwill allocated to them that must be assessed for
impairment when events or circumstances indicate there could be an impairment, or at least annually.
Based on our assumptions at the time of our goodwill impairment testing, the excess of the recoverable
value of the Retail – North America group of cash-generating units (“CGUs”) over the book value is 6
percent. Key assumptions in our testing models may change, and changes that could reasonably be
expected to occur may cause impairment. The sensitivity of Retail – North America’s recoverable
amount, in millions of US dollars, to changes in key assumptions is as follows:
Key Assumptions
Discount rate
Terminal growth rate
Forecasted EBITDA
over forecast period
Percentage Point
Change
Change in Recoverable
Amount
+0.1
-0.1
+0.1
-0.1
+5.0
-5.0
(330)
350
290
(280)
960
(960)
At December 31, 2019, we reviewed our Phosphate CGUs for impairment triggers. For our Aurora CGU,
we used judgment in assessing possible indicators of impairment including expected mine life, supply
and demand variables and expected benchmark prices. Based on our assessment, there were no
impairment triggers. For our White Springs CGU, we identified an impairment trigger due to
deteriorating price expectations and the expected remaining mine life. We completed an impairment
analysis and determined that there was no impairment in excess of the $250 million impairment loss
previously recorded at December 31, 2017.
The following table highlights for White Springs CGU, sensitivities to the recoverable amount in millions
of US dollars which could result in additional impairment losses or reversals of previously recorded
losses:
Key Assumptions
Sales prices
Forecasted EBITDA over forecast period
Discount rate
Percentage Point
Change
Change in Recoverable
Amount
±1.0
±5.0
±0.5
±20
±20
±10
Significant estimates for the measurement of our income taxes include assessing the probability and
measurement of our uncertain tax provisions related to complex global tax regulations, estimating
forecasted taxable income and the timing of reversal of temporary differences, and assessing the
probability of future taxable income used to recognize deferred tax assets. Although we believe our
assumptions and estimates are reasonable, our tax assets are realizable and our accruals for tax
liabilities are adequate for all open tax years based on our interpretation of tax laws and prior
experience, actual results could differ. Changes in the income tax legislations, regulations and
interpretations may result in a material impact to our financial statements.
Income taxes are recorded in our Corporate and Others segment.
Long-lived asset
impairment
Note 15
and
Note 31
Income taxes –
measurement
Note 9
and
Note 30
54 Nutrien Annual Report 2019
Overview
Management’s Discussion & Analysis
Two Year Highlights
Financial Statements
Other Information
Financial
Statement
Reference 1
Note 24
Critical
Accounting
Estimate
Asset retirement
obligations (“AROs”) and
accrued environmental
costs – measurement
(“ERLs”)
The Potash and Phosphate segments have these liabilities (which have a high degree of estimation
uncertainty for future costs and estimated timelines) associated with their mining operations while the
Corporate and Others segment has AROs and ERLs associated with non-operational mines.
Description
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
and changes to the estimate (if any).
Recent Accounting Changes
We adopted IFRS 16 “Leases” as of January 1, 2019. For details on all significant accounting standards changes refer to Note 31 to
the financial statements.
Quarterly Results
(millions of US dollars, except as otherwise noted)
Q4
Q3
Q2
Q1
Q4
Q3
Q2
Q1
2019
2018
Sales
Net (loss) earnings from continuing operations
Net earnings from discontinued operations
Net (loss) earnings
EBITDA
Earnings (loss) per share (“EPS”) from continuing operations
Basic
Diluted
EPS
Basic
Diluted
3,442
(48)
–
(48)
499
(0.08)
(0.08)
(0.08)
(0.08)
4,169
141
–
141
785
0.25
0.24
0.25
0.24
8,693
858
–
858
1,781
1.48
1.47
1.48
1.47
3,719
41
–
41
596
0.07
0.07
0.07
0.07
3,762
296
2,906
3,202
944
4,034
(1,067)
23
(1,044)
(932)
8,145 3,695
(1)
–
(1)
487
741
675
1,416
1,507
0.48
0.48
5.23
5.22
(1.74)
(1.74)
(1.70)
(1.70)
1.18
1.17
2.25
2.24
–
–
–
–
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, while customer prepayments made to us are typically concentrated in December and January,
and our inventory prepayments paid to our vendors are typically concentrated in the period from November to January. Feed and
industrial sales are more evenly distributed throughout the year.
Beginning on January 1, 2018, earnings were impacted by the operations of Agrium acquired in the Merger. In the second and fourth
quarters of 2018, earnings were impacted by $0.6 billion and $2.9 billion, respectively, in after-tax gains on the sales of our
investments in SQM and APC, which were categorized as discontinued operations. 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.
Fourth Quarter Financial Performance
(millions of US dollars)
Three months ended December 31
Retail
Crop nutrients
Crop protection products
Seed
Merchandise 1
Services and other
Total 1
2019
907
635
99
211
319
Sales
2018
917
644
103
142
211
2,171
2,017
% Change
2019
2018
% Change
Gross Margin
(1)
(1)
(4)
49
51
8
186
281
60
44
165
736
184
270
56
27
125
662
1
4
7
63
32
11
1 Certain immaterial figures have been reclassified or grouped together for the three months ended December 31, 2018.
Nutrien Annual Report 2019
55
Overview
Management’s Discussion & Analysis
Two Year Highlights
Financial Statements
Other Information
(millions of US dollars)
Manufactured Product Sales Tonnes (thousands) Manufactured Product Average Net Price per MT
Three months ended December 31
2019
2018
% Change
2019
2018
% Change
Potash
North America
Offshore
Sales
Cost of goods sold
Gross margin
Nitrogen
Ammonia
Urea
Solutions, nitrates and sulfates
Sales
Cost of goods sold
Gross margin
Phosphate
Fertilizer
Industrial and feed
Sales
Cost of goods sold
Gross margin
651
1,234
1,885
571
695
1,096
2,362
466
181
647
731
2,126
2,857
808
687
1,016
2,511
601
207
808
(11)
(42)
(34)
(29)
1
8
(6)
(22)
(13)
(20)
226
164
186
112
74
245
278
152
212
171
41
334
581
403
395
8
242
216
223
95
128
290
337
177
257
175
82
423
513
446
428
18
(7)
(24)
(17)
18
(42)
(16)
(18)
(14)
(18)
(2)
(50)
(21)
13
(10)
(8)
(56)
Highlights of our 2019 fourth quarter compared to the 2018 fourth quarter results were as follows:
Retail
Potash
Nitrogen
Phosphate
Q4 2019 vs Q4 2018
Gross margin increased primarily due to higher merchandise sales, application services sales and livestock
exports from the recently acquired Ruralco in Australia.
Gross margin decreased primarily due to lower offshore demand as customers in key markets drew down
existing inventory. The temporary production downtime in response to lower demand and the Canadian
National Railway labour strike led to higher costs of goods sold per tonne. This temporary slowdown in
global demand caused lower benchmark prices and a lower net realized selling price per tonne. Our
offshore net realized selling price per tonne was also negatively impacted by adjustments to our
provisional selling price to Canpotex.
Gross margin decreased primarily due to a lower net realized selling price caused by declines in global
benchmark prices and from lower ammonia sales volumes caused by unfavorable weather in North
America.
Gross margin decreased primarily due to a reduced net realized selling price as higher prices for industrial
products were more than offset by lower dry fertilizer prices aligned with lower benchmark prices. This was
partially offset by a decrease in cost of goods sold per tonne resulting from lower raw materials costs and
positive asset retirement obligation adjustments from changes to cost estimates.
Selling costs in Retail increased due to higher sales related to acquired businesses.
Impairment of assets increased due to certain individually insignificant impairments of intangible assets
and property, plant and equipment related primarily to changes to our future plans for those assets.
Other fourth quarter
financial highlights
We had an income tax recovery in the fourth quarter of 2019 due to the loss from continuing operations
and income tax expense in the fourth quarter of 2018 due to the earnings from continuing operations. The
effective tax rate increased as a result of a change in proportionate earnings between jurisdictions.
Net earnings from discontinued operations were higher in the fourth quarter of 2018 primarily due to
gains on the sale of our equity investments in SQM and APC (net of tax).
There was other comprehensive income in the fourth quarter of 2019 compared to an other
comprehensive loss in the fourth quarter of 2018 primarily due to a gain on translation of our Retail
operations in Canada and Australia in 2019 compared to losses in 2018.
56 Nutrien Annual Report 2019
Overview
Management’s Discussion & Analysis
Two Year Highlights
Financial Statements
Other Information
Enterprise
Risk
Management
Nutrien integrates enterprise risk management into
all of our strategic and business activities. We focus on
managing risks and facilitating informed risk taking to
remain competitive in an increasingly volatile and
uncertain global economy.
Risk Strategy and Governance
Our strategic and risk management processes are
integrated to ensure we understand and benefit from the
relationship between strategy, risk and value creation. By
considering risk throughout our business, we seek to align
our strategy with our vision and effectively manage the
embedded business risks that could impact the
achievement of our strategy.
Our approach to risk management is governed by our
Board of Directors, including our Board committees, which
oversee our Executive Leadership Team. By understanding
the principal risks to our business and strategy and
implementing measures to manage those risks, we seek
an appropriate balance between risk and return.
Key Risks
We characterize a Key Risk as a risk or combination of risks that could negatively impact the achievement of our vision
and ability to deliver on our strategy. We evaluate those risks we believe could have a significant negative effect on
safety, health and environment, the Company’s financial results, or our reputation, while also considering mitigation
efforts. We consider the following to be Key Risks at this time. For a more detailed discussion of our risks, refer to
Nutrien’s 2019 Annual Information Form.
1 Agriculture Changes and Trends
Associated Key Priorities
Description
The following factors, in addition to other factors, could
impact our strategy, demand for our products and/or
financial performance: farm and industry consolidation,
shifting grower demographics, agriculture productivity and
development, climate change, changes in consumer food
preferences, governments and climate change initiatives, and
technological innovation and digital business models.
Risk Management Approach
Our integrated business platform and diversified earnings
portfolio (consisting of crop inputs and services) are
designed to respond and adapt to changes in agriculture.
We are proactive in developing and using new agricultural
products and practices including our integrated digital
platform. 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.
Sustainability
Growth & Capital Allocation
Innovation & Technology
Employees
Nutrien Annual Report 2019
57
Overview
Management’s Discussion & Analysis
Two Year Highlights
Financial Statements
Other Information
Enterprise Risk Management Continued
2 Shifting Market Fundamentals
Associated Key Priorities
Description
Changes in global macroeconomic conditions – including
trade tariffs and/or other trade restrictions, 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 or decreased availability of raw materials
used in making our products.
Risk Management Approach
Our diversified business model and portfolio of agricultural
products, services and solutions, combined with our global
presence, is designed to enable us to respond to changing
economic conditions.
We have a favorable cost-to-service position and the
flexibility to make operational changes across our portfolio in
order to minimize the impact of changing market dynamics.
We also engage in market development, education, training
and customer relations initiatives that support growth.
3 Changing Regulations
Associated Key Priorities
Description
Changing laws, regulations and government policies –
including health and safety, environmental and climate
change – could affect our ability to produce or sell certain
products, reduce our efficiency and competitive advantage,
increase our costs of raw material, energy, transportation or
compliance, or require us to make capital improvements to
our operations – all of which could impact our financial
performance or reputation.
Risk Management Approach
We have a Government & Industry Affairs team and an active
engagement strategy with governments and regulators that
keeps us current on regulatory developments affecting our
business. We are active in industry associations that address
proposed changes to laws and regulations impacting our
industry. We have a sustainability strategy and we are
developing a climate change strategy to assist in managing
the impact of potential regulatory changes.
4 Political, Economic and Social Instability
Associated Key Priorities
Description
Political, economic and social instability may affect our
business including, for instance, if any of the jurisdictions
in which we operate introduce restrictions on monetary
distributions, forced divestitures or changes to or
nullification of existing agreements, mining permits or
leases. Instability in political or regulatory regimes could
also affect our ability to do business and could impact our
sales and operating results, our reputation or the value of
our assets.
Risk Management Approach
We have a Government & Industry Affairs team and an active
engagement strategy with governments, regulators and
other stakeholders in the countries where we operate or plan
to operate. We assess capital investments and project
decisions against political, country and other related risk
factors. Dedicated teams regularly monitor developments
and global trends that may impact us.
Sustainability
Growth & Capital Allocation
Innovation & Technology
Employees
58 Nutrien Annual Report 2019
Overview
Management’s Discussion & Analysis
Two Year Highlights
Financial Statements
Other Information
Enterprise Risk Management Continued
5 Cybersecurity Threats
Associated Key Priorities
Description
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. Any of these could result in business
disruptions, reputational damage, personal injury, or third-
party claims, impacting our operations, financial
performance or reputation.
Risk Management Approach
We maintain an enhanced focus on cybersecurity 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 measures.
6 Stakeholder Support
Associated Key Priorities
Description
Our stakeholders may not support our business plans or
structure, strategy or core sustainability and social
responsibilities. Loss of stakeholder confidence impairs our
ability to execute our business plans, negatively impacts our
ability to produce or sell our products and may lead to
reputational and financial losses or shareholder action.
Risk Management Approach
We proactively and regularly engage with our stakeholders to
identify and address their concerns and communicate the
long-term value opportunities associated with our business
plans. We have a sustainability strategy that is structured to
support what matters most to our stakeholders and are in the
process of developing a climate strategy.
See page 14 of this report for more information on
sustainability strategy.
7 Talent and Organizational Structure
Associated Key Priorities
Description
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.
Risk Management Approach
We strategically map critical talent in anticipation of future
needs, seeking to hire talent with the right fit for our culture
and purpose. Our succession planning proactively identifies
critical roles and links to internal top talent. Our incentive
programs are competitive and support our purpose-driven
culture with performance expectations encouraging
inclusion and diversity.
See page 20 of this report for Nutrien’s people strategy.
Sustainability
Growth & Capital Allocation
Innovation & Technology
Employees
Nutrien Annual Report 2019
59
Overview
Management’s Discussion & Analysis
Two Year Highlights
Financial Statements
Other Information
Enterprise Risk Management Continued
8 Retail Business Model
Associated Key Priorities
Description
Digital innovations, increased research and development
activity and new technologies in the agriculture industry,
among other factors, could alter the competitive
environment, impacting our Retail operations and financial
performance.
Risk Management Approach
Our full-service offering, continued investment in
technology, and integrated digital platform 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. 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 acquisitions.
See page 18 of this report for more information on
innovation & technology at Nutrien.
9 Capital Allocation
Associated Key Priorities
Description
Our inability to deploy capital or to effectively execute on
opportunities – whether due to market conditions, lack of
options or otherwise, or deploying capital in a manner
inconsistent with our strategic priorities – could impact our
returns, operations, reputation or access to capital.
Risk Management Approach
We are focused on creating long-term value and on
allocating capital consistent with our strategic priorities and
capital allocation strategy. We employ a governance process
for all capital allocation decisions and incorporate risk-
related factors, including execution risk, in those decisions.
See page 16 of this report for our capital allocation strategy.
10 Safety, Health & Environment
Associated Key Priorities
Description
Our operations are subject to safety, health and
environmental risks inherent in the mining, manufacturing,
transportation, storage and distribution of our products.
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.
Risk Management Approach
We have robust governance processes that ensure we follow
all regulatory, industry and internal standards of safety,
health and environmental responsibility. We have structured
incident prevention and response systems in place, conduct
regular security vulnerability assessments and maintain
protocols for employees working and traveling abroad. We
have developed crisis communication protocols and
emergency response programs and personnel can be
deployed in the event of a significant incident.
We maintain environmental monitoring and control systems,
including third-party reviews of key containment structures.
Sustainability
Growth & Capital Allocation
Innovation & Technology
Employees
60 Nutrien Annual Report 2019
Overview
Management’s Discussion & Analysis
Two Year Highlights
Financial Statements
Other Information
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
in Issuers Annual and Interim Filings (NI 52-109)) 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, 2019, 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 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) 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.
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 2019 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, 2019, Nutrien
Ltd. did maintain effective internal control over financial reporting.
We completed the Ruralco acquisition on September 30, 2019 as more fully described in Note 4 to the Financial Statements.
This business was excluded from management’s evaluation of the effectiveness of the Company’s internal control over financial
reporting as of December 31, 2019 due to the proximity of the acquisition to year-end. The associated total assets represent
2 percent of consolidated assets and total revenues represent 1 percent of consolidated revenues included in our 2019 financial
statements.
The effectiveness of the Company’s internal control over financial reporting as at December 31, 2019 was audited by KPMG LLP,
as reflected in their report, which is included in this 2019 Annual Report.
Nutrien Annual Report 2019
61
Overview
Management’s Discussion & Analysis
Two Year Highlights
Financial Statements
Other Information
Forward-Looking Statements
Certain statements and other information included in this
document, including within the “2020 Guidance” section,
constitute “forward-looking information” or “forward-looking
statements” (collectively, “forward-looking statements”) under
applicable securities laws (such statements are often
accompanied by words such as “anticipate”, “forecast”, “expect”,
“believe”, “may”, “will”, “should”, “estimate”, “intend” or other
similar words). All statements in this document, other than those
relating to historical information or current conditions, are
forward-looking statements, including, but not limited to:
Nutrien’s 2020 annual guidance, including our growth and
capital allocation strategies and expectations regarding our
adjusted net earnings per share, adjusted EBITDA and EBITDA
by segment; expectations regarding our sustainability,
environmental (including climate), D&I and innovation and
technology initiatives; capital spending expectations for 2020;
expectations regarding performance of our operating segments
in 2020; our operating segment market outlooks and market
conditions for 2020, and including anticipated supply and
demand for our products and services, expected market and
industry conditions with respect to crop nutrient application
rates, planted acres, crop mix, prices and the impact of currency
fluctuations and import and export volumes; expectations
regarding repurchases of our Common Shares, including the
timing thereof; expectations regarding completion of previously
announced expansion projects (including timing and volumes of
production associated therewith); and acquisitions and
divestitures (including expected timing of closing thereof), and
the expected synergies associated with various acquisitions,
including timing thereof. These forward-looking statements are
subject to a number of assumptions, risks and uncertainties,
many of which are beyond our control, which could cause actual
results to differ materially from such forward-looking
statements. As such, undue reliance should not be placed on
these forward-looking statements.
All of the forward-looking statements are qualified by the
assumptions that are stated or inherent in such forward-looking
statements, including the assumptions referred to below and
elsewhere in this document. Although we believe that these
assumptions are reasonable, this list is not exhaustive of the
factors that may affect any of the forward-looking statements
and the reader should not place an undue reliance on these
assumptions and such forward-looking statements. The
additional key assumptions that have been made include,
among other things, assumptions with respect to our ability to
successfully complete, integrate and realize the anticipated
benefits of our already completed and future acquisitions, and
that we will be able to implement our standards, controls,
procedures and policies at any acquired businesses to realize the
expected synergies; that future business, regulatory and industry
conditions will be within the parameters expected by us,
including with respect to prices, margins, demand, supply,
product availability, supplier agreements, availability and cost of
labor and interest, exchange and effective tax rates; the
completion of our expansion projects on schedule, as planned
and on budget; assumptions with respect to global economic
conditions and the accuracy of our market outlook expectations
for 2020 and in the future (including as outlined in the 2020
Outlook section); the adequacy of our cash generated from
operations and our ability to access our credit facilities or capital
markets for additional sources of financing; our ability to identify
suitable candidates for acquisitions and divestitures and
negotiate acceptable terms; our ability to maintain investment
grade ratings and achieve our performance targets; and the
receipt, on time, of all necessary permits, utilities and project
approvals with respect to our expansion projects and that we will
have the resources necessary to meet the projects’ approach.
Events or circumstances that could cause actual results to differ
materially from those in the forward-looking statements
include, but are not limited to: general global economic, market
and business conditions; failure to complete announced and
future acquisitions or divestitures at all or on the expected terms
and within the expected timeline; climate change and weather
conditions, including impacts from regional flooding and/or
drought conditions; crop planted acreage, yield and prices; the
supply and demand and price levels for our products;
governmental and regulatory requirements and actions by
governmental authorities, including changes in government
policy (including tariffs, trade restrictions and climate change
initiatives), government ownership requirements, changes in
environmental, tax and other laws or regulations and the
interpretation thereof; political risks, including civil unrest,
actions by armed groups or conflict and malicious acts including
terrorism; the occurrence of a major environmental or safety
incident; innovation and cybersecurity risks related to our
systems; regional natural gas supply restrictions; counterparty
and sovereign risk; delays in completion of turnarounds at our
major facilities; gas supply interruptions; any significant
impairment of the carrying value of certain assets; risks related
to reputational loss; certain complications that may arise in our
mining processes; the ability to attract, engage and retain skilled
employees and strikes or other forms of work stoppages; and
other risk factors detailed from time to time in Nutrien reports
filed with the Canadian securities regulators and the Securities
and Exchange Commission in the United States.
The purpose of our expected adjusted net earnings per share,
adjusted EBITDA and EBITDA by segment guidance ranges, as
well as our adjusted earnings per share and adjusted EBITDA
price and volume and input cost sensitivities ranges, are to
assist readers in understanding our expected and targeted
financial results, and this information may not be appropriate for
other purposes.
Nutrien disclaims any intention or obligation to update or revise
any forward-looking statements in this document as a result of
new information or future events, except as may be required
under applicable Canadian securities legislation or applicable US
federal securities laws.
62 Nutrien Annual Report 2019
Overview
Management’s Discussion & Analysis
Two Year Highlights
Financial Statements
Other Information
Appendix
Non-IFRS Financial Measures
We use both IFRS and certain non-IFRS financial measures to assess performance. Non-IFRS financial measures are numerical
measures of a company’s performance, that either exclude or include 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 financial measures provide transparent and useful supplemental information to help investors
evaluate our financial performance, financial condition and liquidity using the same measures as management. These non-IFRS
financial measures should not be considered as a substitute for, or superior to, measures of financial performance prepared in
accordance with IFRS.
The following section outlines our non-IFRS financial measures, their definitions, and why management uses each measure. It
includes reconciliations to the most directly comparable IFRS measures.
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, depreciation and amortization, Merger and related costs, acquisition and integration related costs, share-based
compensation, defined benefit plans curtailment gain, impairment of assets, and foreign exchange gain/loss, net of related
derivatives. In the fourth quarter of 2019, we amended our calculations of adjusted EBITDA and restated the comparative periods to
exclude the impact of foreign exchange gain/loss, net of related derivatives, as foreign exchange changes are not indicative of our
operating performance. We have also amended our calculations of adjusted EBITDA to adjust for acquisition and integration related
costs for certain acquisitions such as Ruralco. There were no similar acquisitions in the comparative periods.
Why we use the measure and why it is useful to investors: These are meaningful measures because they are not impacted by
long-term investment and financing decisions, but rather focus on the performance of our day-to-day operations. These provide a
measure of our ability to service debt and to meet other payment obligations.
(millions of US dollars)
Net earnings (loss) from continuing operations
Finance costs
Income tax expense (recovery)
Depreciation and amortization
EBITDA
Merger and related costs
Acquisition and integration related costs
Share-based compensation
Defined benefit plans curtailment gain
Impairment of assets
Foreign exchange loss (gain), net of related derivatives
Adjusted EBITDA
1 Amount presented is the combined historical financial results of PotashCorp and Agrium.
(millions of US dollars)
Potash EBITDA
Impairment of assets
Potash adjusted EBITDA
2019
992
554
316
1,799
3,661
82
16
104
–
120
42
4,025
2018
(31)
538
(93)
1,592
2,006
170
–
116
(157)
1,809
(10)
3,934
2019
1,593
–
1,593
2017 1
656
515
20
1,221
2,412
178
–
92
–
305
35
3,022
2018
(203)
1,809
1,606
Adjusted EBITDA, Adjusted Net Earnings and Adjusted Net Earnings
Per Share Guidance
This guidance is provided on a non-IFRS basis. We do not provide a reconciliation of such forward-looking measures to the most
directly comparable financial measures calculated and presented in accordance with IFRS due to unknown variables and the
Nutrien Annual Report 2019
63
Overview
Management’s Discussion & Analysis
Two Year Highlights
Financial Statements
Other Information
uncertainty related to future results. These unknown variables may include unpredictable transactions of significant value that may
be inherently difficult to determine, without unreasonable efforts. Guidance excludes the impacts of acquisition and integration
related costs, share-based compensation and foreign exchange gain/loss, net of related derivatives.
Adjusted Net Earnings and Adjusted Net Earnings Per Share
Most directly comparable IFRS financial measure: Net earnings (loss) from continuing operations and net (loss) earnings per share
from continuing operations.
Definition: Net earnings from continuing operations before Merger and related costs, acquisition and integration related costs,
share-based compensation, impairment of assets, purchase price allocation, defined benefit plans curtailment gain, dividend income
of SQM and APC and foreign exchange gain/loss (net of related derivatives), net of tax. In the fourth quarter of 2019, we amended
our calculations of adjusted net earnings and restated the comparative periods to exclude the impact of foreign exchange gain/loss,
net of derivatives, as foreign exchange changes are not indicative of our operating performance. We have also amended our
calculations of adjusted net earnings to adjust for acquisition and integration related costs for certain acquisitions such as Ruralco.
There were no similar acquisitions in the comparative periods.
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.
(millions of US dollars, except as otherwise noted)
Net earnings (loss) from continuing operations
Adjustments:
Merger and related costs
Acquisition and integration related costs
Share-based compensation
Impairment of assets
Foreign exchange loss (gain), net of related
derivatives
Purchase price allocation
Defined benefit plans curtailment gain
Dividend income of SQM and APC
Increases
(Decreases)
2019
Post-Tax
992
82
16
104
120
42
–
–
–
62
12
79
91
32
–
–
–
Per Diluted
Share
Increases
(Decreases)
Post-Tax
Per Diluted
Share
2018
1.70
0.10
0.02
0.14
0.16
0.05
–
–
–
170
–
116
1,809
(10)
211
(157)
156
(31)
(0.05)
130
–
89
1,320
(8)
161
(120)
130
1,671
0.21
–
0.14
2.11
(0.01)
0.26
(0.19)
0.21
2.68
Adjusted net earnings
1,268
2.17
Free Cash Flow and Free Cash Flow Including Changes in Non-Cash Working Capital
Most directly comparable IFRS financial measure: Cash from operations before working capital changes.
Definition: Cash from operations before working capital changes less sustaining capital expenditures and cash provided by
operating activities from discontinued operations. We also calculate this measure including changes in non-cash working capital.
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. These are also useful as an indicator of our ability to service debt, meet other payment
obligations and make strategic investments. These do not represent residual cash flow available for discretionary expenditures.
(millions of US dollars)
Cash from operations before working capital changes
Cash used in operating activities from discontinued operations
Sustaining capital expenditures
Free cash flow
2019
3,175
–
(1,018)
2018
3,190
(130)
(1,085)
2017 1
2,511
(200)
(1,018)
2,157
1,975
1,293
Changes in non-cash working capital
490
(1,138)
57
Free cash flow including changes in non-cash working capital
2,647
837
1,350
1 Amount presented is the combined historical financial results of PotashCorp and Agrium.
64 Nutrien Annual Report 2019
Overview
Management’s Discussion & Analysis
Two Year Highlights
Financial Statements
Other Information
Gross Margin Excluding Depreciation and Amortization Per Tonne – Manufactured
Most directly comparable IFRS financial measure: Gross margin.
Definition: Gross margin per tonne from manufactured products less depreciation and amortization per tonne. Reconciliations are
provided in the “Operating Segment Performance & Outlook” section.
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.
Potash Cash Cost of Product Manufactured (“COPM”)
Most directly comparable IFRS financial measure: Cost of goods sold (“COGS”) for the Potash segment.
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. Potash 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.
(millions of US dollars, except as otherwise noted)
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
2019
1,103
10
(16)
1,097
(355)
742
11,700
63
2018
1,183
(5)
(14)
1,164
(391)
773
12,842
60
Ammonia Controllable Cash COPM
Most directly comparable IFRS financial measure: COGS for the Nitrogen segment.
Definition: The total of COGS for the Nitrogen segment excluding depreciation and amortization expense included in COGS,
cash COGS for products other than ammonia, other adjustments, and natural gas and steam costs, divided by net ammonia
production tonnes.
Why we use the measure and why it is useful to investors: To assess operational performance. Ammonia controllable cash COPM
excludes the effects of production from other periods, the costs of natural gas and steam, and long-term investment decisions,
supporting a focus on the performance of our day-to-day operations.
(millions of US dollars, except as otherwise noted)
Total COGS – Nitrogen
Depreciation and amortization in COGS
Cash COGS for products other than ammonia
Ammonia
Total cash COGS before other adjustments
Other adjustments 1
Total cash COPM
Natural gas and steam costs
Controllable cash COPM
Production tonnes (net tonnes 2 – thousands)
Ammonia controllable cash COPM per tonne
1 Includes changes in inventory balances and other adjustments.
2 Ammonia tonnes available for sale, as not upgraded to other Nitrogen products.
2019
2,148
(462)
(1,226)
460
(57)
403
(273)
130
2,887
45
2018
2,145
(442)
(1,212)
491
(28)
463
(321)
142
3,320
43
Nutrien Annual Report 2019
65
Overview
Management’s Discussion & Analysis
Two Year Highlights
Financial Statements
Other Information
Adjusted Net Debt
Most directly comparable IFRS financial measure: Long-term debt.
Definition: Long-term and short-term debt plus lease liabilities (including their respective current portions) less cash and cash
equivalents and related unamortized fair value adjustments.
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 26 to the financial statements for a reconciliation of adjusted net debt.
Nutrien Financial Receivables
Most directly comparable IFRS financial measure: Receivables.
Definition: Refer to page 27 for details.
Why we use the measure and why it is useful to investors: To differentiate a sub-group of receivables with lower credit risk.
(millions of US dollars)
Nutrien Financial Receivables
Non-Nutrien Financial Receivables
Receivables
2019
821
2,721
3,542
Retail Adjusted 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 Retail sales for the last four rolling quarters excluding working capital acquired
in the quarter certain recent acquisitions, such as Ruralco, were completed.
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 operational efficiency, respectively.
(millions of US dollars, except as otherwise noted)
Q1 2019
Q2 2019
Q3 2019
Q4 2019
Average/Total
Rolling four quarters ended December 31, 2019
Working capital
Working capital from certain recent acquisitions
Adjusted working capital
Sales
Adjusted average working capital to sales (%)
3,190
–
3,190
2,039
3,741
–
3,741
6,512
3,699
(75)
3,624
2,499
1,759
(138)
1,621
2,171
3,044
13,221
23
66 Nutrien Annual Report 2019
Overview
Management’s Discussion & Analysis
Two Year Highlights
Financial Statements
Other Information
Retail Cash Operating Coverage Ratio
Most directly comparable IFRS financial measure: Retail operating expenses 1 as a percentage of Retail gross margin.
Definition: Retail operating expenses excluding depreciation and amortization expense, divided by Retail gross margin excluding
depreciation and amortization expense in cost of goods sold for the last four rolling quarters.
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.
Rolling four quarters ended December 31, 2019
(millions of US dollars, except as otherwise noted)
Q1 2019
Q2 2019
Q3 2019
Q4 2019
Gross margin
Depreciation and amortization in cost of goods sold
Gross margin excluding depreciation and amortization
Operating expenses
Depreciation and amortization in operating expenses
Operating expenses excluding depreciation and amortization
Cash operating coverage ratio (%)
409
2
411
571
(132)
439
1,440
1
1,441
749
(143)
606
655
2
657
617
(150)
467
736
2
738
667
(160)
507
Total
3,240
7
3,247
2,604
(585)
2,019
62
1 Includes Retail expenses below gross margin including selling expenses, general and administrative expenses and other (income) expenses.
Retail Normalized Comparable Store Sales
Most directly comparable IFRS financial measure: Retail sales from comparable base as a component of total Retail sales.
Definition: Prior year comparable store sales adjusted 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: To evaluate sales growth by adjusting for fluctuations in commodity
prices and foreign exchange rates. Includes locations we have owned for more than 12 months.
(millions of US dollars, except as otherwise noted)
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 Certain immaterial figures have been reclassified for 2018.
Retail EBITDA per US Selling Location
Most directly comparable IFRS financial measure: Retail US EBITDA.
2019
2018
12,568
12,520 1
0
12,636 1
12,253
12,103
1
12,363
(1)
(1)
Definition: Total Retail US EBITDA for the last four rolling quarters adjusted for acquisitions in those quarters, divided by the number
of US locations that have generated sales in the last four rolling quarters adjusted for acquired locations.
Why we use the measure and why it is useful to investors: To assess our US Retail operating performance. Includes locations we
have owned for more than 12 months.
Rolling four quarters ended December 31, 2019
(millions of US dollars, except as otherwise noted)
Q1 2019
Q2 2019
Q3 2019
Q4 2019
US EBITDA
Adjustments for acquisitions
US EBITDA adjusted for acquisitions
Number of US selling locations adjusted for acquisitions
EBITDA per US selling location (thousands of US dollars)
(58)
672
142
143
Total
899
(27)
872
902
967
Nutrien Annual Report 2019
67
Overview
Management’s Discussion & Analysis
Two Year Highlights
Financial Statements
Other Information
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 the
information becomes available.
Summary Financial Information
(millions of US dollars, except as otherwise noted)
Operations
Sales
Earnings before finance costs and income taxes
Net earnings (loss) from continuing operations
Net earnings
Diluted net earnings (loss) per share from continuing operations
Diluted net earnings per share
Finance costs
EBITDA 1
Adjusted EBITDA 1
Cash provided by operating activities
Balance Sheet
Total assets
Short-term debt and long-term debt (including leases)
Shareholders’ equity
Common Share Information
Weighted average common shares outstanding (millions)
Closing share price on NYSE (USD)
Total shareholder return percentage (%)
Operating Segment Information
Retail net sales 2
Potash net sales
Nitrogen net sales 3
Phosphate net sales 3
Retail EBITDA
Potash EBITDA
Nitrogen EBITDA 3
Phosphate EBITDA 3
Capital Allocation
Sustaining capital expenditures
Investing capital expenditures
Mine development and pre-stripping expenditures
Acquisitions (net of cash acquired)
Purchase of investments
Dividends paid
Payments for share repurchases
2019
2018
20,023
1,862
992
992
1.70
1.70
554
3,661
4,025
3,665
46,799
11,104
22,869
583
47.91
5.5
13,221
2,604
2,848
1,368
1,231
1,593
1,239
194
1,018
772
96
911
198
1,022
1,930
19,636
414
(31)
3,573
(0.05)
5.72
538
2,006
3,934
2,052
45,502
9,223
24,425
625
47.00
(6.6)
12,520
2,667
2,965
1,561
1,206
(203)
1,215
255
985
320
100
433
135
952
1,800
1 See the “non-IFRS financial measures” section.
2 Certain immaterial figures have been reclassified or grouped together for the year ended December 31, 2018.
3 Restated 2018 for the reclassification of sulfate from the Phosphate segment to the Nitrogen segment. See Note 2 to the financial statements.
68 Nutrien Annual Report 2019
Overview
Management’s Discussion & Analysis
Two Year Highlights
Financial Statements
Other Information
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 (%) 1
Proportion of women (%)
Proportion of women in senior leadership (director level and above) (%)
2019
2018
1.34
0.34
1
23
17
628
22,300
13
19
15
1.28
0.34
2
22
17
1,614
20,300
14
17
17
1 In 2019, we aligned our employee turnover definition with the Global Reporting Initiative definition used in our sustainability reporting and have restated
2018 figures.
Summary Production and Sales Volumes Information
Production (thousands)
Potash production (Product tonnes)
Nitrogen production (Ammonia tonnes) 1
Phosphate production (P2O5 tonnes) 2
Sales of manufactured product tonnes (thousands)
Retail crop nutrient tonnes sold
Potash tonnes sold
Nitrogen tonnes sold 3
Phosphate tonnes sold 3
1 All figures are provided on a gross production basis.
2 Excludes Redwater. Comparative figures were restated to exclude Redwater.
3 Restated for the reclassification of sulfate from the Phosphate segment. See Note 3 to the financial statements.
2019
2018
11,700
6,164
1,514
11,048
11,521
10,270
2,889
12,842
6,372
1,551
10,689
13,019
10,598
3,272
Nutrien Annual Report 2019
69
Financial
Statements
P,E
P,E
P,E
P,E
P
76 At a Glance
77 Consolidated Statements of Earnings
77 Consolidated Statements of Comprehensive Income
78 Consolidated Statements of Cash Flows
79 Consolidated Statements of Changes in Shareholders’ Equity
80 Consolidated Balance Sheets
81 Note 1 Description of Business
81 Note 2 Basis of Presentation
82 Note 3 Segment Information
86 Note 4 Business Combinations
90 Note 5 Nature of Expenses
90 Note 6 Share-Based Compensation
92 Note 7 Other Expenses
93 Note 8 Finance Costs
93 Note 9 Income Taxes
97 Note 10 Discontinued Operations
97 Note 11 Net Earnings Per Share
98 Note 12 Financial Instruments and Related Risk Management
P
P,E 103 Note 13 Receivables
P,E 104 Note 14 Inventories
P,E 105 Note 15 Property, Plant and Equipment
P,E 109 Note 16 Goodwill and Other Intangible Assets
P,E 111 Note 17 Investments
113 Note 18 Other Assets
113 Note 19 Short-Term Debt
114 Note 20 Long-Term Debt
115 Note 21 Lease Liabilities
116 Note 22 Payables and Accrued Charges
P,E 116 Note 23 Pension and Other Post-Retirement Benefits
P,E 121 Note 24 Asset Retirement Obligations and Accrued
Environmental Costs
123 Note 25 Share Capital
124 Note 26 Capital Management
125 Note 27 Commitments
126 Note 28 Guarantees
127 Note 29 Related Party Transactions
127 Note 30 Contingencies and Other Matters
P
E
P,E 129 Note 31 Accounting Policies, Estimates and Judgments
P Includes Accounting Policies
E Includes Accounting Estimates and Judgments
Overview
Management’s Discussion & Analysis
Two Year Highlights
Financial Statements
Other Information
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 the
management of Nutrien Ltd. (the “Company”). 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.
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 and Analysis (“MD&A”) with
management before such information is approved by the
committee and submitted to securities commissions or other
regulatory authorities. The audit committee and management
also analyze the annual consolidated financial statements and
MD&A prior to their approval by the Board of Directors.
The audit committee duties also include reviewing critical
accounting policies and significant estimates and judgments
underlying the consolidated financial statements as presented
by management and approving 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 2019 included
on Page 74. KPMG LLP have full and independent access to the
audit committee to discuss their audit and related matters.
72 Nutrien Annual Report 2019
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 National Instrument 52-109 – Certification of
Disclosure in Issuers’ Annual and Interim Filings. 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.
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, 2019, the Company did maintain effective
internal control over financial reporting.
We completed the Ruralco acquisition on September 30, 2019
as more fully described in Note 4 of the Notes to the
Consolidated Financial Statements. This business was excluded
from management’s evaluation of the effectiveness of the
Company’s internal controls over financial reporting as of
December 31, 2019 due to the proximity of the acquisition to
year-end. The associated total assets represent approximately
2 percent of consolidated total assets and total revenues
represent approximately 1 percent of consolidated revenues
included in Nutrien’s 2019 consolidated financial statements.
The effectiveness of the Company’s internal control over
financial reporting as at December 31, 2019 has been audited
by KPMG LLP, as reflected in their report for 2019 included on
page 73.
Chuck Magro
President and Chief Executive Officer
February 19, 2020
Pedro Farah
Chief Financial Officer
February 19, 2020
Overview
Management’s Discussion & Analysis
Two Year Highlights
Financial Statements
Other Information
Report of Independent
Registered Public
Accounting Firm
To the Shareholders and 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, 2019, 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, 2019, 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 sheets of the Company
as of December 31, 2019 and 2018, the related consolidated
statements of earnings, comprehensive income, changes in
shareholders’ equity, and cash flows for the years then ended,
and the related notes (collectively, the “consolidated financial
statements”), and our report dated February 19, 2020
expressed an unqualified opinion on those consolidated
financial statements.
The Company acquired Ruralco Holdings Limited (“Ruralco”)
during 2019, and management excluded from its assessment of
the effectiveness of the Company’s internal control over financial
reporting as of December 31, 2019, Ruralco’s internal control
over financial reporting associated with 2 percent of total assets
and 1 percent of total revenues included in the consolidated
financial statements of the Company as of and for the year
ended December 31, 2019. Our audit of internal control
over financial reporting of the Company also excluded an
evaluation of the internal control over financial reporting
of Ruralco.
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 US 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
Calgary, Canada
February 19, 2020
In millions of US dollars except as otherwise noted
Nutrien Annual Report 2019
73
Overview
Management’s Discussion & Analysis
Two Year Highlights
Financial Statements
Other Information
Report of Independent
Registered Public
Accounting Firm
To the Shareholders and Board of Directors of Nutrien Ltd.
Opinion on the Consolidated Financial
Statements
We have audited the accompanying consolidated balance
sheets of Nutrien Ltd. and subsidiaries (the “Company”) as of
December 31, 2019 and 2018, the related consolidated
statements of earnings, comprehensive income, changes in
shareholders’ equity, and cash flows for the years 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, 2019 and 2018,
and the results of its operations and its cash flows for the years
then ended, in conformity with International Financial
Reporting Standards as issued by the International Accounting
Standards Board.
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, 2019, 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 19, 2020 expressed an unqualified opinion on
the effectiveness of the Company’s internal control over
financial reporting.
Change in Accounting Principle
As discussed in Note 31 to the consolidated financial
statements, the Company has changed its method of
accounting for leases as of January 1, 2019 due to the
adoption of International Financial Reporting Standard 16,
Leases.
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 audits. 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 audits 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 audits
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
audits 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 audits provide a
reasonable basis for our opinion.
Critical Audit Matters
The critical audit matters communicated below are matters
arising from the current period audit of the consolidated
financial statements that were communicated or required to
be communicated to the audit committee and that: (1) relate
to accounts or disclosures that are material to the consolidated
financial statements and (2) involved our especially
challenging, subjective, or complex judgments. The
communication of critical audit matters does not alter in any
way our opinion on the consolidated financial statements,
taken as a whole, and we are not, by communicating the
critical audit matters below, providing separate opinions on the
critical audit matters or on the accounts or disclosures to
which they relate.
Assessment of the carrying amount of goodwill
for the Retail North America cash-generating
unit
As discussed in Note 16 to the consolidated financial
statements, the carrying amount of goodwill as of
December 31, 2019 was $11,986 million, of which $6,826
million of goodwill has been allocated to the Retail North
America cash-generating unit. The Retail North America
cash-generating unit is tested for impairment annually, and
whenever events or changes in circumstances indicate that
the carrying amount of the cash-generating unit, including
goodwill, exceeds its estimated recoverable amount. The
74 Nutrien Annual Report 2019
In millions of US dollars except as otherwise noted
Overview
Management’s Discussion & Analysis
Two Year Highlights
Financial Statements
Other Information
assessment of the carrying amount of the Retail North America
cash-generating unit involves a number of estimates including
forecasted earnings before tax, interest, depreciation and
amortization (“EBITDA”), terminal growth rate and the discount
rate assumptions used to calculate the recoverable amount of
the Retail North America cash-generating unit.
We identified the assessment of the carrying amount of
goodwill for the Retail North America cash-generating unit as
a critical audit matter. Complex auditor judgment was required
to evaluate the Company’s forecasted EBITDA, terminal
growth rate and discount rate, which were used to calculate
the recoverable amount of the Retail North America
cash-generating unit. Minor changes to these assumptions
have a significant effect on the Company’s assessment of the
carrying amount of the goodwill.
The primary procedures we performed to address this critical
audit matter included the following. We tested certain internal
controls over the Company’s goodwill impairment assessment
process, including controls related to the determination of the
recoverable amount of the Retail North America
cash-generating unit, and the forecasted EBITDA, terminal
growth rate and discount rate. We performed sensitivity
analyses over the terminal growth rate and discount rate to
assess their impact on the Company’s determination that the
recoverable amount of the Retail North America cash-
generating unit exceeded its carrying amount. We evaluated
the Company’s forecasted EBITDA for the Retail North America
cash-generating unit by comparing to historical results and
forecasted planted acreage in the United States. We compared
the terminal growth rate to historical growth of the Retail
North America cash-generating unit and to market
information, including forecasted inflation and forecasted
gross domestic product in the United States. We compared the
Company’s historical forecasts of EBITDA to actual results to
assess the Company’s ability to accurately forecast. In addition,
we involved valuation professionals with specialized skills and
knowledge, who assisted in:
(cid:129) Evaluating the Company’s method for estimating its
discount rate, and testing assumptions used to estimate the
discount rate to publicly available market data for
comparable companies; and
(cid:129) Evaluating the Company’s method for estimating the
recoverable amount of the Retail North America
cash-generating unit and comparing the results of the
Company’s estimate to publicly available market data and
valuation metrics for comparable companies.
Chartered Professional Accountants
We have served as the Company’s auditor since 2018.
Calgary, Canada
February 19, 2020
In millions of US dollars except as otherwise noted
Nutrien Annual Report 2019
75
Overview
Management’s Discussion & Analysis
Two Year Highlights
Financial Statements
Other Information
2019
At a Glance
Find out more at nutrien.com
76 Nutrien Annual Report 2019
In millions of US dollars except as otherwise noted
Overview
Management’s Discussion & Analysis
Two Year Highlights
Financial Statements
Other Information
Consolidated Financial Statements
Consolidated Statements of Earnings
For the years ended December 31
Note
2019
Sales
Freight, transportation and distribution
Cost of goods sold
Gross Margin
Selling expenses
General and administrative expenses
Provincial mining and other taxes
Share-based compensation
Impairment of assets
Other expenses
Earnings Before Finance Costs and Income Taxes
Finance costs
Earnings (Loss) Before Income Taxes
Income tax expense (recovery)
Net Earnings (Loss) from Continuing Operations
Net earnings from discontinued operations
Net Earnings
Net Earnings (Loss) per share from Continuing Operations
Basic
Diluted
Net Earnings per share from Discontinued Operations
Basic
Diluted
Net Earnings per share (“EPS”)
Basic
Diluted
Weighted average shares outstanding for basic EPS
Weighted average shares outstanding for diluted EPS
3
5
5
5
5
5
6
15, 16
7
8
9
10
11
11
11
11
11
2018
Note 2
19,636
864
13,380
5,392
2,337
423
250
116
1,809
43
414
538
(124)
(93)
(31)
3,604
3,573
(0.05)
(0.05)
5.77
5.77
5.72
5.72
20,023
768
13,814
5,441
2,505
404
292
104
120
154
1,862
554
1,308
316
992
–
992
1.70
1.70
–
–
1.70
1.70
582,269,000
583,102,000
624,900,000
624,900,000
Consolidated Statements of Comprehensive Income
For the years ended December 31 (net of related income taxes)
Net Earnings
Other comprehensive income (loss)
Items that will not be reclassified to net earnings:
Net actuarial gain on defined benefit plans
Net fair value loss on investments
Items that have been or may be subsequently reclassified to net earnings:
Gain (loss) on currency translation of foreign operations
Other
Other Comprehensive Income (Loss)
Comprehensive Income
(See Notes to the Consolidated Financial Statements)
2019
992
2018
3,573
7
(25)
47
7
36
1,028
54
(99)
(249)
(8)
(302)
3,271
In millions of US dollars except as otherwise noted
Nutrien Annual Report 2019
77
Overview
Management’s Discussion & Analysis
Two Year Highlights
Financial Statements
Other Information
Consolidated Statements of Cash Flows
For the years ended December 31
Note
2019
Operating Activities
Net earnings
Adjustments for:
Depreciation and amortization
Share-based compensation
Impairment of assets
Provision for (recovery of) deferred income tax
Gain on sale of investments in Sociedad Quimica y Minera de Chile S.A.
6
15, 16
(“SQM”) and Arab Potash Company (“APC”)
Income tax related to the sale of the investment in SQM
Other long-term liabilities and miscellaneous
Cash from operations before working capital changes
Changes in non-cash operating working capital:
Receivables
Inventories
Prepaid expenses and other current assets
Payables and accrued charges
Cash Provided by Operating Activities
Investing Activities
Additions to property, plant and equipment
Additions to intangible assets
Business acquisitions, net of cash acquired
Proceeds from disposal of discontinued operations, net of tax
Purchase of investments
Cash acquired in Merger
Other
Cash (Used in) Provided by Investing Activities
Financing Activities
Transaction costs on long-term debt
Proceeds from (repayment of) short-term debt, net
Proceeds from long-term debt
Repayment of long-term debt
Repayment of principal portion of lease liabilities
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
(Decrease) Increase in Cash and Cash Equivalents
Cash and Cash Equivalents – Beginning of Year
Cash and Cash Equivalents – End of Year
Cash and cash equivalents 1 comprised of:
Cash
Short-term investments
Supplemental Cash Flows Information
Interest paid
Income taxes paid
Total cash outflow for leases
15
16
4
10
4
19
20
20
20
25
25
25
992
1,799
104
120
177
–
–
(17)
3,175
(64)
190
(238)
602
3,665
(1,728)
(163)
(911)
55
(198)
–
147
(2,798)
(29)
216
1,510
(1,010)
(234)
(1,022)
(1,930)
20
(2,479)
(31)
(1,643)
2,314
671
532
139
671
505
29
345
2018
Note 2
3,573
1,592
116
1,809
(290)
(4,399)
977
(188)
3,190
(153)
(887)
561
(659)
2,052
(1,405)
(102)
(433)
5,394
(135)
466
102
3,887
(21)
(927)
–
(12)
–
(952)
(1,800)
7
(3,705)
(36)
2,198
116
2,314
1,506
808
2,314
507
1,155
–
1 Highly liquid investments with a maturity of three months or less from the date of purchase are considered to be cash equivalents.
(See Notes to the Consolidated Financial Statements)
78 Nutrien Annual Report 2019
In millions of US dollars except as otherwise noted
Overview
Management’s Discussion & Analysis
Two Year Highlights
Financial Statements
Other Information
Consolidated Statements of Changes in
Shareholders’ Equity
Accumulated Other Comprehensive (Loss) Income
(“AOCI”)
Share
Capital
Contributed
Surplus
Net Fair Value
Gain (Loss) on
Investments
Net
Actuarial
Gain on
Defined
Benefit
Plans 1
Loss on
Currency
Translation
of Foreign
Operations Other
Balance –
December 31, 2017
Merger impact (Note 4)
Net earnings
Other comprehensive (loss)
income
Shares repurchased (Note 25)
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
Balance –
1,806
15,898
–
–
(998)
–
230
7
–
–
(23)
–
34
17
–
–
–
–
–
–
December 31, 2018
16,740
231
Net earnings
Other comprehensive (loss)
income
Shares repurchased (Note 25)
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
Balance –
–
–
(992)
–
–
–
–
–
23
17
–
–
–
–
–
–
73
–
–
(99)
–
–
–
–
19
–
(7)
–
(25)
–
–
–
–
3
–
December 31, 2019
15,771
248
(29)
–
–
–
54
–
–
–
(54)
–
–
–
–
7
–
–
–
(7)
–
–
–
Total
AOCI
Retained
Earnings
Total
Equity 2
25
–
–
6,242
(1)
3,573
(302)
–
–
–
(831)
(1,273)
8,303
15,904
3,573
(302)
(1,852)
(1,273)
–
(54)
19
21
–
54
(19)
–
51
–
–
21
(2)
–
–
(249)
–
–
–
–
–
–
(46)
–
–
(8)
–
–
–
–
–
21
(251)
(33)
(291)
7,745
24,425
–
47
–
–
–
–
–
–
–
7
–
–
–
–
–
8
–
36
–
–
–
(7)
3
8
992
992
–
(886)
(754)
36
(1,878)
(754)
–
7
(3)
–
40
–
–
8
(204)
(18)
(251)
7,101
22,869
1 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.
2 All equity transactions were attributable to common shareholders.
(See Notes to the Consolidated Financial Statements)
In millions of US dollars except as otherwise noted
Nutrien Annual Report 2019
79
Overview
Management’s Discussion & Analysis
Two Year Highlights
Financial Statements
Other Information
Consolidated Balance Sheets
As at December 31
Assets
Current assets
Cash and cash equivalents
Receivables
Inventories
Prepaid expenses and other current assets
Non-current assets
Property, plant and equipment
Goodwill
Other intangible assets
Investments
Other assets
Total Assets
Liabilities
Current liabilities
Short-term debt
Current portion of long-term debt
Current portion of lease liabilities
Payables and accrued charges
Non-current liabilities
Long-term debt
Lease liabilities
Deferred income tax liabilities
Pension and other post-retirement benefit liabilities
Asset retirement obligations and accrued environmental costs
Other non-current liabilities
Total Liabilities
Shareholders’ Equity
Share capital
Contributed surplus
Accumulated other comprehensive loss
Retained earnings
Total Shareholders’ Equity
Total Liabilities and Shareholders’ Equity
(See Notes to the Consolidated Financial Statements)
Approved by the Board of Directors,
Note
2019
2018
13
14
15
16
16
17
18
19
20
21
22
20
21
9
23
24
25
671
3,542
4,975
1,477
2,314
3,342
4,917
1,089
10,665
11,662
20,335
11,986
2,428
821
564
46,799
976
502
214
7,437
9,129
8,553
859
3,145
433
1,650
161
18,796
11,431
2,210
878
525
45,502
629
995
8
6,703
8,335
7,579
12
2,907
395
1,673
176
23,930
21,077
15,771
248
(251)
7,101
22,869
46,799
16,740
231
(291)
7,745
24,425
45,502
Director
Director
80 Nutrien Annual Report 2019
In millions of US dollars except as otherwise noted
Overview
Management’s Discussion & Analysis
Two Year Highlights
Financial Statements
Other Information
Note 1 Description of Business
Nutrien Ltd. (collectively with its subsidiaries, “Nutrien”, “we”, “us”, “our” or “the Company”) is the world’s largest provider
of crop inputs and services. Nutrien plays a critical role in helping growers around the globe increase food production in a
sustainable manner.
The Company is a corporation organized under the laws of
Canada with its registered head office located at Suite 500,
122 – 1st Avenue South, Saskatoon, Saskatchewan, Canada. As
at December 31, 2019, the Company had assets as follows:
Retail
(cid:129) seven upgrade facilities in North America: three in Alberta
and one each in Alabama, Georgia, Missouri, and
Washington
(cid:129) 50 percent investment in Profertil S.A. (“Profertil”), a
nitrogen producer based in Argentina
(cid:129) various retail facilities across the US, Canada, Australia and
(cid:129) 26 percent investment in Misr Fertilizers Production
South America
(cid:129) private label and proprietary crop protection products and
nutritionals
Company S.A.E. (“MOPCO”), a nitrogen producer based
in Egypt
Phosphate
(cid:129) an innovative integrated digital platform for growers and
(cid:129) two mines and processing plants: one in Florida and one in
crop consultants
Potash
North Carolina
(cid:129) phosphate feed plants in Illinois, Missouri and Nebraska
(cid:129) six operations in the province of Saskatchewan
Nitrogen
(cid:129) an industrial phosphoric acid plant in Ohio
Corporate and Others
(cid:129) eight production facilities in North America: four in Alberta
(cid:129) investment in Canpotex Limited (“Canpotex”), a Canadian
and one each in Georgia, Louisiana, Ohio and Texas
(cid:129) one large-scale operation in Trinidad
Note 2 Basis of Presentation
potash export, sales and marketing company owned in equal
shares by Nutrien and another potash producer
(cid:129) 22 percent investment in Sinofert Holdings Limited
(“Sinofert”), a fertilizer supplier and distributor in China
These consolidated financial statements have been prepared in
accordance with International Financial Reporting Standards as
issued by the International Accounting Standards Board (“IFRS”).
We have consistently applied the same accounting policies
throughout all periods presented, as if these policies had always
been in effect, with the exception of IFRS 16, “Leases”
(“IFRS 16”), which was adopted effective January 1, 2019, the
impacts of which are disclosed in Note 31.
Certain immaterial 2018 figures have been reclassified or
grouped together in the consolidated statements of earnings,
consolidated statements of cash flows, segment information
and nature of expenses.
These consolidated financial statements were authorized for
issue by the Board of Directors on February 19, 2020.
Where an accounting policy is applicable to a specific note to the
consolidated financial statements, the policy is described within
that note, with the related financial disclosures by major caption
as noted in the table of contents. Certain of our accounting
policies that relate to the consolidated financial statements as a
whole, as well as estimates and judgments we have made and
how they affect the amounts reported in the consolidated
financial statements, are disclosed in Note 31. 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 increase 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.
In millions of US dollars except as otherwise noted
Nutrien Annual Report 2019
81
Overview
Management’s Discussion & Analysis
Two Year Highlights
Financial Statements
Other Information
Note 3 Segment Information
The Company has four reportable operating segments: Retail, Potash, Nitrogen and Phosphate. 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 segments
are differentiated by the chemical nutrient contained in the products that each produces.
Accounting Policies, Estimates and Judgments
Operating Segments
We identified the Executive Leadership Team (“ELT”), comprised
of officers at the Executive Vice President level and above, as the
Chief Operating Decision Maker (“CODM”). The CODM uses net
earnings (loss) before finance costs, income taxes, and
depreciation and amortization (“EBITDA”) to measure
performance and allocate resources to the operating segments.
The CODM considers EBITDA a meaningful measure because it is
not impacted by long-term investment and financing decisions,
but rather focuses on the performance of our day-to-day
operations.
In 2019, the CODM reassessed our product groupings and
decided to evaluate the performance of ammonium sulfate as
part of the Nitrogen segment, rather than the Phosphate and
Sulfate segment, as previously reported in our 2018 annual
consolidated financial statements. Comparative amounts for the
Nitrogen and Phosphate segments were restated. For the year
ended December 31, 2018, Nitrogen reflected increases of
$121, $40, and $53 in sales, gross margin and EBITDA,
respectively, and $377 in assets, with corresponding decreases
in Phosphate. In addition, the “Others” segment was renamed to
“Corporate and Others”.
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
reasonable considerations such as production capacities or
historical trends.
Revenue
We recognize revenue when we transfer control over a good or service to a customer.
Transfer of Control for
Retail
Potash, Nitrogen and Phosphate
Sale of Goods
At the point in time when the product is
At the point in time when the product is
(cid:129) purchased at our Retail farm center or
(cid:129) delivered and accepted by customers at
(cid:129) loaded for shipping or
(cid:129) delivered to the customer.
their premises.
Services
Over time as the promised service is rendered. Over time as the promised service is rendered.
For transactions in which we act as an agent rather than the principal, revenue is recognized net of any commissions earned. The
relating commissions are recognized as the sales occurred or as unconditional contracts are signed.
Retail
Retail revenue is generated primarily from sales of the following:
Crop nutrients
Crop protection products
Seed
Merchandise
Dry and liquid macronutrient products including potash, nitrogen and phosphate,
proprietary liquid micronutrient products and nutrient application services.
Various third-party supplier and proprietary products designed to maintain crop quality and
manage plant diseases, weeds, and other pests.
Various third-party supplier seed brands and proprietary seed product lines.
Fencing, feed supplements, livestock-related animal health products, storage and irrigation
equipment, and other products.
Services and other revenues
Product application, soil and leaf testing, crop scouting and precision agriculture services,
water services, financial services and livestock marketing.
Provisions for returns, trade discounts and rebates are deducted from sales revenue.
82 Nutrien Annual Report 2019
In millions of US dollars except as otherwise noted
Overview
Management’s Discussion & Analysis
Two Year Highlights
Financial Statements
Other Information
Note 3 Segment Information Continued
Potash, Nitrogen and Phosphate
Our 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 we expect 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 customer contracts include volume
rebates, we estimate revenue at the earlier of the most likely
amount of consideration we expect to receive or when it is
highly probable that a significant reversal will not occur.
Our 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 other market factors.
Potash
Nitrogen
Phosphate
Products
(cid:129) North American – primarily
(cid:129) Ammonia, urea, urea
granular
(cid:129) Offshore (international) –
primarily granular and standard
ammonium nitrate, industrial
grade ammonium nitrate and
ammonium sulfate
(cid:129) Solid fertilizer, liquid fertilizer,
industrial products and feed
products
Sales prices
impacted by
(cid:129) North American prices
(cid:129) Global energy costs and supply
(cid:129) Global prices and supplies of
referenced at delivered prices
(including transportation and
distribution costs)
(cid:129) International prices referenced
at the mine site (excluding
transportation and distribution
costs)
ammonia and sulfur
Other
We do 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.
We 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.
Seasonality in our 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. Our cash collections generally occur
after the application season is complete, while customer
prepayments made to us are typically concentrated in
December and January and inventory prepayments paid to
our vendors are typically concentrated in the period from
November to January. Feed and industrial sales are more
evenly distributed throughout the year.
For product sales with 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.
In millions of US dollars except as otherwise noted
Nutrien Annual Report 2019
83
Overview
Management’s Discussion & Analysis
Two Year Highlights
Financial Statements
Other Information
Note 3 Segment Information Continued
Supporting Information
Financial information on each of these segments is summarized in the following tables:
Retail
Potash
Nitrogen
Phosphate
Corporate
and Others
Eliminations
Consolidated
2019
Sales – third party
– intersegment
Sales – total
Freight, transportation and distribution
13,221
–
Net sales
Cost of goods sold
Gross margin
Selling expenses
General and administrative expenses
Provincial mining and other taxes
Share-based compensation expense
Impairment of assets (Note 15 and 16)
Other expenses (income)
Earnings (loss) before finance costs
and income taxes
Depreciation and amortization
EBITDA
Assets 1
13,183
38
13,221
9,981
3,240
2,484
112
–
–
–
8
2,702
207
2,909
305
2,604
1,103
1,501
9
6
287
–
–
(4)
636
595
1,203
390
2,608
612
3,220
372
2,848
2,148
700
25
15
2
–
–
(46)
704
535
1,397
203
1,600
232
1,368
1,373
(5)
5
7
1
–
–
25
(43)
237
194
1,231
1,593
1,239
19,990 11,696
10,991
2,198
133
–
133
–
133
133
–
(18)
264
2
104
120
171
(643)
42
(601)
2,129
–
(1,060)
(1,060)
(141)
(919)
(924)
5
–
–
–
–
–
–
5
–
5
20,023
–
20,023
768
19,255
13,814
5,441
2,505
404
292
104
120
154
1,862
1,799
3,661
(205)
46,799
1 Included in the Retail and Nitrogen segments are $126 and $482, respectively, relating to equity-accounted investees as described in Note 17.
2018
Sales – third party
– intersegment
Sales – total
Freight, transportation and distribution
12,520
–
Net sales
Cost of goods sold
Gross margin
Selling expenses
General and administrative expenses
Provincial mining and other taxes
Share-based compensation expense
Impairment of assets (Note 15)
Other (income) expenses
Earnings (loss) before finance costs
and income taxes
Depreciation and amortization
EBITDA
Assets 2
Retail
Potash
Nitrogen 1
Phosphate 1
Corporate
and Others
Eliminations
Consolidated
12,470
50
12,520
9,485
3,035
2,303
100
–
–
–
(75)
707
499
1,206
2,796
220
3,016
349
2,667
1,183
1,484
14
10
244
–
1,809
14
(607)
404
(203)
2,712
626
3,338
373
2,965
2,145
820
32
20
3
–
–
(8)
773
442
1,215
1,508
268
1,776
215
1,561
1,473
88
10
9
1
–
–
6
62
193
255
150
–
150
–
150
150
–
(22)
284
2
116
–
106
(486)
54
(432)
–
(1,164)
(1,164)
(73)
(1,091)
(1,056)
(35)
–
–
–
–
–
–
(35)
–
(35)
19,636
–
19,636
864
18,772
13,380
5,392
2,337
423
250
116
1,809
43
414
1,592
2,006
17,964 11,710
10,386
2,406
3,678
(642)
45,502
1 Comparative figures have been restated to reflect the change in the sulfate product grouping from Phosphate and Sulfate to Nitrogen.
2 Included in the Retail and Nitrogen segments are $208 and $428, respectively, relating to equity-accounted investees as described in Note 17.
84 Nutrien Annual Report 2019
In millions of US dollars except as otherwise noted
Overview
Management’s Discussion & Analysis
Two Year Highlights
Financial Statements
Other Information
Note 3 Segment Information Continued
Financial information by geographic area is summarized in the following tables:
Sales – Third Party
United States
Canada
Australia
Canpotex 1
Trinidad
Argentina
Europe
Other
2019
12,522
2,504
1,955
1,625
113
388
210
706
20,023
2018
11,891
2,790
1,681
1,657
190
387
312
728
19,636
1 As described in Note 1, Canpotex executed offshore marketing, sales and distribution functions for certain of our products. Canpotex’s 2019 sales volumes
were made to: Latin America 31 percent, China 22 percent, India 10 percent, Other Asian markets 27 percent, Other markets 10 percent (2018 – Latin
America 33 percent, China 18 percent, India 10 percent, Other Asian markets 31 percent, Other markets 8 percent) (Note 29).
Non-Current Assets 1
United States
Canada
Australia
Trinidad
Other
2019
15,685
17,503
1,172
691
639
35,690
2018
14,501
17,100
607
570
621
33,399
1 Excludes financial instruments (other than equity-accounted investees), deferred tax assets and post-employment benefit assets.
We 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. Sales reported
under our Corporate and Others segment primarily relates to our non-core Canadian business.
Retail sales by product line
Crop nutrients
Crop protection products
Seed
Merchandise
Services and other
2019
2018
4,989
4,983
1,712
598
939
4,577
4,862
1,687
584
810
13,221
12,520
In millions of US dollars except as otherwise noted
Nutrien Annual Report 2019
85
Overview
Management’s Discussion & Analysis
Two Year Highlights
Financial Statements
Other Information
Note 3 Segment Information Continued
Potash sales by geography
Manufactured product
North America
Offshore 1
Other potash and purchased products
Nitrogen sales by product line 2
Manufactured product
Ammonia
Urea
Solutions, nitrates and sulfates
Other nitrogen and purchased products
Phosphate sales by product line 2
Manufactured product
Fertilizer
Industrial and feed
Other phosphate and purchased products
2019
2018
1,283
1,625
1
2,909
884
1,019
812
505
3,220
944
475
181
1,600
1,356
1,657
3
3,016
1,061
979
825
473
3,338
1,141
469
166
1,776
1 Relates to Canpotex.
2 Comparative figures have been restated to reflect the change in the sulfate product grouping from Phosphate and Sulfate to Nitrogen.
Note 4 Business Combinations
The Company’s business combinations include the merger between Potash Corporation of Saskatchewan Inc. (“PotashCorp”)
and Agrium Inc. (“Agrium”) (the “Merger”), the acquisition of Retail businesses, including Ruralco Holdings Limited
(“Ruralco”), and various digital agriculture, proprietary products and agricultural services.
Accounting Policies, Estimates and Judgments
(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 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.
(cid:129) Identifiable assets acquired and liabilities assumed are
(cid:129) For each business combination, we elect to measure the
generally measured at fair value.
non-controlling interest in the acquired entity either at fair
value or at the proportionate share of the acquiree’s
identifiable net assets.
86 Nutrien Annual Report 2019
In millions of US dollars except as otherwise noted
Overview
Management’s Discussion & Analysis
Two Year Highlights
Financial Statements
Other Information
Note 4 Business Combinations Continued
Judgment is required to determine which entity is the acquirer
in a merger of equals. In identifying PotashCorp as the acquirer
in the Merger, we 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, we evaluated various metrics. No single factor was
the sole determinant in the overall conclusion that PotashCorp
was the acquirer for accounting purposes in the Merger;
rather, all factors were considered in arriving at the conclusion.
Asset
Ruralco
Merger
Other
Acquisitions
Property, plant and
equipment
X
X
Other intangible
assets
X
X
X
X
Long-term debt
Asset retirement
obligations and
accrued
environmental costs
X
X
Purchase price allocation involves judgment in identifying
assets acquired and liabilities assumed, and estimation of their
fair values. To determine fair values, we used quoted market
prices or widely accepted valuation techniques as described
below. Key assumptions include discount rates and revenue
growth rates specific to the acquired assets or liabilities
assumed. We performed a thorough review of all internal and
external sources of information available on circumstances
that existed at the acquisition date. We also engaged
independent valuation experts on certain acquisitions to assist
in determining the fair value of certain assets acquired and
liabilities assumed and related deferred income tax impacts.
Valuation Technique and Judgments Applied
Market approach for land and certain types of personal
property: sales comparison that measures the value of an asset
through an analysis of sales and offerings of comparable assets.
Replacement costs for all other depreciable property, plant and
equipment: measures the value of an asset by estimating the
costs to acquire or construct comparable assets and adjusts for
age and condition of the asset.
Income approach – multi-period excess earnings method:
measures the value of an asset based on the present value of
the incremental after-tax cash flows attributable to the asset
after deducting contributory asset charges (“CACs”). Allocation
of CACs is a matter of judgment and based on the nature of the
acquired businesses’ operations and historical trends.
We considered several factors in determining the fair value of
customer relationships, such as customers’ relationships with
the acquired company and its employees, the segmentation of
customers, historical customer attrition rates and revenue
growth. Segmenting customers is a matter of judgment and
includes factors such as the size of the customer and customer
behavior patterns.
Comparable debt instruments with similar maturities, adjusted
where necessary to the acquired company’s credit spread,
based on information published by financial institutions.
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. We expect asset retirement obligations for
phosphate sites to be paid over the next 68 years, while we
expect asset retirement obligations for potash and nitrogen
sites to be paid subsequently.
We expect accrued environmental costs – discounted using a
credit adjusted risk-free rate – to be paid over the next 30 years.
In millions of US dollars except as otherwise noted
Nutrien Annual Report 2019
87
Overview
Management’s Discussion & Analysis
Two Year Highlights
Financial Statements
Other Information
Note 4 Business Combinations Continued
Supporting Information
Acquisition date
September 30, 2019
January 1, 2018
Various
Ruralco
Merger
Other Acquisitions
Purchase price, net of cash and
cash equivalents acquired
$330
$16,010
On the acquisition date, we
acquired 100% of the
Ruralco stock that was issued
and outstanding.
Also included in the total
consideration, net of cash
and cash equivalents
acquired, is the impact of
$18 relating to a foreign
exchange hedge loss which
we designated a cash flow
hedge.
Transaction costs are
recorded in acquisition and
integration related costs in
other expenses.
We determined the purchase
price based on the number of
Agrium shares outstanding
and their trading price
on December 29, 2017.
On 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.
Merger and related costs are
included in other expenses.
$11,185, none of which is
deductible for income tax
purposes.
2019 – $581, net of $100
previously held equity-
accounted interest in
Agrichem. We acquired the
remaining 20 percent
interest in Agrichem in the
first nine months of 2019,
making Agrichem a wholly
owned consolidated
subsidiary of the Company.
(2018 – $433)
$341 (2018 – $197)
Goodwill and expected benefits
of the acquisition
$202
The expected benefits of the acquisitions resulting in goodwill include:
(cid:129) synergies from expected reduction in operating costs;
(cid:129) wider distribution channel for selling products of acquired businesses;
(cid:129) a larger assembled workforce;
(cid:129) potential increase in customer base;
(cid:129) enhanced ability to innovate;
(cid:129) production and expense optimization, including procurement savings (specific to Merger); and
(cid:129) closer proximity of nitrogen operations to sources of low-cost natural gas (specific to Merger).
Description
An agriservices business in
Australia with approximately
250 operating locations.
A major global producer and
distributor of agricultural
products, services and
solutions.
68 Retail locations in North
and South America and
Australia, including
companies operating in the
proprietary products
business, such as Actagro,
LLC, a developer,
manufacturer and marketer
of environmentally
sustainable soil and plant
health products and
technologies (2018 – 53
Retail locations in North
America and Australia and
companies operating within
the digital agriculture,
proprietary products and
agricultural services
businesses).
88 Nutrien Annual Report 2019
In millions of US dollars except as otherwise noted
Overview
Management’s Discussion & Analysis
Two Year Highlights
Financial Statements
Other Information
Note 4 Business Combinations Continued
We allocated the following values to the acquired assets and assumed liabilities based upon fair values at their respective acquisition
date:
2019
Ruralco (Estimate)
2018
Preliminary 1 Adjustments 2
Revised
Fair Value
Other
Acquisitions 3
Merger
(Final)
Other
Acquisitions 3
Cash and cash equivalents
Receivables
Inventories
Prepaid expenses and other current assets
Property, plant and equipment
Goodwill
Other intangible assets
Investments
Other assets
Total assets
Short-term debt
Payables and accrued charges
Long-term debt, including current portion
Lease liabilities, including current portion
Deferred income tax liabilities
Pension and other post-retirement benefit
liabilities
Asset retirement obligations and accrued
environmental costs
Other non-current liabilities
Total liabilities
Total consideration
Previously held equity-accounted interest in
Agrichem
Total consideration, net of cash and cash
equivalents acquired
–
250
116
11
70
272
55
15
16
805
112
299
–
44
7
–
–
13
475
330
–
330
–
39
1
(3)
66
(70)
110
–
–
143
–
46
–
66
31
–
–
–
143
–
–
–
–
289 4
117
8
136
202
165
15
16 5
948
112
345
–
110
38
–
–
13
618
330
–
330
–
68
145
38
115
341
179
–
2
888
25
156
11
1
7
–
–
7
207
681
100
466
2,600 4
3,303
1,124
7,459
11,185
2,348
528
293 5
29,306
867
5,239
4,941
–
934
142
1,094
79
13,296
16,010
–
–
20
146
2
107
197
8
11
3
494
–
52
–
–
–
–
–
9
61
433
–
581
16,010
433
1 Preliminary value as previously reported in our third quarter 2019 unaudited financial statements. The purchase price allocation is not final as we continue
to obtain and verify information required to determine the fair value of certain assets and liabilities and the amount of deferred income taxes arising on their
recognition. We estimated the preliminary purchase price allocation as of the date of the acquisition based on information that was available and continue
to adjust those estimates as new information that existed at the date of acquisition becomes available. We expect to finalize the amounts recognized when
we obtain the information necessary to complete the analysis, and in any event, not later than September 30, 2020.
2 We recorded adjustments to the preliminary fair value to reflect facts and circumstances in existence as of the date of acquisition. These adjustments
primarily related to changes in the preliminary valuation assumptions, including refinement of intangible assets. All measurement period adjustments were
offset against goodwill.
3 This represents preliminary fair values. For certain acquisitions, we finalized the purchase price with no material change to the fair values disclosed in
prior periods.
4 Includes receivables from customers with gross contractual amounts of $247, of which $5 are considered to be uncollectible relating to Ruralco (2018 –
$2,247 and $80 respectively relating to the Merger).
5 Includes deferred income tax assets of $14 relating to Ruralco (2018 – $158 relating to the Merger).
Financial Information Related to the Acquired Operations
2019 Proforma 1
Sales
EBITDA
Ruralco
Other Acquisitions
1,090
50
480
40
1 Estimated annual sales and EBITDA if acquisitions occurred at the beginning of the year. Net earnings before income taxes is not available.
In millions of US dollars except as otherwise noted
Nutrien Annual Report 2019
89
Overview
Management’s Discussion & Analysis
Two Year Highlights
Financial Statements
Other Information
Note 4 Business Combinations Continued
From date of acquisition
Sales
Net earnings (loss) before income taxes
Note 5 Nature of Expenses
2019 Actuals
2018 Actuals
Ruralco
Other Acquisitions
249
(2)
312
(1)
Merger
14,551
546
Other Acquisitions
213
10
Purchased and produced raw materials and product for resale 1
Depreciation and amortization
Employee costs 2
Freight
Impairment of assets (Note 15 and 16)
Provincial mining and other taxes 3
Offsite warehouse costs 4
Railcar and vessel costs 4
Merger and related costs
Acquisition and integration related costs
Contract services
Lease expense 5
Fleet fuel, repairs and maintenance
Other
Total cost of goods sold and expenses
2019
11,335
1,799
2,268
845
120
292
51
5
82
16
504
66
202
576
18,161
2018
10,881
1,592
1,949
934
1,809
250
68
128
170
–
469
148
183
641
19,222
1 Significant expenses include: 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 23.
3 Includes $190 and $102 (2018 – $160 and $90) relating to Saskatchewan potash production tax and Saskatchewan resource surcharge and other,
respectively, as required under Saskatchewan provincial legislation.
4 Includes expenses relating to operating leases in 2018.
5 In 2019, includes lease expense relating to short-term leases, leases of low-value and variable lease payments.
Note 6 Share-Based Compensation
We have share-based compensation plans (including those assumed from PotashCorp and Agrium) for eligible employees
and directors as part of their remuneration package, including Stock Options, Performance Share Units (“PSUs”), Restricted
Share Units (“RSUs”) and Deferred Share Units (“DSUs”).
Accounting Policies, Estimates and Judgments
For awards with performance conditions that determine the
number of options or units to which employees are entitled,
measurement of compensation cost is based on our best
estimate of the outcome of the performance conditions.
Changes to vesting assumptions are reflected in earnings
immediately for compensation cost already recognized.
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, and
(cid:129) fair value for PSUs is determined on grant date by projecting
the outcome of performance conditions.
For plans settled through cash, a liability is recorded based on
the fair value of the awards each period.
90 Nutrien Annual Report 2019
In millions of US dollars except as otherwise noted
Overview
Management’s Discussion & Analysis
Two Year Highlights
Financial Statements
Other Information
Note 6 Share-Based Compensation Continued
Estimation involves determining:
(cid:129) stock option-pricing model assumptions as described in the
weighted average assumptions table;
(cid:129) forfeiture rate for options granted based on past experience
and future expectations, and adjusted upon actual vesting;
(cid:129) projected outcome of performance conditions for PSUs,
including the relative ranking of our total shareholder
Supporting Information
return, including expected dividends, compared with a
specified peer group using a Monte Carlo simulation option-
pricing model and the outcome of our synergies relative to
the target; and
(cid:129) the number of dividend equivalent units expected to be
earned.
The following summarizes the Nutrien share-based compensation plans, under which we have awards available to be granted, and
the assumed legacy plans of PotashCorp and Agrium, under which no awards will be granted.
Plan Features
Stock Options
PSUs
RSUs
DSUs
SARs/TSARs 4
Eligibility
Officers and
eligible
employees
Officers and eligible employees
Eligible
employees
Non-executive
directors
Granted
Annually
Annually
Annually
At the discretion
of the Board of
Directors
Awards no
longer granted;
legacy awards
only
Awards no
longer granted;
legacy awards
only
Vesting Period
25% per year
over four
years 1
On third anniversary of grant
date 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
On third
anniversary of
grant date and
are not subject
to performance
conditions
Fully vest upon
grant
25% per year
over four years
Maximum Term 10 years
Not applicable
Not applicable
Not applicable
10 years
Settlement
Shares
Cash / Shares 2
Cash
Cash 3
Cash
1 Under the assumed legacy PotashCorp long-term incentive and performance option plan, stock options vest on the third anniversary of the grant date.
2 Under the assumed legacy PotashCorp long-term incentive plan, PSUs will be settled in shares for grantees who are subject to our share ownership
guidelines and in cash for all other grantees.
3 Based on the common share price at the time of the director’s departure from the Board of Directors.
4 Under the assumed legacy Agrium stock appreciation rights (“SARs”) plan, holders of tandem stock appreciation rights (“TSARs”) have the ability to choose
between (a) receiving in cash the price of our shares on the date of exercise in excess of the exercise price of the right or (b) receiving common shares by
paying the exercise price of the right. Our past experience and future expectation is that substantially all TSAR holders will elect to choose the first option.
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 2019 was $11.27
(2018 – $9.71). The weighted average assumptions by year of grant that impacted current year results are as follows:
Assumptions
Exercise price per option
Expected annual dividend yield (%)
Expected volatility (%)
Risk-free interest rate (%)
Average expected life of options (years)
Based On
Quoted market closing price 1
Annualized dividend rate 2
Historical volatility 3
Zero-coupon government issues 4
Historical experience
1 Of common shares on the last trading day immediately preceding the date of the grant.
2 As of the date of grant.
3 Of the Company’s share over a period commensurate with the expected life of the option.
4 Implied yield available on equivalent remaining term at the time of the grant.
Year of Grant
2019
53.54
3.22
27
2.55
7.5
2018
44.50
3.58
29
2.79
7.5
In millions of US dollars except as otherwise noted
Nutrien Annual Report 2019
91
Overview
Management’s Discussion & Analysis
Two Year Highlights
Financial Statements
Other Information
Note 6 Share-Based Compensation Continued
A summary of the status of our stock option plans as at December 31, 2019 and 2018 and changes during the years ending on those
dates is as follows:
Balance – beginning of year
Granted
Exercised
Forfeited or cancelled
Expired
Outstanding – end of year
Number of Shares Subject to Option
Weighted Average Exercise Price
2019
9,044,237
1,376,533
(451,574)
(502,016)
(275,700)
9,191,480
2018
9,947,583
1,875,162
(647,331)
(1,793,077)
(338,100)
9,044,237
2019
58.41
53.54
42.73
86.53
76.59
56.88
2018
69.54
44.50
42.86
82.84
154.94
58.41
The aggregate grant-date fair value of all stock options granted during 2019 was $16. The average share price during 2019 was
$50.91 per share.
The following table summarizes information about our stock options outstanding as at December 31, 2019 with expiry dates ranging
from May 2020 to February 2029:
Range of Exercise Prices
$37.84 to $40.23
$40.24 to $45.40
$45.41 to $49.51
$49.52 to $52.75
$52.76 to $77.62
$77.63 to $130.78
Options Outstanding
Weighted
Average
Remaining
Life in Years
Weighted
Average
Exercise
Price
6
7
7
5
8
3
6
38.21
43.61
46.46
51.96
58.58
93.56
56.88
Number
1,345,235
1,934,844
1,371,872
912,183
1,814,520
1,812,826
9,191,480
Options Exercisable
Weighted
Average
Exercise
Price
38.26
42.88
46.38
51.96
69.47
93.56
60.71
Number
1,170,022
1,067,346
788,169
912,183
574,542
1,812,826
6,325,088
Information for all employee and Director share-based compensation plans is summarized below:
Stock Options
PSUs
RSUs
DSUs
SARs
Units Granted
in 2019
Units Outstanding
as at December 31, 2019
1,376,533
719,330
425,082
50,958
–
9,191,480
1,834,984
986,756
434,093
1,750,169
Compensation Expense (Recovery)
2019
19
65
18
2
–
104
2018
23
83
14
–
(4)
116
Note 7 Other Expenses
Merger and related costs
Acquisition and integration related costs
Foreign exchange loss (gain), net of related derivatives
Earnings of equity-accounted investees
Bad debts
Defined Benefit Plans Curtailment Gain (Note 23)
Other expenses
2019
82
16
42
(66)
24
–
56
154
2018
170
–
(10)
(40)
26
(157)
54
43
92 Nutrien Annual Report 2019
In millions of US dollars except as otherwise noted
Overview
Management’s Discussion & Analysis
Two Year Highlights
Financial Statements
Other Information
Note 8 Finance Costs
Interest expense
Short-term debt
Long-term debt
Lease liabilities (Note 21)
Unwinding of discount on asset retirement obligations (Note 24)
Interest on net defined benefit pension and other post-retirement plan obligations (Note 23)
Borrowing costs capitalized to property, plant and equipment
Interest income
2019
2018
87
387
34
54
15
(18)
(5)
554
129
372
–
51
15
(12)
(17)
538
Borrowing costs capitalized to property, plant and equipment in 2019 were calculated by applying an average capitalization rate of
4.6 percent (2018 – 4.4 percent) to expenditures on qualifying assets.
Note 9 Income Taxes
Accounting Policies, Estimates and Judgments
We operate in a specialized industry and in several tax jurisdictions. As a result, our earnings are 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 earnings (loss) is comprised of current and deferred income tax.
Current income tax is
Deferred income tax is
(cid:129) the expected tax payable on the taxable earnings for the year,
(cid:129) recognized using the liability method,
(cid:129) calculated using rates enacted or substantively enacted at the
(cid:129) based on temporary differences between carrying amounts
dates of the consolidated balance sheets in the countries
where our subsidiaries 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.
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 (or recovered
from) the taxation authorities using our 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 we are 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 compensation 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.
In millions of US dollars except as otherwise noted
Nutrien Annual Report 2019
93
Overview
Management’s Discussion & Analysis
Two Year Highlights
Financial Statements
Other Information
Note 9 Income Taxes Continued
Income tax assets and liabilities are offset when
Current income taxes
Deferred income taxes
(cid:129) we have a legally enforceable right to offset the recognized
(cid:129) we have a legally enforceable right to set off current tax
amounts 1, and
assets against current tax liabilities, and
(cid:129) the intention to settle on a net basis or realize the asset and
(cid:129) they relate to income taxes levied by the same taxation
settle the liability simultaneously.
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 us 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.
Estimates and judgments to determine our taxes are impacted
by
(cid:129) the breadth of our 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 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.
Supporting Information
Income Taxes included in Net Earnings (Loss) 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 earnings (loss) before income taxes as follows:
Earnings (loss) before income taxes
Canada
United States
Australia
Trinidad
Other
Canadian federal and provincial statutory income tax rate (%)
Income tax at statutory rates
Adjusted for the effect of:
Impact of foreign tax rates
Non-taxable income
Production-related deductions
Foreign accrual property income
Impact of tax rate changes
Other
Income tax expense (recovery) included in net earnings (loss) from continuing operations
2019
2018
765
315
27
(28)
229
1,308
27
353
(45)
(19)
(17)
18
16
10
316
(1,195)
619
96
98
258
(124)
27
(33)
(58)
(10)
(15)
15
–
8
(93)
94 Nutrien Annual Report 2019
In millions of US dollars except as otherwise noted
Overview
Management’s Discussion & Analysis
Two Year Highlights
Financial Statements
Other Information
Note 9 Income Taxes Continued
Total income tax expense (recovery), included in net earnings (loss) from continuing operations, was comprised of the following:
Current income tax
Tax expense for current year
Adjustments in respect of prior years
Total current income tax expense
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 expense (recovery)
Income tax expense (recovery) included in net earnings (loss) from continuing operations
2019
2018
161
(22)
139
152
9
16
–
177
316
195
(15)
180
(283)
12
–
(2)
(273)
(93)
Income Tax Balances
Income tax balances within the consolidated balance sheets as at December 31 were comprised of the following:
Income Tax Assets and Liabilities
Balance Sheet Location
2019
2018
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 13)
Other assets (Note 18)
Other assets (Note 18)
Payables and accrued charges (Note 22)
Other non-current liabilities
Deferred income tax liabilities
104
36
249
389
43
44
3,145
3,232
248
36
216
500
47
64
2,907
3,018
In millions of US dollars except as otherwise noted
Nutrien Annual Report 2019
95
Overview
Management’s Discussion & Analysis
Two Year Highlights
Financial Statements
Other Information
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 expense (recovery)
recognized in net earnings (loss) from continuing operations were:
Deferred Income Tax (Assets)
Liabilities
Deferred Income Tax Expense
(Recovery) Recognized
in Net Earnings (Loss)
2019
2018
2019
2018
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
Lease liabilities
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:
(387)
(270)
(145)
(107)
(227)
(51)
(59)
(9)
(61)
3,647
523
42
2,896
(412)
(261)
(130)
(110)
–
(58)
(54)
(17)
(57)
3,218
546
26
2,691
Balance – beginning of year
Merger and acquisitions (Note 4)
Income tax expense (recovery) recognized in net earnings (loss) from continuing operations
Income tax expense (recovery) recognized in net earnings (loss) from discontinued operations
Income tax charge recognized in OCI
Other
Balance – end of year
Amounts and expiry dates of unused tax losses and unused tax credits as at December 31, 2019 were:
25
(9)
(13)
3
55
7
(5)
5
4
147
(58)
16
177
2019
2,691
29
177
–
2
(3)
2,896
11
(198)
44
10
–
(3)
(13)
15
18
(132)
(31)
6
(273)
2018
2,187
776
(273)
(17)
22
(4)
2,691
Unused operating losses
Unused capital losses
Unused investment tax credits
The unused tax losses and credits with no expiry dates can be
carried forward indefinitely.
As at December 31, 2019, we had $965 of tax losses for which
we did not recognize deferred tax assets.
We have 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.
Amount
Expiry Date
1,027
829
38
2020 - Indefinite
Indefinite
2020 - 2038
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, 2019 was $9,183 (2018 – $8,710).
96 Nutrien Annual Report 2019
In millions of US dollars except as otherwise noted
Overview
Management’s Discussion & Analysis
Two Year Highlights
Financial Statements
Other Information
Note 10 Discontinued Operations
Accounting Policies
Discontinued operations represent a component of our 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.
Our 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 fair value through other comprehensive
income (“FVTOCI”); and
(cid:129) dividends received are recorded on the consolidated
statements of earnings.
Supporting Information
In 2018, our investments in SQM, Israel Chemicals Ltd. (“ICL”) and APC were presented as discontinued operations due to regulatory
requirements to dispose of these investments in connection with the Merger.
As of December 31, 2018, we completed all required divestitures and retained no residual interests as outlined below:
For the year ended December 31, 2018
Shares in SQM
Shares in ICL
Shares in APC
Conda Phosphate operations
Total sale
1 Proceeds are net of commissions.
2 Proceeds of $39 were collected in 2019.
Proceeds 1
Gain (Loss)
on Sale
Gain (Loss) on
Sale Net of
Income Taxes
5,126
685
501
98
6,410 2
4,278
(19)
121
–
4,380
3,366
(19)
126
–
3,473
Net Earnings
and Retained
Earnings
3,366
–
126
–
3,492
AOCI
–
(19)
–
–
(19)
Net earnings from discontinued operations for the year ended December 31 were as follows:
Gain on disposal of investments in SQM and APC
Dividend income of SQM, APC and ICL 1
Income tax expense 2
Net earnings from discontinued operations
2018
4,399
156
(951)
3,604
1 Dividend income is included in cash provided by operating activities on the consolidated statements of cash flows, net of tax of $26.
2 For 2018, income tax expense 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).
Note 11 Net Earnings Per share
Weighted average number of common shares
Dilutive effect of stock options
Dilutive effect of share-settled PSUs
Weighted average number of diluted common shares
2019
2018
582,269,000
777,000
56,000
624,900,000
– 1
– 1
583,102,000
624,900,000
1 The diluted weighted average share calculations excluded an additional 658,000stock options and 137,000equity-settled PSUs due to their anti-dilutive effect.
In millions of US dollars except as otherwise noted
Nutrien Annual Report 2019
97
Overview
Management’s Discussion & Analysis
Two Year Highlights
Financial Statements
Other Information
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
2019
2018
4,539,529
2010 – 2015
2015, 2019
5,721,656
2009 – 2015
2015, 2018
Note 12 Financial Instruments and Related Risk Management
Accounting Policies
Financial instruments are classified and measured as follows:
Fair Value Through Profit or Loss
(“FVTPL”)
Fair Value Through Other
Comprehensive Income
(“FVTOCI”)
Instrument type
Cash and cash
equivalents and derivatives
Equity investments not held for
trading
Measurement
Fair value
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
Fair value
OCI 2
Profit or loss
–
OCI
OCI
Financial Assets and Liabilities at
Amortized Cost 1
Receivables, short-term debt,
payables and accrued charges,
long-term debt, other long-
term debt instruments
Amortized cost
–
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, we may make an irrevocable election at initial recognition to recognize changes in fair value through OCI rather
than profit or loss.
Financial instruments are recognized at trade date when we
commit to purchase or sell the asset. Financial assets are
derecognized when the rights to receive cash flow from the
investments have expired or we have 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.
We also assess whether the natural gas swaps 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 our New York Mercantile Exchange (“NYMEX”) natural
gas hedges is assessed on a prospective and retrospective basis
using regression analyses. In 2018, our Alberta Energy Company
(“AECO”) natural gas hedges were assessed using a qualitative
assessment. Potential sources of ineffectiveness are changes in
timing of forecast transactions, changes in volume delivered or
changes in our credit risk or the counterparty.
98 Nutrien Annual Report 2019
In millions of US dollars except as otherwise noted
Overview
Management’s Discussion & Analysis
Two Year Highlights
Financial Statements
Other Information
Note 12 Financial Instruments and Related Risk Management Continued
Net investment hedges relating to the commitment to purchase
a foreign operation:
(cid:129) are considered a non-financial item and are accounted for
similar to a cash flow hedge; and
(cid:129) the gain or loss from the hedging instrument is deferred in
OCI and subsequently recorded as an adjustment to goodwill
when the business combination occurs.
Financial assets and financial liabilities are offset and the
net amount is presented in the consolidated balance sheets
when we:
(cid:129) currently have a legally enforceable right to offset the
recognized amounts; and
(cid:129) intend either to settle on a net basis, or to realize the assets
and settle the liabilities simultaneously.
Supporting Information
Credit Risk
Our exposure to credit risk on our 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:
Cash and cash equivalents
Receivables 1
Other current assets – derivatives
1 Excluding income tax receivable.
2019
671
3,438
5
4,114
2018
2,314
3,094
5
5,413
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
We manage our credit risk on receivables from customers
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 our
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. We may transact with
customers that fail to meet specified benchmark
creditworthiness on a cash basis or provide other evidence of
ability to pay.
X
X
X
In our 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 financing
arrangements directly with the financial institution while we
have only a limited recourse involvement to the extent of an
indemnification of the financial institution for 54 percent (2018
– 52 percent) of its future bad debts to a maximum of 3 percent
(2018 – 5 percent) of the qualified customer loans. Outstanding
customer credit with the financial institution was $521 at
December 31, 2019, which is not recognized in our 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. Our
receivables from customers also include a concentration in
Retail operations in Australia for advances to customers to
purchase crop inputs and livestock. We mitigate risk in these
receivables by obtaining security over livestock and crop.
In millions of US dollars except as otherwise noted
Nutrien Annual Report 2019
99
Overview
Management’s Discussion & Analysis
Two Year Highlights
Financial Statements
Other Information
Note 12 Financial Instruments and Related Risk Management Continued
Liquidity Risk
Liquidity risk arises from our general funding needs and the
management of our assets, liabilities and optimal capital
structure. We manage our liquidity risk to maintain sufficient
liquid financial resources to fund our operations and meet our
commitments and obligations in a cost-effective manner. In
managing our liquidity risk, we have access to a range of
funding options and have 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 our available credit facilities as at December 31, 2019:
Unsecured revolving term credit facility 1
Uncommitted revolving demand facility
Other credit facilities
Total
Amount
4,500
500
820
Amount Outstanding
and Committed
Amount
Available
650
–
326
3,850
500
494
1 The unsecured revolving term credit facility matures April 10, 2023, subject to extension at the request of Nutrien provided that the resulting maturity date
shall not exceed five years from the date of request.
The following maturity analysis of our 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.
2019
Short-term debt 1
Payables and accrued charges 2
Long-term debt, including current portion 1
Lease liabilities, including current portion 1
Derivatives
Carrying Amount
of Liability as at
December 31
Contractual
Cash Flows
Within 1
Year
976
5,264
9,055
1,073
33
16,401
976
5,264
14,392
1,302
33
21,967
976
5,264
894
249
14
7,397
1 to 3
Years
–
–
1,268
364
10
1,642
3 to 5
Years
–
–
1,923
234
9
2,166
Over 5
Years
–
–
10,307
455
–
10,762
1 Contractual cash flows include contractual interest payments related to debt obligations and lease liabilities. Interest rates on variable rate debt are based on
prevailing rates as at December 31, 2019.
2 Excludes non-financial liabilities and includes trade payables of approximately $1.4 billion paid in January and February 2020 through an arrangement
whereby a supplier sold the right to receive payment to a financial institution.
100 Nutrien Annual Report 2019
In millions of US dollars except as otherwise noted
Overview
Management’s Discussion & Analysis
Two Year Highlights
Financial Statements
Other Information
Note 12 Financial Instruments and Related Risk Management Continued
Foreign Exchange Risk
To manage foreign exchange risk (primarily related to our
foreign operations), we 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 following table presents the significant foreign currency derivatives that existed at December 31:
Sell/buy
Forwards
USD/CDN
CDN/USD
USD/AUD 1
AUD/USD
1 Australian Dollar
2019
2018
Notional
Maturities
337
120
78
47
2020
2020
2020
2020
Average
contract
rate
1.3096
1.3138
1.4593
1.4563
Notional
Maturities
502
205
40
48
2019
2019
2019
2019
Average
contract
rate
1.3583
1.3636
1.3777
1.3816
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, our 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.
We have credit facilities in Argentina that are subject to
floating interest rates. We do not believe we have material
exposure to interest rate risk on our financial instruments and
earnings as at December 31, 2019 and 2018.
Price Risk
Commodity price risk exists on our natural gas derivative
instruments. Our natural gas strategy is to diversify our
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. Our 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.
We had no material exposure to price risk on our financial
instruments as at December 31, 2019 and 2018.
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
our finance department.
In millions of US dollars except as otherwise noted
Nutrien Annual Report 2019 101
Overview
Management’s Discussion & Analysis
Two Year Highlights
Financial Statements
Other Information
Note 12 Financial Instruments and Related Risk Management Continued
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 or other instruments with similar
terms and credit risk (Level 2) as at the balance sheet date
Quoted forward exchange rates (Level 2) as at the balance
sheet date
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, our 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. Market comparison was used for the 2018 AECO natural gas hedges.
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 our fair value hierarchy for financial assets and financial liabilities carried at fair value on a recurring
basis or measured at amortized cost:
Financial instruments measured at
Fair value on a recurring basis
Cash and cash equivalents
Derivative instrument assets
Other current financial assets – marketable securities 2
Investments at FVTOCI (Note 17)
Derivative instrument liabilities
Amortized cost
Current portion of long-term debt
Notes and debentures
Fixed and floating rate debt
Long-term debt
Notes and debentures
Fixed and floating rate debt
2019
2018
Carrying
Amount
Level 1 1
Level 2 1
Carrying
Amount
Level 1 1
Level 2 1
671
5
193
161
(33)
(494)
(8)
–
–
27
161
–
671
5
166
–
(33)
2,314
5
97
186
(71)
–
–
(503)
(8)
(995)
(8)
–
–
12
186
–
–
–
(8,528)
(25)
(1,726)
–
(7,440)
(25)
(7,569)
(22)
(1,004)
–
2,314
5
85
–
(71)
(1,009)
(8)
(6,177)
(22)
1 Financial instruments included in Level 1 are measured using quoted prices in active markets for identical assets or liabilities, while those classified as Level 2
are measured using significant other observable inputs. During 2019 and 2018, there were no transfers between Level 1 and Level 2 for financial instruments
measured at fair value on a recurring basis. Our policy is to recognize transfers at the end of the reporting period.
2 Marketable securities consist of equity and fixed income securities.
102 Nutrien Annual Report 2019
In millions of US dollars except as otherwise noted
Overview
Management’s Discussion & Analysis
Two Year Highlights
Financial Statements
Other Information
Note 12 Financial Instruments and Related Risk Management Continued
Financial assets (liabilities)
Gross
Offset
Net Amounts
Presented
Gross
Offset
Net Amounts
Presented
2019
2018
Derivative instrument assets
Natural gas derivatives
Derivative instrument liabilities
Natural gas derivatives 1
Other long-term debt instruments 2
–
(30)
(150)
(180)
–
–
150
150
–
(30)
–
(30)
31
(27)
(92)
(150)
(211)
26
150
149
4
(66)
–
(62)
1 Cash margin deposits of $17 (2018 – $18) were placed with counterparties related to legally enforceable master netting arrangements.
2 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.
We were in compliance with these covenants as at December 31, 2019.
Natural gas derivatives outstanding:
2019
2018
Notional 1
Maturities
Average
Contract
Price 2
Fair Value
of Assets
(Liabilities) Notional 1
Maturities
Average
Contract
Price 2
Fair Value
of Assets
(Liabilities)
NYMEX swaps
AECO swaps
16
–
2020 – 2022
n/a
4.26
–
(30)
–
22
26
2019 – 2022
2019
4.26
1.92
(35)
(25)
1 In millions of British thermal units (“MMBtu”).
2 US dollars per MMBtu.
n/a = not applicable
Note 13 Receivables
Accounting Policies, Estimates and Judgments
Receivables from customers are recognized initially at fair
value and subsequently measured at amortized cost less
allowance for expected credit losses of receivables from
customers. We estimate losses on receivables based on known
troubled accounts and historical experience of losses incurred
using the lifetime expected credit loss method, which
represents the expected credit loss that will result from all
possible default events over the expected life of a financial
instrument. To determine the expected credit losses,
receivables from customers have been grouped based on
geography, days past due and/or customer credit risk profile.
Receivables are considered to be in default and are written off
against the allowance when it is probable that all remaining
contractual payments due will not be collected in accordance
with the terms of the agreement. 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 earned based on sales
volumes of products are offset to cost of goods sold.
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.
Determining when there is no reasonable expectation of
recovering the amounts 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.
In millions of US dollars except as otherwise noted
Nutrien Annual Report 2019 103
Overview
Management’s Discussion & Analysis
Two Year Highlights
Financial Statements
Other Information
Note 13 Receivables Continued
Supporting Information
Receivables from customers – third parties
– Canpotex (Note 29)
Less allowance for expected credit losses of receivables from customers
Rebates
Income taxes (Note 9)
Other receivables
Note 14 Inventories
Accounting Policies, Estimates and Judgments
2019
2,936
194
(83)
3,047
190
104
201
3,542
2018
2,628
208
(90)
2,746
169
248
179
3,342
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
Products and raw materials
Materials and supplies
(cid:129) selling price of the finished product (in ordinary course of
(cid:129) replacement cost.
business) less the estimated costs of completion and estimated
costs to make the sale.
A writedown is recognized if the carrying amount exceeds net realizable value and may be reversed if the circumstances which
caused it no longer exist.
Various factors impact our estimates of net realizable value, including inventory levels, forecasted prices of key production inputs,
global nutrient capacities, and crop price trends.
Supporting Information
Product purchased for resale 1
Finished products
Intermediate products
Raw materials
Materials and supplies
2019
3,592
524
244
205
410
4,975
2018
3,545
501
218
275
378
4,917
1 Includes biological assets of $33 (December 31, 2018 – $2) measured at
fair value less cost of disposal.
Inventories expensed to cost of goods sold during the year
were $13,465 (2018 – $13,083).
104 Nutrien Annual Report 2019
In millions of US dollars except as otherwise noted
Overview
Management’s Discussion & Analysis
Two Year Highlights
Financial Statements
Other Information
Note 15 Property, Plant and Equipment
The majority of our tangible assets are the buildings, machinery and equipment used to produce or distribute our products
and render our services.
Accounting Policies, Estimates and Judgments
Owned Property, Plant and Equipment
Property, plant and equipment 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 our 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) the expenditure is 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 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.
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 our mines, the mining methods used, and the
related costs incurred to develop and mine 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.
In millions of US dollars except as otherwise noted
Nutrien Annual Report 2019 105
Overview
Management’s Discussion & Analysis
Two Year Highlights
Financial Statements
Other Information
Note 15 Property, Plant and Equipment Continued
Leased Property, Plant and Equipment
A contract is a lease or contains a lease if it conveys the right to
control the use of an identified asset for a period of time in
exchange for consideration. Leases are recognized as
right-of-use (“ROU”) assets and corresponding liabilities at the
date at which a leased asset is available for use. Lease
payments are allocated between finance costs, calculated
using the effective interest method, and a reduction of the
liability. ROU assets are depreciated over the shorter of the
asset’s useful life and the lease term on a straight-line basis.
Our major categories of assets leased are:
(cid:129) railcars and marine vessels used to transport product to
customers;
(cid:129) real estate used as office space, storage and distribution;
and
(cid:129) mobile equipment primarily used to deliver and apply
product and to meet with customers.
Railcars are utilized in North America and include general
service and high-pressure tank cars and general-purpose
hopper cars. Railcars are sourced from multiple suppliers and
terms vary by lease agreement. For railcars required in our
operations, we have a history of renegotiating new leases at
termination of existing leases. Marine vessels include ocean-
going vessels used to transport ammonia from our nitrogen
facilities in Trinidad to our customers. We lease real estate
across our operations consisting of office space and product
storage and distribution sites. Real estate leases have varying
terms by location and use of the property, and are normally
renewable at market rates. Most storage and distribution
leases do not convey a right to use a specific identified space
and accordingly these are not classified as leases under IFRS 16
and are expensed as incurred. Our Retail segment leases a fleet
of motor vehicles and product application equipment and
other transportation equipment. Motor vehicle leases primarily
have a 50-month initial term and are renewable annually
thereafter. We expect to renew all our Retail motor vehicle
leases for substantially all of the useful life of the equipment.
We seek to maximize operational flexibility in managing our
leasing activities by including extension options when
negotiating new leases. Extension options are exercisable at
our option and not by the lessors. In determining if a renewal
period should be included in the lease term, we consider all
relevant factors that create an economic incentive for us to
exercise a renewal, including the location of the asset, the
availability of suitable alternatives, the significance of the asset
to operations, and our business strategy.
Lease agreements do not contain significant covenants;
however, leased assets may be used as security for lease
liabilities and other borrowings.
ROU assets are measured at cost, less any impairments,
including:
(cid:129) the initial measurement of lease liability (see Note 21);
(cid:129) any lease payments made at or before the commencement
date less any lease incentives received;
(cid:129) any initial direct costs; and
(cid:129) an estimate of costs, if any, to be incurred by us in restoring
the underlying asset to the condition required by the terms
and conditions of the lease.
Liabilities arising from a lease are initially measured as the net
present value of the future lease payments, including:
(cid:129) fixed payments (including in-substance fixed payments), less
any lease incentives;
(cid:129) variable lease payments that are based on an index or a rate;
(cid:129) amounts expected to be payable under residual value
guarantees;
(cid:129) the exercise price of a purchase option if we are reasonably
certain to exercise that option; and
(cid:129) payments of penalties for terminating the lease, if the lease
term reflects us exercising that option.
In recording ROU assets and related liabilities at inception of a
lease, lease payments are discounted using the interest rate
implicit in the lease. If that rate cannot be determined, an
incremental borrowing rate is used, being a rate that we would
have to pay to borrow the funds required to obtain a similar
asset, adjusted for term, security, asset value and the borrower’s
economic environment.
The carrying amount of ROU assets and lease liabilities is
remeasured if there is a modification of the lease, a change in
the lease term, a change in the in-substance fixed lease
payments, a change in the expected amount under a residual
value guarantee or a change in the assessment to exercise a
purchase, extension or termination option.
Payments for short-term leases and leases of low-value assets
are expensed on a straight-line basis. Short-term leases are
leases with a lease term of 12 months or less that do not
contain a purchase option. Low-value assets generally
comprise IT equipment and office furniture.
Judgment is required to determine whether a contract or
arrangement includes a lease and if it is reasonably certain that
an extension option will be exercised.
Estimation is used to determine the useful lives of ROU assets,
the lease term and the appropriate discount rate applied to the
lease payments to calculate the lease liability.
Refer to Note 31 for impacts of the adoption of IFRS 16.
Accounting policies, estimates and judgments related to
impairment of long-lived assets are described in Note 31.
106 Nutrien Annual Report 2019
In millions of US dollars except as otherwise noted
Overview
Management’s Discussion & Analysis
Two Year Highlights
Financial Statements
Other Information
Note 15 Property, Plant and Equipment Continued
Supporting Information
Land and
Improvements
Buildings and
Improvements
Machinery
and
Equipment
Mine
Development
Costs
Assets Under
Construction
Total
Useful life range (years)
Carrying amount – December 31, 2018
ROU assets recognized on adoption of
IFRS 16
Acquisitions (Note 4)
Additions
Additions – ROU
Disposals
Transfers
Foreign currency translation and other
Depreciation
Depreciation – ROU
Impairment
3 – 80
1,018
1 – 60
6,044
48
17
14
–
(3)
108
(4)
(36)
(2)
–
307
136
30
22
(5)
145
(37)
(187)
(46)
–
1 – 80
9,882
704
61
225
177
(84)
932
(14)
(1,004)
(186)
(52)
Carrying amount – December 31, 2019
1,160
6,409
10,641
n/a
709
–
–
–
–
–
110
5
(77)
–
–
747
n/a
1,143
–
37
1,487
–
–
(1,295)
6
–
–
–
1,378
18,796
1,059
251
1,756
199
(92)
–
(44)
(1,304)
(234)
(52)
20,335
Balance – December 31, 2019
comprised of:
Cost
Accumulated depreciation and
impairments
Carrying amount – December 31, 2019
Balance – December 31, 2019
comprised of:
Owned property, plant and equipment
ROU assets
Carrying amount – December 31, 2019
Carrying amount – December 31, 2017
Merger impact (Note 4)
Other acquisitions
Additions
Disposals
Transfers
Foreign currency translation and other
Depreciation
Impairment
1,474
8,207
18,548
2,068
1,378
31,675
(314)
1,160
(1,798)
6,409
(7,907)
(1,321)
–
(11,340)
10,641
747
1,378
20,335
1,117
43
1,160
612
396
10
41
(3)
10
(9)
(33)
(6)
6,065
344
6,409
4,184
2,695
31
61
(14)
30
28
(195)
(776)
6,044
9,973
668
10,641
6,744
4,042
66
327
(30)
538
(21)
(1,032)
(752)
9,882
747
–
747
979
–
–
42
–
18
10
(65)
(275)
709
1,378
–
1,378
452
326
–
975
–
(596)
(14)
–
–
1,143
19,280
1,055
20,335
12,971
7,459
107
1,446
(47)
–
(6)
(1,325)
(1,809)
18,796
Carrying amount – December 31, 2018
1,018
Balance – December 31, 2018
comprised of:
Cost
Accumulated depreciation and
impairments
Carrying amount – December 31, 2018
1,294
7,617
16,806
1,954
1,143
28,814
(276)
1,018
(1,573)
6,044
(6,924)
(1,245)
–
(10,018)
9,882
709
1,143
18,796
In millions of US dollars except as otherwise noted
Nutrien Annual Report 2019 107
Overview
Management’s Discussion & Analysis
Two Year Highlights
Financial Statements
Other Information
Note 15 Property, Plant and Equipment Continued
Depreciation of property, plant and equipment was included in the following:
Freight, transportation and distribution
Cost of goods sold
Selling expenses
General and administrative expenses
Depreciation recorded in inventory
2019
137
1,008
344
40
1,529
161
1,690
2018
15
1,016
259
35
1,325
108
1,433
After a strategic portfolio review was completed in 2018, we
determined the New Brunswick Potash operations would no
longer be part of our medium-term or long-term strategic
plans. 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, which was then assessed for impairment.
The estimated recoverable amount of the New Brunswick CGU,
based on fair value less costs of disposal (“FVLCD”), was
$50 resulting in an impairment loss of $1,809 ($1,320 net
of tax) being 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 2019
or 2018.
108 Nutrien Annual Report 2019
In millions of US dollars except as otherwise noted
Overview
Management’s Discussion & Analysis
Two Year Highlights
Financial Statements
Other Information
Note 16 Goodwill and Other Intangible Assets
Accounting Policies, Estimates and Judgments
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. Other intangible assets
are generally measured at cost less accumulated amortization
and any accumulated impairment losses.
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. Useful lives are reviewed, and adjusted if appropriate, at
least annually.
Supporting Information
Goodwill
Customer
Relationships 2
Technology
Trade
Names
Other
Total
Other Intangibles
Useful life range (years)
Carrying amount – December 31, 2018
Acquisitions (Note 4)
Additions – internally developed
Foreign currency translation and other
Impairment
Amortization 1
Carrying amount – December 31, 2019
Balance – December 31, 2019 comprised of:
n/a
11,431
543
–
12
–
–
11,986
3 – 15
1,554
173
–
2
–
(145)
1,584
Cost
Accumulated amortization and
impairment
Carrying amount – December 31, 2019
Carrying amount – December 31, 2017
Merger impact (Note 4)
Other acquisitions (Note 4)
Additions – internally developed
Disposals
Foreign currency translation and other
Amortization 1
Carrying amount – December 31, 2018
Balance – December 31, 2018 comprised of:
Cost
Accumulated amortization
Carrying amount – December 31, 2018
11,993
1,906
(7)
11,986
97
11,185
197
–
–
(48)
–
11,431
11,438
(7)
11,431
(322)
1,584
–
1,708
1
–
–
(20)
(135)
1,554
1,691
(137)
1,554
3 – 30
10 – 20 3
1 – 20
117
43
197
9
–
(15)
351
429
(78)
351
–
44
–
79
–
1
(7)
117
124
(7)
117
90
13
–
18
(35)
(24)
62
449
115
2
(25)
(33)
(77)
431
2,210
344
199
4
(68)
(261)
2,428
92
597
3,024
(30)
62
–
122
–
–
–
(4)
(28)
90
118
(28)
90
(166)
431
69
474
7
19
(27)
(6)
(87)
449
586
(137)
449
(596)
2,428
69
2,348
8
98
(27)
(29)
(257)
2,210
2,519
(309)
2,210
1 Amortization of $234 was included in selling expenses during the year ended December 31, 2019 (2018 – $225).
2 The remaining amortization period of customer relationships at December 31, 2019, was approximately 7 years.
3 Certain trade names have indefinite useful lives as there are no regulatory, legal, contractual, cooperative, economic or other factors that limit their
useful lives.
In millions of US dollars except as otherwise noted
Nutrien Annual Report 2019 109
Overview
Management’s Discussion & Analysis
Two Year Highlights
Financial Statements
Other Information
Note 16 Goodwill and Other Intangible Assets Continued
Goodwill Impairment Testing
We performed our annual impairment test on goodwill during
the fourth quarter and did not identify any impairment,
however the recoverable amount for Retail – North America
did not substantially exceed its carrying amount.
In testing for impairment of goodwill, we calculate the
recoverable amount for groups of CGUs containing goodwill.
We used the FVLCD methodology based on after-tax
discounted cash flows (five-year projections and a terminal
year thereafter) and incorporated assumptions an independent
market participant would apply. We adjusted discount rates for
each group of CGUs for the risk associated with achieving our
forecasts (five-year projections) and for the currency in which
we expect to generate cash flows. FVLCD is a Level 3
measurement. We use our 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. The key forecast
assumptions were based on historical data and estimates of
future results from internal sources as well as industry and
market trends.
For each group of CGUs, terminal growth rates and discount rates used were as follows:
Retail – North America
Retail – International 1
Potash
Nitrogen
Terminal Growth Rate (%)
Discount Rate (%)
2.5
2.0
2.5
2.0
7.0
7.5 - 15.0
8.0
9.0
1 The discount rates reflect the country risk premium and size for our international groups of CGUs.
110 Nutrien Annual Report 2019
In millions of US dollars except as otherwise noted
Overview
Management’s Discussion & Analysis
Two Year Highlights
Financial Statements
Other Information
Note 16 Goodwill and Other Intangible Assets Continued
The Retail – North America group of CGUs recoverable amount exceeds its carrying amount by $794 which is 6% of the recoverable
amount. As a result of the Merger, the non-cash fair value adjustment to the Retail — North America goodwill was $4,284. Goodwill
is more susceptible to impairment risk if business operating results or economic conditions deteriorate and we do not meet our
forecasts. A reduction in the terminal growth rate, an increase in the discount rate or a decrease in forecasted cash flows could cause
material impairment in the future. The following table indicates the percentage by which key assumptions would need to change
individually for the estimated Retail — North America recoverable amount to be equal to the carrying amount:
Key Assumptions
Terminal growth rate
Forecasted EBITDA over forecast period
Discount rate
Note 17 Investments
Change Required for Carrying
Amount to Equal Recoverable
Amount (%)
Value Used in Impairment
Model
(0.3)
(4.1)
0.2
2.5%
6,128
7.0%
We hold interests in associates and joint ventures, the most significant being Canpotex, MOPCO and Profertil. Our most
significant investment accounted for as FVTOCI is Sinofert.
Accounting Policies, Estimates and Judgments
Investments in Equity-Accounted Investees
Investments in which we exercise significant influence (but
do not control) or have 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 an associate.
We recognize profits on sales to Canpotex when there is a
transfer of control, either at the time the product is loaded for
shipping or delivered, depending on the terms of the contract.
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.
Our significant policies include the following:
(cid:129) the cost of investments sold is based on the weighted
average method, and
(cid:129) unrealized gains and losses on these investments remain in
OCI until the time of sale or disposal when it is transferred to
retained earnings.
Investments in Equity-Accounted Investees and
Investments at FVTOCI
We continuously assess our ability to exercise significant
influence or joint control over our investments. Our 22 percent
ownership in Sinofert does not constitute significant influence
as we do not have any representation on the Board of Directors
of Sinofert.
We have representation on the MOPCO Board of Directors
providing significant influence over MOPCO. We recorded our
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 our consolidated financial statements.
We elected to account for our investment in Sinofert as
FVTOCI as it is held for strategic purposes.
In millions of US dollars except as otherwise noted
Nutrien Annual Report 2019 111
Overview
Management’s Discussion & Analysis
Two Year Highlights
Financial Statements
Other Information
Note 17 Investments Continued
Supporting Information
Equity-accounted investees and investments at FVTOCI as at December 31 were comprised of:
Principal Place
of Business and
Incorporation
Proportion of Ownership Interest
and Voting Rights Held (%)
Carrying Amount
2019
2018
2019
2018
Name
Principal Activity
Equity-accounted investees
MOPCO
Profertil
Canpotex
Agrichem 1
Other associates and joint ventures
Nitrogen Producer
Nitrogen Producer
Marketing and Logistics
Fertilizer Producer and Marketer
Total equity-accounted investees
Egypt
Argentina
Canada
Brazil
Investments at FVTOCI
Sinofert
Other
Fertilizer Supplier and Distributor China/Bermuda
Total investments at FVTOCI
26
50
50
100
22
–
26
50
50
80
22
–
270
212
–
–
178
660
161
–
161
236
192
–
103
161
692
180
6
186
1 During 2019, we acquired the remaining 20 percent interest in Agrichem making it a wholly owned consolidated subsidiary, as described in Note 4, and as a
result ceased equity accounting. Prior to this acquisition, we had joint control with the other shareholder of Agrichem.
Future conditions, including those related to MOPCO and Profertil, are subject to variability due to political instability and civil unrest.
We are exposed to foreign exchange risk related to fluctuations in the Egyptian pound and Argentine peso against the US dollar. This
may also restrict our ability to obtain dividends from Profertil.
Additional financial information on our proportionate interest in equity-accounted investees for the years ended December 31 was
as follows:
Associates
Joint Ventures
2019
2018
2019
2018
Earnings from continuing operations and net earnings
Other comprehensive income
Total comprehensive income
34
6
40
24
–
24
32
–
32
16
–
16
112 Nutrien Annual Report 2019
In millions of US dollars except as otherwise noted
Overview
Management’s Discussion & Analysis
Two Year Highlights
Financial Statements
Other Information
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 $71 (2018 – $79)
Long-term income tax receivable (Note 9)
Accrued pension benefit asset (Note 23)
Other – net of accumulated amortization of $41 (2018 – $38)
Note 19 Short-Term Debt
2019
249
89
36
25
165
564
2018
216
81
36
27
165
525
We use our $4.5 billion commercial paper program for our short-term cash requirements. The commercial paper program is
backstopped by the $4.5 billion unsecured revolving term credit facility (“Nutrien Credit Facility”). Short-term facilities are
renegotiated periodically.
Short-term debt as at December 31 was comprised of:
Commercial paper
Other credit facilities 1
Rate of Interest (%)
2.0 – 2.1
0.8 – 10.4
2019
650
326
976
2018
391
238
629
1 Credit facilities are unsecured and consist of South American facilities with debt of $149 (2018 – $216) and interest rates ranging from 3.00 percent to
10.38 percent, Australia facilities with debt of $157 (2018 – $Nil) and interest rates ranging from 0.75 percent to 2.09 percent, and Other facilities with debt
of $20 (2018 – $22) and interest rates ranging from 1.64 percent to 2.50 percent.
The amount available under the commercial paper program is
limited to the availability of backup funds under the Nutrien
Credit Facility. As at December 31, 2019, we were authorized
to issue commercial paper up to $4,500 (2018 – $4,500).
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. We were in compliance with all covenants as
at December 31, 2019.
We also had other facilities available from which we could draw
short-term debt, including a $500 uncommitted revolving
demand facility and $820 of other facilities mostly
denominated in foreign currencies. Our $500 accounts
receivable securitization program was terminated in 2019.
In millions of US dollars except as otherwise noted
Nutrien Annual Report 2019 113
Overview
Management’s Discussion & Analysis
Two Year Highlights
Financial Statements
Other Information
Note 20 Long-Term Debt
We source our borrowings for funding purposes primarily through notes, debentures and long-term credit facilities. We have
access to the capital markets through our base shelf prospectus.
Supporting Information
Long-term debt as at December 31 was comprised of:
Notes 1
Rate of Interest (%)
Maturity
2019
2018
6.750
6.500
4.875
3.150
3.500
3.625
3.375
3.000
4.000
4.200
4.125
7.125
5.875
5.625
6.125
4.900
5.250
5.000
7.800
January 15, 2019
May 15, 2019
March 30, 2020
October 1, 2022
June 1, 2023
March 15, 2024
March 15, 2025
April 1, 2025
December 15, 2026
April 1, 2029
March 15, 2035
May 23, 2036
December 1, 2036
December 1, 2040
January 15, 2041
June 1, 2043
January 15, 2045
April 1, 2049
February 1, 2027
–
–
500
500
500
750
550
500
500
750
450
300
500
500
500
500
500
750
125
33
8,708
424
(77)
9,055
(508)
–
6
(502)
8,553
500
500
500
500
500
750
550
500
500
–
450
300
500
500
500
500
500
–
125
10
8,185
444
(55)
8,574
(1,000)
(1)
6
(995)
7,579
Debentures 1
Other
Add net unamortized fair value adjustments
Less net unamortized debt issue costs
Less current maturities
Less current portion of net unamortized fair
value adjustments
Add current portion of net unamortized debt issue costs
1 Each series of 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 our option, at specified prices.
We are subject to certain customary covenants including limitation on liens, merger and change of control covenants, and
customary events of default. We were in compliance with these covenants as at December 31, 2019.
114 Nutrien Annual Report 2019
In millions of US dollars except as otherwise noted
Overview
Management’s Discussion & Analysis
Two Year Highlights
Financial Statements
Other Information
Note 20 Long-Term Debt Continued
The following is a summary of changes in liabilities arising from financing activities:
Short-Term Debt
and Current
Portion of
Long-Term Debt 1
Current
Portion of
Lease
Liabilities
Long-Term
Debt
Lease
Liabilities
1,624
–
145
(794)
500
3
1,478
730
870
(927)
1,023
(72)
1,624
8
196
20
(184)
178
(4)
214
–
8
–
–
–
8
7,579
–
3
1,461
(500)
10
8,553
3,711
4,918
(12)
(1,023)
(15)
7,579
12
863
91
75
(178)
(4)
859
–
12
–
–
–
12
Total
9,223
1,059
259
558
–
5
11,104
4,441
5,808
(939)
–
(87)
9,223
Balance – December 31, 2018
Adoption of IFRS 16 (Note 15)
Debt acquired (Note 4)
Cash flows 1
Reclassifications
Foreign currency translation and other non-cash
changes
Balance – December 31, 2019
Balance – December 31, 2017
Debt acquired in Merger (Note 4)
Cash flows 1
Reclassifications
Foreign currency translation and other non-cash
changes
Balance – December 31, 2018
1 Cash inflows and cash outflows are presented on a net basis.
Note 21 Lease Liabilities
We adopted IFRS 16, “Leases” as of January 1, 2019. See Note 15 and 31 for the respective accounting policies, estimates and
judgments.
Lease liabilities
Current portion of lease liabilities
Total
Rate of Interest (%)
2019
2018
3.35
3.06
859
214
1,073
12
8
20
In millions of US dollars except as otherwise noted
Nutrien Annual Report 2019 115
Overview
Management’s Discussion & Analysis
Two Year Highlights
Financial Statements
Other Information
Note 22 Payables and Accrued Charges
Payables and accrued charges consist primarily of amounts we owe to suppliers and prepayments made by customers
planning to purchase our 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 24)
Accrued interest
Current portion of share-based compensation (Note 6)
Current portion of derivatives
Income taxes (Note 9)
Current portion of pension and other post-retirement benefits (Note 23)
Other payables and other accrued charges
Note 23 Pension and Other Post-Retirement Benefits
2019
4,016
1,693
258
434
148
103
118
13
43
15
596
7,437
2018
3,053
1,625
526
425
156
105
87
45
47
13
621
6,703
We offer the following 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 our employees participate in at least one of these plans.
Accounting Policies, 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
(cid:129) past service cost is recognized in net earnings at the earlier
of i) when a plan amendment or curtailment occurs; or
ii) when 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, we
recognize 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.
116 Nutrien Annual Report 2019
In millions of US dollars except as otherwise noted
Overview
Management’s Discussion & Analysis
Two Year Highlights
Financial Statements
Other Information
Note 23 Pension and Other Post-Retirement Benefits Continued
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 our independent actuaries.
Our discount rate assumptions are impacted by:
(cid:129) the weighted average interest rate at which each pension
and other post-retirement plan liability could be effectively
settled at the measurement date;
(cid:129) country specific rates; and
Supporting Information
(cid:129) the use of a yield curve approach 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 we do 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 our significant plans as at and for the year
ended December 31 were as follows:
Pension
Other
2019
2018
2019
2018
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 (years) 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 duration of the defined benefit obligations 4 (years)
3.35
4.66
n/a
n/a
20.5
22.7
14.61
4.22
4.75
n/a
n/a
20.6
22.8
13.7
3.20
n/a
4.17
n/a
4.50 – 6.10 2 4.50 – 6.10 2
2037
2037
20.3
22.9
15.8
20.4
22.8
15.1
1 The current year’s expense is determined using the assumptions that existed at the end of the previous year.
2 We assumed a graded medical cost trend rate starting at 6.10 percent in 2019, moving to 4.50 percent by 2037 (2018 – starting at 6.10 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
Of the most significant assumptions, a change in discount rates has the greatest potential impact on our pension and other post-
retirement benefit plans, with sensitivity to change as follows:
As reported
Discount rate
Change in Assumption
1.0 percentage point decrease
1.0 percentage point increase
2019
2018
Benefit
Obligations
Expense in
Earnings Before
Income Taxes
Benefit
Obligations
Recovery in
Loss Before
Income Taxes
2,044
335
(268)
71
9
(11)
1,797
271
(218)
(87)
24
(22)
In millions of US dollars except as otherwise noted
Nutrien Annual Report 2019 117
Overview
Management’s Discussion & Analysis
Two Year Highlights
Financial Statements
Other Information
Note 23 Pension and Other Post-Retirement Benefits Continued
Description of Defined Benefit Pension Plans
We sponsor defined benefit pension plans as follows:
United States
(cid:129) non-contributory,
(cid:129) made to meet or exceed minimum funding
Plan Type
Contributions
(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,
requirements of the Employee Retirement Income
Security Act of 1974 and associated Internal Revenue
Service regulations and procedures.
Canada
(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 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.
Our defined benefit pension plans 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 our
employees. 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.
118 Nutrien Annual Report 2019
In millions of US dollars except as otherwise noted
Overview
Management’s Discussion & Analysis
Two Year Highlights
Financial Statements
Other Information
Note 23 Pension and Other Post-Retirement Benefits Continued
Description of Other Post-Retirement Plans
We provide 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) 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
(cid:129) coordination with government-provided medical insurance
plans.
in each country;
(cid:129) certain unfunded cost-sharing features such as
co-insurance, deductibles and co-payments – benefits
subject to change;
We provide 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 us to broadly similar actuarial risks. The most significant risks
include investment risk and interest rate risk as discussed below. Other risks include longevity risk and salary risk.
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, we employ:
(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. Our 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.
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.
In millions of US dollars except as otherwise noted
Nutrien Annual Report 2019 119
Overview
Management’s Discussion & Analysis
Two Year Highlights
Financial Statements
Other Information
Note 23 Pension and Other Post-Retirement Benefits Continued
Financial Information
Movements in the pension and other post-retirement benefit assets (liabilities)
Balance – beginning of year
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) recovery
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 – end of year 3
Balance comprised of:
Non-current assets
Other assets (Note 18)
Current liabilities
Payables and accrued charges (Note 22)
Non-current liabilities
Pension and other post-retirement benefit liabilities
2019
Plan
Assets
1,416
–
Obligation
(1,797)
–
Net
Obligation
(381)
–
(1,831)
(347)
2018
Plan
Assets
1,380
205
–
62
–
(27)
Net
(451)
(142)
(67)
(15)
157
12
(67)
(77)
157
39
52
35
87
210
11
–
221
(6)
–
114
108
–
–
(149)
(149)
6
53
(114)
(55)
210
11
(149)
72
–
53
–
53
(40)
(74)
–
(29)
(143)
(199)
14
–
(185)
(5)
–
86
81
–
59
–
13
72
–
–
193
193
5
21
(86)
(60)
(40)
(15)
–
(16)
(71)
(199)
14
193
8
–
21
–
21
(2,044)
1,621
(423)
(1,797)
1,416
(381)
25
(15)
(433)
27
(13)
(395)
1 We acquired Agrium’s pension and other post-retirement benefit obligations, representing the fair values at the acquisition date as described in Note 4.
2 In 2018, as part of our continuous assessment of our operations, participation (based on age and years of service) in certain company defined benefit pension
and other post-retirement benefit plans was suspended and/or discontinued effective January 1, 2020. As a result, we recognized a Merger-related Defined
Benefit Plans Curtailment Gain of $157.
3 Obligations arising from funded and unfunded pension plans are $(1,652) and $(392), respectively (2018 – $(1,466) and $(331)). Other post-retirement
benefit plans have no plan assets and are unfunded.
120 Nutrien Annual Report 2019
In millions of US dollars except as otherwise noted
Overview
Management’s Discussion & Analysis
Two Year Highlights
Financial Statements
Other Information
Note 23 Pension and Other Post-Retirement Benefits Continued
Plan Assets
As at December 31, the fair value of plan assets of our defined benefit pension plans, by asset category, were as follows:
Cash and cash equivalents
Equity securities and equity funds
US
International
Debt securities 2
International balanced fund
Other
Total pension plan assets
8
1
35
–
–
–
44
Quoted Prices
in Active
Markets for
Identical Assets
2019
Other 1
2018
Quoted Prices
in Active
Markets for
Identical Assets Other
Total
6
454
175
187
–
(25)
797
54
60
65
65
329
97
9
519
240
516
97
(16)
619
1,416
112
571
62
698
112
22
Total
120
572
97
698
112
22
1,577
1,621
1 Approximately 60% of the Other plan assets are held in funds whose fair values are estimated as a practical expedient using their net asset value per share.
The redemption frequency of these funds is immediate and no notice period is required.
2 Debt securities included US securities of 82 percent (2018 – 52 percent), International securities of 18 percent (2018 – 31 percent) and Mortgage-backed
securities of Nil percent (2018 – 17 percent).
Letters of credit secured certain of our Canadian unfunded defined benefit plan liabilities as at December 31, 2019.
We expect to contribute approximately $95 to all pension and post-retirement plans during 2020. Total contributions recognized as
expense under all defined contribution plans for 2019 was $88 (2018 – $75).
Note 24 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, Estimates and Judgments
Provisions are:
(cid:129) measured at the present value of the cash flow expected to
Asset retirement obligations and accrued environmental
costs include:
be required to settle the obligation; and
(cid:129) reclamation and restoration costs at our potash 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.
As a result of the Merger, we recognized contingent liabilities,
which represent additional environmental costs that are
present obligations 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 discounted underlying cash flows.
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.
In millions of US dollars except as otherwise noted
Nutrien Annual Report 2019 121
Overview
Management’s Discussion & Analysis
Two Year Highlights
Financial Statements
Other Information
Note 24 Asset Retirement Obligations and Accrued Environmental Costs Continued
Estimates for provisions take into account the following:
(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 our 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 our consolidated financial statements.
We use 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 we operate. Other than certain land
reclamation programs, settlement of the obligations is typically
correlated with mine life estimates.
Supporting Information
The pre-tax risk-free discount rate, expected cash flow payments and sensitivity to changes in the discount rate on the recorded
liability for asset retirement obligations and accrued environmental costs at December 31, 2019 were as follows:
Asset retirement obligations
Retail
Potash
Phosphate
Corporate and Other 4,5
Accrued environmental costs
Retail
Corporate and Other
Risk-Free
Rate (%) 1
Cash Flow
Payments
(years) 2
Undiscounted
Cash Flows
Discounted
Cash Flows
2.08 – 2.81
5.00
2.93 – 3.19
1.22 – 6.50
1 – 30
40 – 442
1 – 81
1 – 483
1.92 – 4.27
1.47 – 3.02
1 – 30
1 – 28
11
650 3
853
864
77
563
10
70
495
675
72
467
Discount Rate
+0.5% -0.5%
(81)
87
(14)
17
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, 2019. Changes in years can result from changes to the mine life and/or
changes in the rate of tailing volumes.
3 Represents total undiscounted cash flows in the first year of decommissioning. This 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 92
to 401 years.
4 For nitrogen sites, we have not recorded any asset retirement obligations because no significant asset retirement obligations have been identified or there is
no reasonable basis for estimating a date or range of dates of cessation of operations. We considered the historical performance of our facilities as well as our
planned maintenance, major upgrades and replacements which can extend the useful lives of our facilities indefinitely.
5 Includes certain potash and phosphate sites that are non-operating sites, with the majority of phosphate site payments taking place over the next 81 years.
Following is a reconciliation of asset retirement obligations and accrued environmental costs:
Balance – December 31, 2018
Recorded in earnings
Capitalized to property, plant and equipment
Settled during the year
Foreign currency translation and other
Balance – December 31, 2019
Balance – December 31, 2019 comprised of:
Current liabilities
Payables and accrued charges (Note 22)
Non-current liabilities
Asset retirement obligations and accrued environmental costs
Asset
Retirement
Obligations
Accrued
Environmental
Costs
1,295
39
5
(103)
18
1,254
123
1,131
534
17
–
(16)
9
544
25
519
Total
1,829
56
5
(119)
27
1,798
148
1,650
122 Nutrien Annual Report 2019
In millions of US dollars except as otherwise noted
Overview
Management’s Discussion & Analysis
Two Year Highlights
Financial Statements
Other Information
Note 24 Asset Retirement Obligations and Accrued Environmental Costs Continued
We are subject to numerous environmental requirements
under federal, provincial, state and local laws in the countries
in which we operate. We have gypsum stack capping, closure
and post-closure obligations through our subsidiaries, PCS
Phosphate Company, Inc. in White Springs, Florida and PCS
Nitrogen Inc. in Geismar, Louisiana pursuant to the financial
assurance regulatory requirements in those states. The
recorded provisions may not necessarily reflect our obligations
under these financial assurances.
Note 25 Share Capital
Authorized
We are 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.
Issued
Balance – December 31, 2018
Issued under option plans and share-settled plans
Repurchased
Balance – December 31, 2019
Share repurchase programs
Number of Common Shares
Share Capital
608,535,477
474,655
(36,067,323)
572,942,809
16,740
23
(992)
15,771
Board of Directors Approval
Expiry
Maximum Shares for Repurchase
2018 Normal Course Issuer Bid 1
2019 Normal Course Issuer Bid 2
February 20, 2018
February 20, 2019
February 22, 2019
February 26, 2020
50,363,686
42,164,420
1 On December 14, 2018, the normal course issuer bid was increased to permit the repurchase of up to approximately 8 percent of our outstanding common
shares for cancellation.
2 On December 2, 2019, the normal course issuer bid was increased to permit the repurchase of up to 7 percent of our outstanding common shares for
cancellation. Purchases of common shares can expire earlier than the date above if the maximum number of common shares allowable is acquired earlier or
we otherwise decide not to make any further repurchases.
Purchases under the normal course issuer bids were, or may be, made through open market purchases at market prices as well as by
other means permitted by applicable securities regulatory authorities, including private agreements.
The following table summarizes our share repurchases:
Common shares repurchased for cancellation
Average price per share
Total cost
2019
2018
36,067,323
52.07
1,878
36,332,197
50.97
1,852
As of February 19, 2020, an additional 2,214,780 common shares were repurchased for cancellation at a cost of $95 and an average
price per share of $42.84.
Dividends declared
Dividends declared for the years ended December 31 were as follows:
Declared
May 10, 2019
July 30, 2019
December 13, 2019
2019
Per Share
Declared
0.43
0.45
0.45
1.33
February 20, 2018
May 23, 2018
July 19, 2018
November 5, 2018
December 14, 2018
2018
Per Share
0.40
0.40
0.40
0.43
0.43
2.06
Subsequent to year-end, our Board of Directors declared a quarterly dividend of $0.45 per share payable on April 16, 2020 to
shareholders of record on March 31, 2020. The total estimated dividend to be paid is $257.
In millions of US dollars except as otherwise noted
Nutrien Annual Report 2019 123
Overview
Management’s Discussion & Analysis
Two Year Highlights
Financial Statements
Other Information
Note 26 Capital Management
The objective of our capital allocation policy is to balance the return of capital to our shareholders, improvements in the
efficiency of our existing assets, and delivery on our growth opportunities, while maintaining a strong balance sheet and
flexible capital structure to optimize the cost of capital at an acceptable level of risk. Our 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.
We monitor our 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.
We use a combination of short-term and long-term debt to
finance our operations. We typically pay floating rates of
interest on short-term debt and credit facilities, and fixed rates
on notes and debentures.
Adjusted net debt and adjusted shareholders’ equity are included as components of our capital structure. The calculation of adjusted
net debt, adjusted shareholders’ equity and adjusted capital are set out in the following table:
Short-term debt
Current portion of long-term debt
Current portion of lease liabilities
Long-term debt
Lease liabilities
Total debt
Cash and cash equivalents
Net debt
Unamortized fair value adjustments
Adjusted net debt
Total shareholders’ equity
Accumulated other comprehensive loss
Adjusted shareholders’ equity
Adjusted capital
We monitor the following ratios:
Adjusted net debt to adjusted EBITDA
Adjusted EBITDA to adjusted finance costs
Adjusted net debt to adjusted capital (%)
2019
976
502
214
8,553
859
11,104
(671)
10,433
(424)
10,009
22,869
251
23,120
33,129
2019
2.5
8.0
30.2
2018
629
995
8
7,579
12
9,223
(2,314)
6,909
(444)
6,465
24,425
291
24,716
31,181
2018
1.6
8.1
20.7
124 Nutrien Annual Report 2019
In millions of US dollars except as otherwise noted
Overview
Management’s Discussion & Analysis
Two Year Highlights
Financial Statements
Other Information
Note 26 Capital Management Continued
Other components of ratios above are calculated as follows:
Net earnings (loss) from continuing operations
Finance costs
Income tax expense (recovery)
Depreciation and amortization
EBITDA
Impairment of assets
Merger and related costs
Acquisition and integration related costs
Share-based compensation
Foreign exchange loss (gain), net of derivatives
Defined Benefit Plans Curtailment Gain
Adjusted EBITDA
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
Adjusted finance costs
2019
992
554
316
1,799
3,661
120
82
16
104
42
–
4,025
2019
554
(54)
18
(15)
503
2018
(31)
538
(93)
1,592
2,006
1,809
170
–
116
(10)
(157)
3,934
2018
538
(51)
12
(15)
484
We maintain a base shelf prospectus, which permits issuance
through April 2020 in Canada and the US, 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, 2019, we
filed a prospectus supplement to issue $1,500 of notes, as
discussed in Note 20.
Note 27 Commitments
A commitment is a legally binding and enforceable agreement to purchase goods or services in the future. The amounts
below reflect our commitments based on current expected contract prices.
Refer to Note 31 for details pertaining to the impact of the adoption of IFRS 16 in 2019 and Note 15 for the discussion related to the
accounting policies, estimates and judgments.
Supporting Information
Minimum future commitments under these contractual arrangements were as follows at December 31, 2019:
Within 1 year
1 to 3 years
3 to 5 years
Over 5 years
Total
1 Includes principal portion and estimated interest.
Lease
Liabilities 1
Long-Term
Debt 1
Purchase
Commitments
Capital
Commitments
Other
Commitments
249
364
234
455
1,302
894
1,268
1,923
10,307
14,392
877
766
438
209
2,290
43
7
–
–
50
118
137
58
124
437
Total
2,181
2,542
2,653
11,095
18,471
In millions of US dollars except as otherwise noted
Nutrien Annual Report 2019 125
Overview
Management’s Discussion & Analysis
Two Year Highlights
Financial Statements
Other Information
Note 27 Commitments Continued
Purchase Commitments
In 2018, we entered into a new long-term natural gas
purchase agreement in Trinidad, that began 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 foregoing table are based on floor prices and minimum
purchase quantities.
Profertil has long-term gas contracts denominated in
US dollars which expire in 2021, which account for virtually all
of Profertil’s gas requirements. YPF S.A., our joint venture
partner in Profertil, supplies approximately 70 percent of the
gas under these contracts.
The Carseland facility has a power co-generation agreement,
expiring on December 31, 2026, which provides 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.
Note 28 Guarantees
Accounting Policies
Guarantees are not recognized in the consolidated balance
sheets, but are disclosed and include contracts or
indemnifications that contingently require us to make
payments to the guaranteed party based on:
(cid:129) changes in the underlying contract or indemnification;
Supporting Information
In the normal course of business, we provide 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 us 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 us from making a reasonable estimate of the
Agreements for the purchase of sulfur for use in production of
phosphoric acid provide for specified purchase quantities and
prices based on market rates at the time of delivery.
Commitments included in the foregoing table are based on
expected contract prices.
As part of the agreement to sell the Conda Phosphate
operations (“CPO”), we entered into long-term strategic supply
and offtake agreements which extend to 2023. Under the
terms of the supply and offtake agreements, we 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.
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.
(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.
maximum potential amount that it could be required to pay
to counterparties; and
(cid:129) have not historically resulted in any significant payments by
Nutrien and, as at December 31, 2019, no amounts have
been accrued in the consolidated financial statements
(except for accruals relating to the underlying potential
liabilities).
We directly guarantee certain commitments of our investee
(such as railcar leases) under certain agreements with third
parties. We would be required to perform on these guarantees
in the event of default by the investee. No material loss is
anticipated by reason of such agreements and guarantees.
126 Nutrien Annual Report 2019
In millions of US dollars except as otherwise noted
Overview
Management’s Discussion & Analysis
Two Year Highlights
Financial Statements
Other Information
Note 29 Related Party Transactions
We transact with a number of related parties, the most significant being with our associates and joint ventures, key
management personnel and post-employment benefit plans.
Supporting Information
Sale of Goods
We sell potash from our 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, 2019 were
$1,625 (2018 – $1,657). Canpotex’s proportionate sales
volumes by geographic area are shown in Note 3.
The receivable outstanding from Canpotex is shown in Note 13
and arose from sale transactions described above. It is
unsecured and bears no interest. There are no provisions held
against this receivable.
Receivables from equity holders of our equity-
accounted investees
For certain equity holders of our other equity-accounted
investees, we have provided loans which have an outstanding
balance at December 31, 2019 of $1 (2018 – $Nil). There are
no provisions held against these receivables.
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
Transactions with Post-Employment Benefit Plans
Disclosures related to our post-employment benefit plans are shown in Note 23.
Note 30 Contingencies and Other Matters
2019
2018
15
31
3
12
61
19
53
3
23
98
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 of our control, or present obligations not recognized because the
amount cannot be sufficiently measured or payment is not probable.
Accounting Estimates and Judgments
The following judgments are required to determine our
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 our
consolidated financial statements.
In millions of US dollars except as otherwise noted
Nutrien Annual Report 2019 127
Overview
Management’s Discussion & Analysis
Two Year Highlights
Financial Statements
Other Information
Note 30 Contingencies and Other Matters Continued
Supporting Information
Canpotex
Nutrien is a shareholder in Canpotex, which markets Canadian
potash outside of Canada and the US. Should any operating
losses or other liabilities be incurred by Canpotex, the
shareholders have contractually agreed to reimburse it in
proportion to each shareholder’s productive capacity. Through
December 31, 2019, 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
We are engaged in ongoing site assessment and/or
remediation activities at a number of facilities and sites.
Anticipated costs associated with these matters are added to
accrued environmental costs in the manner described in
Note 24.
Environmental Remediation
We have established provisions for environmental site
assessment and/or remediation matters to the extent that
expenses associated with those matters we consider likely to
be incurred. Except for the uncertainties described below, we
do not believe that our future obligations with respect to these
matters are reasonably likely to have a material adverse effect
on our consolidated financial statements.
Legal matters with significant uncertainties include the
following:
and the related state agencies to resolve these matters.
Due to the nature of the allegations, we are uncertain as to
how the matters will be resolved. Based on settlements with
other members of the phosphate industry, we expect that
a resolution could involve any or all of the following:
1) penalties, which we currently believe 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 our Aurora
facility in 2016 indicated alleged exceedances of the
mercury emission limits that were established by the Final
Rule. We have 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 our 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 United States Environmental Protection Agency (“US
(cid:129) We operate in countries that are parties to the Paris
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 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
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 our 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, we believe that the ultimate
resolution of such actions is not reasonably likely to
have a material adverse effect on our consolidated financial
statements.
128 Nutrien Annual Report 2019
In millions of US dollars except as otherwise noted
Overview
Management’s Discussion & Analysis
Two Year Highlights
Financial Statements
Other Information
Note 30 Contingencies and Other Matters Continued
The breadth of our operations and the global complexity of tax
regulations require assessments of uncertainties and
judgments in estimating the taxes we 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 our tax assets and tax liabilities.
We own facilities that have been either permanently or
indefinitely shut down. We expect to incur nominal annual
expenditures for site security and other maintenance costs at
some 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 our
consolidated financial statements and would be recognized
and recorded in the period in which they are incurred.
Note 31 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 we have adopted and made and how they affect the amounts
reported in the consolidated financial statements. Certain of our policies involve accounting estimates and judgments because they
require us 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
Principles of
Consolidation
Accounting Policies
Accounting Estimates and Judgments
These consolidated financial statements include the
accounts of the Company and entities we control.
We have control if we have:
(cid:129) power over the investee to direct its relevant
activities;
(cid:129) exposure, or rights, to variable returns from
involvement with the investee; and
(cid:129) the ability to use our power over the investee to
affect the amount of our returns.
The existence and effect of potential voting rights
that are currently exercisable or convertible are
considered when assessing whether we control
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.
Judgment involves:
(cid:129) assessing control, including if we have the power to
direct the relevant activities of the investee; and
(cid:129) determining the relevant activities and the party that
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 our benefit; and
(cid:129) the exposure, or rights, to variability of returns from
the Company’s involvement with the investee.
In millions of US dollars except as otherwise noted
Nutrien Annual Report 2019 129
Overview
Management’s Discussion & Analysis
Two Year Highlights
Financial Statements
Other Information
Note 31 Accounting Policies, Estimates and Judgments Continued
Topic
Principles of
Consolidation
(continued)
Long-Lived
Asset
Impairment
Accounting Policies
Accounting Estimates and Judgments
Principal (wholly owned) Operating
Subsidiaries:
Potash Corporation of
Saskatchewan Inc.
Agrium Inc.
Agrium Canada Partnership
Agrium Potash Ltd.
Agrium U.S. Inc.
Cominco Fertilizer Partnership
Landmark Operations Ltd.
Nutrien Ag Solutions (Canada) Inc.
Nutrien Ag Solutions, Inc.
PCS Nitrogen Fertilizer, LP
PCS Nitrogen Trinidad Limited
PCS Phosphate Company, Inc.
Phosphate Holding Company, Inc.
Location
Canada
Canada
Canada
Canada
United States
United States
Australia
Canada
United States
United States
Trinidad
United States
United States
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
Manufacturer and distributor of crop nutrients
Manufacturer and distributor of crop nutrients
Crop input retailer
Crop input retailer
Crop input retailer
Production of nitrogen products in the United States
Production of nitrogen products in Trinidad
Mining and/or processing of phosphate products
Mining and/or processing of phosphate products and
production of nitrogen products in the United States
Intercompany balances and transactions are eliminated on consolidation.
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).
At the end of each reporting period, we review
conditions to determine whether there
is any indication that an impairment exists that could
potentially impact the carrying amounts of both our
long-lived assets (including property, plant and
equipment, and investments) to be held and used
and our identifiable intangible assets and goodwill.
When such indicators exist, impairment testing is
performed. Regardless, goodwill is tested at least
annually (in the fourth quarter).
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
Estimates and judgment involves:
(cid:129) identifying the appropriate asset or CGU;
(cid:129) determining the appropriate discount rate for
assessing the recoverable amount; and
(cid:129) making assumptions about future sales, market
conditions, terminal growth rates and cash flow
forecasts over the long-term life of the assets
or CGUs.
We 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 our consolidated
financial statements.
Impairments were recognized during 2019 and 2018 as
shown in Note 15 and Note 16.
At December 31, 2019, we reviewed our Phosphate
CGUs for impairment triggers. For our Aurora CGU,
we used judgment in assessing possible indicators of
impairment including expected mine life, supply and
demand variables and expected benchmark prices.
Based on our assessment, there were no impairment
triggers. For our White Springs CGU, we identified an
impairment trigger due to deteriorating price
expectations and the expected remaining mine life.
We completed an impairment analysis and determined
that there was no impairment in excess of the $250
impairment loss previously recorded at December 31,
2017.
130 Nutrien Annual Report 2019
In millions of US dollars except as otherwise noted
Overview
Management’s Discussion & Analysis
Two Year Highlights
Financial Statements
Other Information
Note 31 Accounting Policies, Estimates and Judgments Continued
Topic
Long-Lived
Asset
Impairment
(continued)
Accounting Policies
Accounting Estimates and Judgments
(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).
The following table highlights for White Springs
CGU sensitivities to the recoverable amount
which could result in additional impairment losses
or reversals of previously recorded losses:
Non-financial assets, other than goodwill, that
previously suffered an impairment loss are reviewed
at each reporting date for possible reversal of the
impairment.
Fair Value
Measurements
Fair value measurements are categorized into
levels based on the degree to which inputs are
observable and their significance:
(cid:129) Level 1 – Unadjusted quoted prices (in active
markets accessible at the measurement date for
identical assets or liabilities).
(cid:129) Level 2 – 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).
(cid:129) Level 3 – Prices or valuation techniques that
require inputs that are both unobservable and
significant to the overall measurement.
Restructuring
Charges
Foreign
Currency
Transactions
Plant shutdowns, sales of business units or other
corporate restructurings may trigger restructuring
charges. Incremental costs for employee termination,
contract termination and other exit costs are
recognized as a liability and an expense when:
(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.
Items included in our consolidated financial
statements and those of our subsidiaries are
measured using the currency of the primary
economic environment in which the individual
entity operates (the “functional currency”).
Potential Change
(percent)
Increase (Decrease)
to Recoverable
Amount
±1.0
±5.0
±0.5
±20
±20
±10
Key Assumptions
Sales prices
Forecasted EBITDA
over forecast period
Discount rate
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 our
assessment of the lowest level input that is significant to
the fair value measurement and is subject to estimation
and judgment.
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
our subsidiaries. In determining the functional currency
of our operations, we primarily considered the currency
that determines the pricing of transactions rather than
focusing on the currency in which transactions are
denominated.
In millions of US dollars except as otherwise noted
Nutrien Annual Report 2019 131
Overview
Management’s Discussion & Analysis
Two Year Highlights
Financial Statements
Other Information
Note 31 Accounting Policies, Estimates and Judgments Continued
Topic
Foreign
Currency
Transactions
(continued)
Accounting Policies
Accounting Estimates and Judgments
Foreign exchange gains and losses resulting from the
settlement of foreign currency transactions, and from
the translation at period-end 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
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 of the
transaction is available and it is apparent that such
rate is a more suitable measurement.
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 we have applied. The standards disclosed below
had a material impact or disclosure impact on our consolidated financial statements.
Standard
IFRS 16,
Leases
Description
Impact
Issued to supersede IAS 17 and related standards,
we are required to apply a new model for lessee
accounting under which all leases will be recorded
as a 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.
We adopted IFRS 16 effective January 1, 2019, using the
modified retrospective method, which in our case resulted
in prospective application as there was no impact to
opening retained earnings on transition. Under this
method of adoption, we measured the ROU asset equal to
the lease liability and used our incremental borrowing rate
to determine the present value of future lease payments.
We have chosen to apply practical expedients, including
the use of a single discount rate for a portfolio of leases
with reasonably similar characteristics, reliance on previous
assessments as to whether lease contracts are onerous,
exclusion of initial direct costs in measuring ROU assets at
the date of initial application, the election not to separate
non-lease components and instead to account for lease
and non-lease components as a single arrangement,
recognition exemptions for short-term and low-value
leases, use of hindsight in assessing lease terms and
grandfathering of the lease definition on transition.
Until January 1, 2019, substantially all of our leases were
classified as operating leases under IAS 17, “Leases”,
with payments expensed on a straight-line basis over the
lease term.
132 Nutrien Annual Report 2019
In millions of US dollars except as otherwise noted
Overview
Management’s Discussion & Analysis
Two Year Highlights
Financial Statements
Other Information
Note 31 Accounting Policies, Estimates and Judgments Continued
IFRS 16, Leases (continued)
The following table summarizes the impact of adopting IFRS 16 on the consolidated financial statements:
December 31,
2018
IFRS 16
Adjustment
January 1, 2019
Property, plant and equipment – ROU assets 1
Lease liabilities, including current portion
46
20
1,059
1,059
Undiscounted operating lease commitments at December 31, 2018
Operating lease commitments that did not qualify as leases under IFRS 16
Extension options reasonably certain to be exercised
Effect of discounting using the incremental borrowing rate at January 1, 2019 2
Discounted operating lease commitments at January 1, 2019 2
Finance lease liabilities at December 31, 2018
Total lease liabilities at January 1, 2019
1,105
1,079
1,087
(150)
297
(175)
1,059
20
1,079
1 Balances as at December 31, 2018 reflect finance leases that were included in property, plant and equipment.
2 When measuring lease liabilities, we discounted lease payments using our incremental borrowing rate at January 1, 2019. The weighted average rate applied
was 3.52 percent.
Refer to Note 15 and Note 21 for additional information relating the adoption of IFRS 16.
We have adopted the following amended standards and interpretations with no material impact on our consolidated financial
statements:
(cid:129) IFRIC 23, Uncertainty Over Income Tax Treatments
(cid:129) Amendments to IFRS 3, Business Combinations
(cid:129) Amendments to IAS 28, Long-term Interests in Associates
(cid:129) Amendments to IAS 12, Income Taxes
and Joint Ventures
(cid:129) Amendments to IAS 19, Employee Benefits
(cid:129) Amendments to IAS 23, Borrowing Costs
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, 2019. The
following amended standards are not expected to have a
material impact on our consolidated financial statements:
(cid:129) Conceptual Framework for Financial Reporting
(cid:129) Amendments to IAS 1 and IAS 8, Definition of Material
(cid:129) Amendments to IFRS 3, Business Combinations, Definition of
a business
The following amended standards and interpretations are being
reviewed to determine the potential impact on our consolidated
financial statements:
(cid:129) IFRS 17, Insurance Contracts
In millions of US dollars except as otherwise noted
Nutrien Annual Report 2019 133
Overview
Management’s Discussion & Analysis
Two Year Highlights
Financial Statements
Other Information
Terms and
Definitions
Terms
AECO
Argus
CRU
Doane
Alberta Energy Company, Canada
Argus Media group, UK
CRU International limited, UK
Doane University, USA
FAO or FAOSTAT
Food and Agriculture Organization of the United Nations, Italy
Fertecon
IFA
IMEA
Moody’s
NYMEX
NYSE
PNW
S&P
TSX
USDA
CDN
USD
AUD
Scientific Terms
Potash
Nitrogen
Phosphate
Fertecon Limited, UK
International Fertilizer Industry Association, France
Instituto Mato-Grossense De Economia Agropecuária, Brazil
Moody’s Corporation (NYSE: MCO), USA
New York Mercantile Exchange, USA
New York Stock Exchange, USA
Pacific Northwest, USA
Standard & Poor’s Financial Services LLC, USA
Toronto Stock Exchange, Canada
United States Department of Agriculture, USA
Canadian dollar
United States dollar
Australian dollar
KCI
NH3
UAN
MGA
DAP
MAP
SPA
AS
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)
ammonium sulfate (solid)
Product Measures
K2 O tonne
N tonne
P2 O5 tonne
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 tonne
Standard measure of the weights of all types of potash, nitrogen and phosphate products
134 Nutrien Annual Report 2019
Overview
Management’s Discussion & Analysis
Two Year Highlights
Financial Statements
Other Information
Definitions
Brownfield
Capital deployment
Community
Investment
Compound Annual
Growth Rate
Environmental
Incidents
Employee Turnover
Rate
Investing Capital
New project expanding or developing an existing facility or operation
Cash outlays for property, plant and equipment, intangible assets, business acquisitions (net of cash
acquired), investments, dividends and repurchase of common shares.
Represents cash disbursements, matching of employee gifts and in-kind contributions of equipment,
goods and services and employee volunteerism (on corporate time).
Represents 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.
Number of incidents includes release quantities that exceed the US Comprehensive Environmental
Response, Compensation, and Liability Act limits, in Potash facilities any release that exceeds
Saskatchewan Release Limits (based on the Saskatchewan Environmental Code), non-compliance
incidents that exceed $10,000 in costs to reach compliance or enforcement actions with fines exceeding
$1,000.
The number of permanent employees who left the Company (due to deaths and voluntary and
involuntary terminations, and excluding announced workforce reductions) as a percentage of average
total employees during the year. 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.
Greenfield capacity
New operation built on undeveloped site
Latin America
South America, Central America, Caribbean and Mexico
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.
Mmt
Million metric tonnes
North America
Canada and the US
Offshore
All markets except Canada and the US
Sustaining Capital
Sustaining capital expenditures are required to sustain operations at existing levels and include major
repairs and maintenance and plant turnarounds.
Taxes and Royalties
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 Annual Report 2019 135
Overview
Management’s Discussion & Analysis
Two Year Highlights & Terms
Financial Statements
Other Information
Board
of Directors
Senior
Management
136 Nutrien Annual Report 2019
Shareholder
Information
Dividends
Ownership
Common Share Prices
Dividend amounts paid to shareholders residing in Canada are
adjusted by the exchange rate applicable on the dividend record
date. Dividends are normally paid in January, April, July and October
with record dates normally set approximately three weeks in
advance of the payment date. Future cash dividends will be paid
out 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).
On February 19, 2020,
there were 519 holders of
record of the company’s
common shares.
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.
Offices
Nutrien’s registered head office is:
It also has corporate offices at:
Suite 500, 122 – 1st Avenue South
Saskatoon, Saskatchewan
Canada S7K 7G3
13131 Lake Fraser Drive SE
Calgary, Alberta
Canada T2J 7E8
5296 Harvest Lake Drive
Loveland, Colorado
US 80538
Investor Relations
Investor Relations Department
Email
investors@nutrien.com
Phone
(403) 225-7451
Transfer Agent
NYSE Corporate Governance
The certifications required by Section 302 of the Sarbanes-
Oxley Act of 2002 are filed as exhibits to our 2019 Annual
Report on Form 40-F.
You can contact AST Trust Company (Canada), the
corporation’s transfer agent, as follows:
Phone
Fax
Mail
1-800-387-0825
(toll-free within Canada and the US)
1-416-682-3860
(from any country other than Canada and the US)
1-514-985-8843
(all countries)
P.O. Box 1
320 Bay Street
Toronto, ON M5H 4A6
Website www.astfinancial.com