LEADING SOLUTIONS
FOR SUSTAINABLE
AGRICULTURE
Annual Report 2020
Corporate Overview
Letter from the President and CEO
Managementʼs Discussion & Analysis
Nutrienʼs Global Profile
Nutrienʼs Strategy
Focused Approach to Value Creation
Operating Segment Performance
& Outlook
Financial Overview
Enterprise Risk Management
Other and Appendix
Three-Year Highlights
Financial Statements & Notes
1
6
9
10
11
12
19
45
58
62
70
72
Terms & Definitions
133
Board of Directors & Senior Management 135
About this report:
You can find this report and information on Nutrien on our website at nutrien.com.
While we include certain non-financial information in this report, more detailed
information on our sustainability strategy and performance is provided on our website
at nutrien.com/sustainability.
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:
For definitions, further information and reconciliation of
these measures to the most directly comparable measures
under IFRS, see the “Non-IFRS Financial Measures” section.
• Adjusted EBITDA and related guidance
• Adjusted net earnings per share
• Free cash flow and free cash flow including changes
in non-cash operating working capital
• Retail adjusted EBITDA per US selling location
• Retail adjusted average working capital to sales
• Retail cash operating coverage ratio
• Potash cash cost of product manufactured
See the “Terms and Definitions” section for definitions,
abbreviations and terms used in this annual report.
LEADING SOLUTIONS FOR
SUSTAINABLE AGRICULTURE
Supporting growers in their pursuit to feed the future is ingrained in everything we
do. Nutrien is helping growers around the world to do more, grow more, feed more –
all in an increasingly innovative and sustainable way.
More than 200 million people have been added to the global population since 2018,
and Nutrien is focused on supporting growers to meet the challenge of feeding this
growing world. We will continue to work in lockstep with growers and other
stakeholders to meet the challenge of feeding another 2 billion people expected
to be added to the global population over the next 30 years.
Nutrien is reshaping what it means to be an agricultural input provider and we
are developing tools and solutions to enhance agricultural productivity and
sustainability practices. We built a groundbreaking digital platform, we offer
innovative products and solutions that address a changing agriculture landscape
and we introduced our revolutionary end-to-end Carbon Program.
Supported by our unique and advantaged position across the agricultural value
chain, Nutrien will be unrelenting in our pursuit of offering Leading Solutions for
Sustainable Agriculture to feed the future.
2 BILLION
ADDITIONAL
PEOPLE TO FEED
BY 2050
#1
AGRICULTURE
RETAILER GLOBALLY
BY SIZE
#1
LARGEST POTASH
PRODUCER BY
CAPACITY
A LEADER IN CARBON
MANAGEMENT
& SUSTAINABLE
AGRICULTURE
Source: United Nations, Nutrien
1
Nutrien Annual Report2020Overview Managementʼs Discussion & Analysis Three-Year Highlights Financial Statements Other Information GENERATING SUPERIOR LONG-TERM VALUE
Unique Competitive Advantages for Today and the Future
Nutrien is uniquely positioned with a value enhancing business model that we believe provides a clear
path for superior returns for shareholders. We are delivering leading whole-acre solutions backed by
world class assets, and we are shaping the agricultural landscape of tomorrow.
We expect to grow and optimize our business to deliver value that is under our control while our
integrated business provides significant earnings leverage to strengthening agriculture and fertilizer
fundamentals and prices.
GROWING OUR
BUSINESS – UNDER
OUR CONTROL
Nutrien is committed to growing
earnings through network
optimization, cost management,
expanded production,
organic growth and accretive
acquisitions.
NUTRIEN AG SOLUTIONS
(“RETAIL”)
We are bolstering our position as
the leading retail provider of crop
inputs by staying focused on our
grower customers.
We expect to deliver 3 percent
organic adjusted EBITDA growth
annually for the next three years, via
customer value creation including
deeper penetration of our proprietary
product portfolio, growth in digital
and financing capabilities, and
optimization of our network and
sustainability solutions.
We are executing on our accretive
tuck-in strategy in the US and
replicating our Retail model in
underserved markets, such as Brazil,
to leverage the benefits of our
business to quickly add efficiencies,
achieve synergies and deliver growth.
POTASH
We operate the most reliable, safe,
and efficient Potash assets as part of
a diverse and flexible mine network.
This allows us to position the right
tonnes at the right time and to
minimize risk.
We are unique and advantaged,
with 5 million tonnes of incremental
available capacity and with the
option to build an additional 5 million
tonnes in brownfield expansion as
needed – significantly more quickly
and at a lower cost than any
greenfield projects.
We are progressing our Next
Generation Potash program, which
is focused on using the latest mining
automation and digital technologies
from the mine face right through to
the mill. This is expected to further
lower our production cost per tonne
and improve safety performance.
NITROGEN & PHOSPHATE
Our Nitrogen production network
is low-cost and diversified, with
opportunities to execute high-
return and low-risk brownfield
projects, expand our production
of sustainability products and
significantly lower our carbon
footprint. Nutrien is already one of
the largest producers of blue/low
carbon ammonia in the world.
Operational initiatives in our Nitrogen
and Phosphate businesses are
expected to lower production costs
per tonne, increase asset utilization
and increase sales volumes.
Longer-term, we anticipate there
could be significant growth potential
for ammonia as a means to transport
hydrogen as fuel, which we are well
positioned to supply.
2
Nutrien Annual Report2020Overview Managementʼs Discussion & Analysis Three-Year Highlights Financial Statements Other Information EARNINGS LEVERAGE
Nutrien has significant earnings leverage to improving agriculture and fertilizer fundamentals.
+$650M1
ESTIMATED ANNUAL IMPACT TO NUTRIEN ADJ. EBITDA
FROM A $25/MT INCREASE IN FERTILIZER PRICES
MORE
THAN
+$100M
ESTIMATED ANNUAL IMPACT TO NUTRIEN ADJ. EBITDA
FROM AN ADDITIONAL 1MMT OF POTASH SALES VOLUMES
1 Excludes the impact of rising fertilizer prices on Nutrien Ag Solutions and provincial mining and production taxes.
FERTILIZER PRICES
Nutrien produces and distributes approximately
27 million tonnes of potash, nitrogen and phosphate
annually which creates significant earnings leverage when
fertilizer prices improve.
Fertilizer prices have begun to recover from cyclical
lows and are now above 3 year average levels, but below
greenfield project economics. Underlying fundamentals
for potash and nitrogen in particular, are strengthening,
providing tremendous earnings growth potential.
SALES VOLUMES
We have an additional 5 million tonnes of available
potash capacity beyond existing production levels, a
characteristic unique to Nutrien in the potash industry.
We expect to deploy this available capacity as global
demand grows, increasing our sales volumes and further
lowering our production costs per tonne.
FINANCIAL STRENGTH, STABILITY & CREDIBILITY
We believe Nutrien is the best positioned company in the agriculture input space with a track record of delivering growth,
value and strong shareholder returns.
STRONG BALANCE SHEET & CASH FLOWS
Nutrien’s integrated business model provides a diversified
earnings base, underpinned by stable growth in Nutrien Ag
Solutions and earnings torque from Potash, Nitrogen
and Phosphate.
This integrated model generates strong free cash flows,
and facilitates efficient allocation of capital to grow our
business while maintaining a strong balance sheet.
CREDIBILITY
Nutrien has a proven track record of execution including
delivering company synergies, strategic growth and strong
shareholder returns.
Our sights are aimed on growth and optimization of
our existing business, forging a path for the future of
agriculture while maximizing shareholder returns.
FREE CASH FLOW
($ millions)
Free Cash Flow
$2,157
$1,975
$1,830
Free Cash Flow Including Changes in
Non-Cash Operating Working Capital
$2,647
$2,404
$837
ADJUSTED EBITDA
($ billions)
2021 Adjusted EBITDA Guidance Range
Adjusted Net Debt/Adjusted EBITDA
$4.0-$4.5
$3.0
3.1x
$3.9
$4.0
2.5x
1.6x
$3.7
2.6x
2018 2019
2020
2018 2019 2020
2017
2018
2019
2020
2021F1
Source: Nutrien
Source: Nutrien
1 Based on adjusted EBITDA guidance provided on February 17, 2021.
3
Nutrien Annual Report2020Overview Managementʼs Discussion & Analysis Three-Year Highlights Financial Statements Other Information 2020 FINANCIAL & OPERATING HIGHLIGHTS
Committed to Growing, Optimizing and Delivering
We are raising expectations of what an agriculture company can be, by improving our business today
and continually positioning ourselves for tomorrow.
Financial
Operational
2019
2020
2019
2020
2019
2020
2019
2020
2019
2020
2019
2020
2019
2020
2019
2020
2019
2020
2019
2020
2019
2020
2019
2020
$3.7B
ADJUSTED EBITDA
$4.0B
$3.7B
$4.0B
$3.7B
$4.0B
$3.7B
$1.08M
RETAIL ADJUSTED EBITDA
PER US SELLING LOCATION
$0.97M
$1.08M
$0.97M
$1.08M
$0.97M
$1.08M
2019
2020
2019
2020
2019
2020
$4.0B
$3.7B
2019
2020
$0.97M
$1.08M
$3.3B
CASH PROVIDED BY
OPERATING ACTIVITIES
$3.7B
$3.3B
$3.7B
$3.3B
$3.7B
$3.3B
$3.7B
$3.3B
$1.8B
FREE CASH FLOW
$2.2B
$1.8B
$2.2B
$1.8B
$2.2B
$1.8B
$2.2B
$1.8B
$5.2B
GROSS MARGIN
2019
2020
2019
2020
2019
2020
2019
2020
2019
2020
2019
2020
2019
2020
2019
2020
10%
RETAIL ADJUSTED
EBITDA MARGIN
$59POTASH CASH COPM
PER TONNE 2
93%
AMMONIA
OPERATING RATE 3
9%
10%
9%
10%
9%
10%
9%
10%
$63
$59
$63
$59
$63
$59
$63
$59
Sustainable
20%
ESG RATING
IMPROVEMENT 1
NA
20
NA
20
NA
20
NA
20
2019
2020
2019
2020
2019
2020
2019
2020
~1MMT
2019
NA
BLUE / LOW CARBON
2020
1 Mmt
2019
AMMONIA PRODUCTION CAPABILITY
NA
2020
1 Mmt
2019
NA
2020
1 Mmt
2019
2020
NA
1 Mmt
25%
PROPORTION OF FEMALE
VICE PRESIDENT AND ABOVE
>500K
US SOIL SAMPLE
TESTS PERFORMED
2019
2020
2019
2020
2019
2020
2019
2020
2019
2020
2019
2020
2019
2020
25%
25%
25%
25%
25%
25%
25%
25%
>400K
>500K
>400K
>500K
>400K
>500K
>400K
>500K
2019
2020
2019
2020
2019
1
2020
$5.5B
$5.2B
$5.5B
$5.2B
$5.5B
$5.2B
2019
2020
2019
2020
2019
2020
91%
93%
91%
93%
91%
93%
ESG rating improvement from external rating agencies that provide a numeric score: MSCI ESG Rating, CDP Climate, S&P Global CSA,
Sustainalytics ESG Risk ISS Quality Scores, FTSE Russell.
2 Cash cost of product manufactured.
2019
3 Excludes Trinidad and Joffre.
2020
$5.5B
$5.2B
2019
2020
91%
93%
2019
2020
4
FIND OUT MORE AT NUTRIEN.COM
Nutrien Annual Report2020Overview Managementʼs Discussion & Analysis Three-Year Highlights Financial Statements Other Information
FINANCIAL & OPERATING SUMMARY
Year ended December 31
(millions of US dollars, except as otherwise noted)
2020
2019
Change (%)
Financial Performance
Sales
Gross Margin
Adjusted EBITDA
Retail Adjusted EBITDA
Potash Adjusted EBITDA
Nitrogen Adjusted EBITDA
Phosphate Adjusted EBITDA
Earnings per Share
Adjusted Net Earnings per Share
Strategic Initiatives
Cash Provided by Operating Activities
Free Cash Flow
Dividend Payout/Free Cash Flow
Adjusted Net Debt/Adjusted EBITDA
Working Capital Ratio
Retail Adjusted EBITDA to Sales
Retail Adjusted Average Working Capital to Sales
$
20,908
$ 20,084
5,239
3,667
1,430
1,190
1,080
232
0.81
1.80
5,502
4,025
1,231
1,593
1,239
194
1.70
2.17
$
$
3,323
1,830
$
$
3,665
2,157
56%
2.6x
1.4
10%
15%
47%
2.5x
1.2
9%
23%
Retail Adjusted EBITDA per US Selling Location
$
1.075
$
0.967
Retail Cash Operating Coverage Ratio1
Potash Cash COPM per Tonne
Ammonia Operating Rate
Non-Financial Performance
CO2 Equivalent Captured (Mmt)
Lost-Time Injury Frequency 2
Total Employees
Voluntary Employee Turnover Rate 3
Community Investment
Environmental Incidents
$
$
61%
59
93%
1.0
0.25
$
62%
63
91%
1.2
0.34
23,100
22,300
9%
18
23
$
9%
17
23
1 Adjusted to reflect what the metric would have been prior to a reclassification of certain immaterial figures.
2 Frequency based for every 200,000 hours worked.
3 Based on regular full-time and part-time employees.
+4
-5
-9
+16
-25
-13
+20
-52
-17
-9
-15
+9
+4
+17
+1
-8
+11
-1
-6
+2
-17
-26
+4
–
+6
–
5
Nutrien Annual Report2020Overview Managementʼs Discussion & Analysis Three-Year Highlights Financial Statements Other Information
LETTER FROM THE PRESIDENT AND CEO
2020 will go down in the history books as a year like no other and I hope that as you are reading this
you and your loved ones are safe and healthy. While virtually every person, community and sector of
the economy has been impacted by COVID-19, demand for agriculture products and crop inputs has
shown incredible resilience.
“ We believe Nutrien is
the best-positioned
company in the ag sector
to capitalize on improving
market fundamentals.”
Chuck Magro, President
and Chief Executive Officer
– Nutrien
The importance of food security and agriculture’s purpose
Our sector and Company have a responsibility to provide
to feed the world has never been more apparent and
the world’s farmers with the crop inputs needed to grow
important. Nutrien continued to execute its strategy and again
and produce healthy and nutritious food. In fact, we did
demonstrated stability with its business model which is built
just that. At the outset of the pandemic we rolled out a
to weather market volatility. Nutrien is positioned to take
comprehensive operating plan and have been adapting to
advantage of the strengthening agricultural fundamentals we
new developments ever since. We implemented COVID-19
saw this past year and into 2021.
protocols across our operations to help protect and support
While COVID-19 created significant challenges for most
companies globally, Nutrien successfully stuck to our
strategy, stayed the course and demonstrated stability. In
fact, thanks to the adaptability, resilience and stamina
of our more than 23,000 employees worldwide, we were
able to work together in an organized and proactive
manner to allow Nutrien to not only weather the storm,
but to continue to grow and strengthen our business.
Having said this I recognize it’s been a very challenging
year for people around the globe, including many of our
employees and communities where we operate. At
our employees, and our facilities have been able to continue
to operate at normal rates, and in many cases even above
pre-COVID-19 levels. Virtually all of our corporate staff
shifted to working from home in early 2020 and we expect
that to continue until it is safe to return to our offices, which
may vary by region. We also hosted frequent company-wide
webcasts to ensure an open exchange of information with
the Executive Leadership Team and all Nutrien employees,
which is ongoing. We remain committed to helping ensure
our employees and communities have the tools and support
they need to weather this storm.
Nutrien, we strive to recognize and support our key
Looking into 2021, the outlook for our business shows
stakeholders in a multitude of ways to address the
significant strengthening in market fundamentals. This is
challenges created by the global pandemic.
supported by much stronger crop prices globally and
6
Nutrien Annual Report2020Overview Managementʼs Discussion & Analysis Three-Year Highlights Financial Statements Other Information farmers’ cash margins above 9-year highs, which is due to a
reduce our cash cost of production per tonne which resulted
combination of strong global demand for grains and oilseeds
in record low results for Nutrien. The outlook for potash has
and lower-than-expected crop production in 2020.
improved for 2021, starting the year at much higher prices
PROGRESS AND PERFORMANCE
than the average in 2020, while remaining very affordable for
growers. For our Nitrogen business, we achieved record high
Taking a step back for reflection, it has been three years since
sales volumes in 2020 through higher combined ammonia
the formation of Nutrien and I believe the benefits of the
operating rates at our North American facilities and the
merger are clearly evident. If you look at our 2017 combined
benefit from recent brownfield debottleneck expansions
historical adjusted EBITDA levels and adjust them for the
which were brought on-stream on time and on budget.
lower average fertilizer prices in 2020, our 2020 adjusted
EBITDA is $900 million higher – thanks primarily to the over
$650 million in ongoing synergies we captured as a result
of the merger. Furthermore, over this time we increased
our dividend by 15 percent, bought back 12 percent of our
common shares outstanding and have grown our Nutrien
Ag Solutions business by over 20 percent – all while having
one of the best health and safety records in the industry.
We sold our 26 percent equity position in the Misr Fertilizers
Production Company S.A.E. (“MOPCO”) nitrogen facility in
Egypt for $540 million, and expect to redeploy the proceeds
to generate higher returns for shareholders. This is another
example of our commitment to a continual and rigorous
portfolio review to optimize our business.
OUR ESG AND SUSTAINABILITY GOALS
During 2020, we also made good progress toward our targets
During 2020, we made great strides towards our goal to
for virtually all of the key metrics that we identified in 2019,
be the leader in sustainability in the global agriculture sector.
as we continue to focus on controlling our controllables.
This included improved cash cost of production per tonne
for potash and nitrogen, increasing Retail adjusted EBITDA
per US selling location, stronger adjusted EBITDA margins
for our Nutrien Ag Solutions business and improved Retail
average working capital and cash operating coverage results.
We continued to grow Nutrien Ag Solutions in 2020,
particularly in Australia, Brazil and the US. The Ruralco
Holdings Limited (“Ruralco”) acquisition in Australia, which
closed in late 2019, has been an exceptional acquisition as
we have captured the originally identified $30 million in
synergies ahead of schedule, and announced a further
$20 million in synergies expected to be captured by the end
of 2021. In Brazil, we made two acquisitions in 2020 and
expect run-rate revenue in Brazil to surpass $500 million
in 2021. We anticipate Brazil could generate $100 million in
annual adjusted EBITDA within the next three years.
Another major success story this year was the acceptance
and adoption of our leading Retail digital platform, where
sales exceeded $1.2 billion in 2020 – more than double
the goal of $500 million we had set at the start of the
year. While the pandemic played a role in the rapid rate of
use, we believe this strong and positive trend will continue,
particularly given the new functionalities we expect
to introduce.
Within our Potash operations we increased sales volumes
by over 1 million tonnes this year, and took actions to further
That is one of the reasons our theme for this year’s Annual
Report is “Leading Solutions for Sustainable Agriculture”
and we have taken that challenge and opportunity to heart.
We are working on our broader climate-smart strategy,
with numerous investments made over the years to
develop climate-friendly products and services. For
example, Nutrien is one of the leading producers of blue/
low carbon ammonia, with approximately 1 million tonnes
of production capability. Looking back on 2020, we
achieved an approximate 20 percent improvement in our
overall ESG ratings, and made substantial progress
compared to our peer groups. We expect to unveil a
comprehensive long-term strategy, plans and targets in April
2021 to continue to demonstrate our leadership in this area.
In the area of safety, health and environment, I’m pleased
to report that 2020 was our most successful year to date
which meant we sent more workers home safe each day
and maintained a low level of environmental incidents.
We believe our safety culture and leadership are the
primary drivers of these results. By focusing on prevention
of incidents, increasing awareness through leadership
presence, and creating an open dialogue environment,
we improved performance. We expect to build on this year’s
excellent results, as nothing is more important to me, the
Nutrien Executive Leadership Team or the Board of
Directors than the well-being of our people and the
communities in which we operate.
7
Nutrien Annual Report2020Overview Managementʼs Discussion & Analysis Three-Year Highlights Financial Statements Other Information In late 2020, Nutrien announced what we expect will be
We also gave back to the communities in which we
the world’s leading carbon management and sustainable
operate, particularly in this year of increased need. We
agriculture program, and I believe we are uniquely
contributed $18 million in community investment including
positioned to offer the industry’s most comprehensive
approximately $2 million for hunger relief, working with over
end-to-end carbon program. The program makes it easy
200 charities supporting food programs in North America,
for growers to adopt more sustainable agronomic practices
Australia, South America and Trinidad. Disaster relief needs
that generate significant financial benefits for the grower,
were also high this year and we donated nearly $250,000 to
while also delivering positive carbon outcomes that can
local communities impacted by fires in the Western US and
be seamlessly verified, thereby creating carbon credits that
Australia, as well those impacted by the Derecho storm in
can be traded. We have the opportunity to leverage and
Iowa and hurricanes in the Southern US.
further strengthen our trusted and direct relationship with
growers across North and South America and Australia, with
LOOKING AHEAD
year-round and full-acre agronomic support and advice. Our
We believe Nutrien is the best-positioned company in the
position is further strengthened by our investments in our
ag sector to capitalize on improving market fundamentals,
integrated digital hub, which streamlines data collection and
and to capture additional potash volume the market needs
the measurement of sustainability performance, leveraging
by using our 5 million tonnes of strategic available capacity.
one of the widest ranges of proprietary and third-party
We have levers to grow our earnings significantly, with
products and value-added services in the industry. Nutrien is
actions under our control and as market fundamentals
well positioned to succeed and support all aspects of carbon
continue to improve. We will benefit from stronger global
credit generation and monetization given the breadth of our
agricultural markets and the expected improvement in the
assets, capabilities, digital platform, industry leadership and
fertilizer cycle – and as always we will focus on what we
access to and strong relationships with growers.
can control and follow through on our commitments.
In the coming years I plan to call on companies and leaders
As the world’s largest provider of crop inputs, services and
across the agriculture industry, as well as governments,
solutions, Nutrien has a vital role to play in producing more
to come together to put in place the systems and policies
food and delivering on our purpose to Grow Our World
needed to establish a new carbon economy for
from the Ground Up. 2020 has been a challenging year for
agriculture. We believe climate change is one of the
everyone, including Nutrien’s over 23,000 employees
world’s biggest issues.
From a people perspective, we are pleased to report
the results of our 2020 employee engagement survey,
where our overall engagement score was 89 percent, a
leading score among peers. We are advancing efforts related
to diversity and inclusion, and in 2020, we established a
Global Inclusion Council of Senior Leaders from each
globally, who by working together, have made a major
contribution to feeding the world and delivering strong
results through this pandemic. On behalf of the Board and
the Executive Leadership Team, I want to thank our valued
employees, customers and communities in which we
operate for the commitment they have shown during these
unprecedented times.
business unit and geography. We also structured a new
Thank You,
equity, diversity and inclusion (“EDI”) center of excellence
which will be operationalized in the first quarter of 2021
and we will provide targets and goals. Lastly, in November
Nutrien was named one of Canada’s Top Employers for
the second year in a row. This is one of several awards
Chuck Magro
and recognitions we have received recently, in addition
President and Chief Executive Officer
to, Achievers 50 Most Engaged Workplaces, Canada’s Top
Employers for Young People, Canada’s Best Diversity
Employers and Saskatchewan’s Top Employer.
February 18, 2021
8
Nutrien Annual Report2020Overview Managementʼs Discussion & Analysis Three-Year Highlights Financial Statements Other Information MANAGEMENT’S
DISCUSSION & ANALYSIS
As at and for the year ended December 31, 2020
The following management’s discussion and analysis (“MD&A”) is the responsibility of management and is dated as of February 18, 2021. The Board of
Directors (“Board”) 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 approval of this disclosure. The Board 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. This MD&A is based on the Company’s audited consolidated financial statements for the year
ended December 31, 2020 (“financial statements”) based on International Financial Reporting Standards (“IFRS”) as issued by the International Accounting
Standards Board, 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:
• Adjusted EBITDA
• Adjusted net earnings and adjusted net earnings
• Potash cash cost of product manufactured
• Ammonia controllable cash cost of product
per share
manufactured
• Adjusted EBITDA, adjusted net earnings per share
and sustaining capital expenditures guidance
• Free cash flow and free cash flow including
• Retail adjusted average working capital to sales
• Retail adjusted average working capital to sales
excluding Nutrien Financial
changes in non-cash operating working capital
• Retail cash operating coverage ratio
• Retail normalized comparable store sales
• Retail adjusted EBITDA per US selling location
• Nutrien Financial net interest margin
• Sustaining and investing capital expenditures
• Gross margin excluding depreciation and
amortization per tonne - manufactured
For definitions, further information and reconciliation of these measures to the most directly comparable measures under IFRS, see the “Non-IFRS Financial
Measures” section.
Also see the cautionary statement in the “Forward-Looking Statements” section.
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 the “Terms and Definitions” section for definitions, abbreviations and terms used in this 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, 2020, 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 Report2020Overview Managementʼs Discussion & Analysis Three-Year Highlights Financial Statements Other Information
Overview
Managementʼs Discussion & Analysis
Three-Year Highlights
Financial Statements
Other Information
NUTRIEN’S GLOBAL PROFILE
We operate globally & across the agriculture value chain
Nutrien is the world’s largest provider of crop inputs and services, playing a critical role in helping
growers increase food production in a sustainable manner. We produce and distribute 27 million
tonnes of potash, nitrogen and phosphate products worldwide and we deliver leading solutions
through the world’s premier Ag retail network, providing exceptional access to growers across three
continents. We continue to enhance our production and distribution capabilities across multiple
paths including the development of our leading digital platform in the Ag retail market. We operate
in 13 countries with more than 23,000 employees globally.
Nutrien Ag Solutions (“Retail”)
Potash
~1,500
NORTH AMERICA
LOCATIONS
>425
AUSTRALIA
LOCATIONS
>35
BRAZIL
LOCATIONS
>70
OTHER
LOCATIONS
20.6 MMT
NAMEPLATE
CAPACITY
6
POTASH
MINES
~300
NORTH AMERICAN
DISTRIBUTION POINTS
>40
COUNTRIES
SERVED
Nitrogen
14PRODUCTION
FACILITIES
13AMMONIA
PLANTS
16PRODUCTS
PRODUCED
~60%
FERTILIZER RELATED
SALES
FIND OUT MORE
Nutrien Factbook
Nutrien Digital Video
Nutrien Ag Solutions
Potash Facility Tour
To view and download
our Industry Factbook, visit
https://www.nutrien.com/
resources
To view the Nutrien Digital
video, visit https://www.
youtube.com/watch?v=Swg06_
cjvno&feature=youtu.be
To view A Day in the Life
of Nutrien Ag Solutions,
visit https://www.youtube.
com/watch?v=OnUF1e1Do_
A&t=70s
To view the Nutrien Potash
Facility Tour, visit
https://www.youtube.com/
watch?v=OFECEkOcb4w
10
Nutrien Annual Report2020 Overview
Managementʼs Discussion & Analysis
Three-Year Highlights
Financial Statements
Other Information
NUTRIEN’S STRATEGY
At Nutrien, our purpose is to Grow Our World from the Ground Up. Our unique mix of world-class
assets and position across the agricultural value chain provides exceptional opportunities to
create value.
Nutrien’s strategy is to strengthen our channel to the grower and improve our competitive position as the world’s largest
crop input retailer through optimizing our world-class and low-cost production assets. We are focused on optimizing and
investing in our business to create superior value for both shareholders and customers.
1 ENHANCING OUR
LEADING POSITION
2 LEVERAGING
TECHNOLOGY
We focus on enhancing our world-class and low-cost
potash and nitrogen production network and creating
value and efficiencies through the integration of our
supply chain. This includes the optimization and growth
of the world’s largest Ag retail network. We develop and
deliver value-enhancing whole-acre solutions to help
growers produce abundant, healthy and sustainable
food. These solutions include our comprehensive digital
capabilities, agronomic tools and deep portfolio of
proprietary products.
We invest in new tools and solutions to help lower our
costs, to drive efficiencies and safety and to better serve
our customers, including the use of leading solutions
for sustainable agriculture. We developed the leading
digital agriculture retail platform that provides field
planning, digital agronomy, e-commerce and sustainability
solutions and we continue to expand our proprietary
product portfolio. Our Next Generation Potash program
continues to progress and we are executing initiatives in
Nitrogen that leverage technology to lower production
costs, increase efficiency and improve safety and
sustainability results.
3 LEADING AG
SUSTAINABILITY
4 GROWING RETURNS &
FINANCIAL STABILITY
Nutrien is focused on creating long-term value for
shareholders, including earnings growth. We believe much
of this growth is within our control by investing in our
world-class Retail business, growing nutrient production
and optimizing the entire network. Our capital allocation
policy prioritizes sustaining our assets, preserving the
strength and resiliency of our balance sheet, supporting a
sustainable and growing dividend and applying a rigorous
compete-for-capital reinvestment strategy to maximize
shareholder value.
Nutrien is focused on being a leader in reducing
carbon emissions generated along the ag value chain.
Nutrien’s Carbon Program creates the opportunity to
financially reward growers who apply best practices and
climate smart products, which is expected to drive a step
change in agricultural sustainability and improved carbon
management. By leveraging our unique relationship with
the grower, we can deliver an end-to-end program
where we can add value throughout.
At our nitrogen production facilities, we have the capability
to produce approximately 1 million tonnes of blue/low
carbon ammonia annually, we are planning to expand the
production of sustainable products and we are further
planning to reduce our carbon footprint through energy
use efficiency and abatement projects. At our potash
mines, we are planning to reduce our carbon footprint
and lower our costs through self-generated electricity
and heat, and we are progressing projects to improve
water management.
11
Nutrien Annual Report2020 Overview
Managementʼs Discussion & Analysis
Three-Year Highlights
Financial Statements
Other Information
FOCUSED APPROACH TO VALUE CREATION
We developed a specific approach to capital allocation and clearly defined a strategy to grow the
business, improve efficiencies and create value.
We established several priorities and initiatives designed to create value and deliver Leading Solutions for Sustainable
Agriculture and we set clearly defined targets and performance metrics to measure progress. Our strategy and performance
are supported by governance oversight and risk management by our Executive Leadership Team and Board of Directors.
13
14
01 PLAN
03 PRODUCE
05 PRESERVE
02 PLANT
04 PROFIT
15
16
17
18
NUTRIEN’S ENVIRONMENT,
SOCIAL AND GOVERNANCE
(“ESG”) STRATEGY
Raising expectations of what an agriculture
company can be.
NUTRIEN’S CARBON PROGRAM
Nutrien is working to solve some of the
world’s biggest challenges: producing
more food with less land, water and
environmental impact.
NUTRIEN AG SOLUTIONS
Driving a change in agriculture that delivers
growth and reinforces our competitive
advantages.
A GLOBAL LEADER IN POTASH
Growing sales with global demand and
lowering production costs within our flexible
network of mines.
WELL POSITIONED NITROGEN
OPERATIONS
Improving operating rates, reducing
greenhouse gas (“GHG”) emissions and
positioning for alternative product potential.
CAPITAL ALLOCATION
Focusing on financial growth and
shareholder returns.
12
Nutrien Annual Report2020
Overview
Managementʼs Discussion & Analysis
Three-Year Highlights
Financial Statements
Other Information
NUTRIEN’S ESG STRATEGY
At Nutrien, we are raising expectations of what an agriculture company can be and how we can
make positive contributions.
We are integrating ESG practices across our Company with a cohesive strategy that is driven by our leadership and
governance. Over the past year, our third party ESG ratings have increased by approximately 20 percent and our goal is
to further improve by delivering a comprehensive ESG strategy and related targets in 2021. The strategy will provide a
roadmap for our initiatives, targets and goals while creating accountability.
ENVIRONMENT
SOCIAL
GOVERNANCE
We embed strong corporate
governance systems and principles
in our business through a diverse
and independent Board of Directors,
strong ethical principles that inform
our activities, and rigorous systems
for cybersecurity and data privacy.
Nutrien’s corporate governance
framework includes policies and
processes that define the roles of
the Board and Executive Leadership
Team. It also ensures that our
business practices meet high
ethical standards.
LEARN MORE
https://www.nutrien.com/what-
we-do/governance
We are committed to reducing
the environmental impacts of our
operations on air, land and water, and
developing products and innovative
solutions that help growers tackle the
environmental challenges facing the
agriculture industry.
Working with growers to apply
today’s best practices is key to the
sustainability of the agriculture
industry. Development of new
technologies, practices and programs
are required to support this journey,
which is why Nutrien launched a
comprehensive agriculture carbon
program and continues to invest in
the development of a portfolio of
sustainable products and solutions
for growers. We are also helping
drive nutrient use efficiency and farm
productivity, provide environmentally
sustainable soil and plant health
solutions, and enable digital
agronomic and sustainability analysis.
LEARN MORE
Nutrien's Carbon Program p14
Blue/low Carbon Ammonia p17
Next Generation Potash p16
As part of Nutrien’s purpose driven
culture, we aim to develop respectful
and positive relationships with our
employees, contractors, suppliers,
customers, and local communities.
We attract and retain our people
by investing in the experience and
engagement of our employees,
developing the best talent, and
fostering diversity and inclusion in
Nutrien’s culture. In addition, we have
an effective succession management
process to safeguard the long-term
achievement of our strategy.
Nothing is more important to
Nutrien than the well-being of our
employees, which was emphasized
by our response during the COVID-19
pandemic. Ensuring safe operations
and delivering on our commitment
to keep employees and contractors
safe are also essential elements
of delivering strong business
performance.
13
Nutrien Annual Report2020
Overview
Managementʼs Discussion & Analysis
Three-Year Highlights
Financial Statements
Other Information
NUTRIEN’S CARBON PROGRAM
We have an opportunity to make a significant contribution to farming both from an
environmental and an economic perspective. Doing so will require a new way of thinking about
carbon and unprecedented collaboration across the value chain.
“ Nutrien is working to
solve some of the world’s
biggest challenges:
producing more food
with less land, water and
environmental impact.”
Chuck Magro, President
and Chief Executive Officer
– Nutrien
FIND OUT MORE
https://www.nutrien.com/sustainability/carbon-program
01 PLAN
03 PRODUCE
05 PRESERVE
02 PLANT
04 PROFIT
NUTRIEN’S CARBON PROGRAM
Nutrien launched what we expect to be the agricultural
industry’s most comprehensive end-to-end carbon
program with a goal of making it easier for growers to
increase productivity, improve sustainability and boost
profitability. The program is designed to increase grower
margins per acre and generate verifiable carbon credits
that can be monetized.
This revolutionary program begins by targeting 100,000
acres of pilot farmland across North America in 2021
followed by a full roll-out, then a launch in Australia and
South America. We are designing scalable programs that
facilitate the use of climate smart inputs and sustainable
practices to reduce GHG emissions, improve soil carbon
sequestration, and measure the positive financial,
productivity and environmental impacts.
NUTRIEN’S ROLE
Nutrien is uniquely positioned to be a leader due to our
trusted relationship with growers, our focus on full acre
solutions and our leading digital capabilities. Leveraging
our digital crop planning capabilities, we build customized
field plans that target agronomic practices and product
recommendations designed to generate positive carbon
outcomes and drive yield efficiency.
Nutrien’s comprehensive Carbon Program is expected
to deliver benefits to growers and the environment while
engaging a broad base of value-chain partners and
stakeholders. We believe this will foster further adoption
of sustainable agricultural practices that drive positive
environmental outcomes and preserve security of global
food production to feed the world’s growing population.
~$30POTENTIAL PER ACRE 1
Increased agronomic profitability
(before carbon credits and
may vary significantly
based on existing practices).
~1-2 MT
CO2e/ACRE 1
Reduced or sequestered, depending
on grower practices adopted
– an incremental revenue stream that
could be worth +$10-20 per tonne
as voluntary markets grow.
85%
OF CURRENT AG EMISSIONS
EXPECTED TO BE OFFSET
GLOBALLY BY 2050 1
(excluding livestock production,
land use, land-use change and forestry)
1 Estimated run-rate impact from ag industry carbon management improvements and representing the potential range of benefits from Nutrien's
Carbon Program.
14
Nutrien Annual Report2020
Overview
Managementʼs Discussion & Analysis
Three-Year Highlights
Financial Statements
Other Information
NUTRIEN AG SOLUTIONS
Nutrien Ag Solutions is the leading Ag retailer globally with multiple drivers to grow the business.
In addition to growing our footprint through acquisitions, we are driving change that can deliver stronger organic growth.
Our strategy starts with our unique connection and relationship with the grower supported by our more than 3,600
agronomists and our leading digital platform. We deliver whole-acre solutions to enhance productivity, profitability and
sustainability. The five key drivers for our organic growth are outlined below.
1
Proprietary
Product
Expansion
2
Optimize
Assets
3
Digital
4
Nutrien
Financial
5
Sustainability
Growing our line of
proprietary products
Optimizing the US's
largest Ag retail chain
& distribution network
Revolutionizing Ag
retail with the leading
integrated digital
platform
Building customized
solutions that support
customer retention and
business growth
Supporting growers in
navigating challenges
of ag sustainability
We offer more than 2,000
proprietary products that
contribute to significantly
higher margins compared
to third-party products.
These products are often
customized for specific
growing regions and
conditions, and include
patented technologies.
We develop these
products at the more than
30 facilities dedicated to
innovation, breeding and
associated production.
As the largest Ag retailer
in our key markets, we
target optimization
throughout our network.
We are creating pathways
to drive efficiency in our
cash operating coverage
ratio, average working
capital and adjusted
EBITDA per US selling
location.
Nutrien Ag Solutions
provides the leading
digital tool set in retail
agriculture that facilitates
our grower customers
and our agronomists to
collaborate in new and
unique ways that drive
efficiency, convenience,
and a better outcome in
the field.
We established aggressive
goals on each key
performance indicator,
we are executing against
those goals and we are
closely monitoring our
performance.
The efficacy and
efficiency of our digital
platform is delivering
tangible benefits that
include improved
customer loyalty and
higher customer spend,
all of which drive organic
adjusted EBITDA growth.
LEARN MORE
Nutrien Digital video
visit https://www.you
tube.com watch?v=Swg
06_cjvno&feature=you
tu.be
We believe Nutrien is
uniquely positioned to
offer the industry's most
comprehensive, end-
to-end carbon program
making it easy for growers
to adopt sustainable,
agronomic practices that
aim to generate positive
carbon outcomes,
translating into additional
earnings for our farmer
customers.
LEARN MORE
Nutrien's Carbon
Program https://
www.nutrien.com/
sustainability/
carbon-program
We developed Nutrien
Financial to formalize
short-term financing
we have historically
offered to our customers
through payment terms,
making it easier and
more convenient for
them to access credit
and to enhance our
collection and credit
risk management
practices. We expect
Nutrien Financial will
deliver earnings through
improved customer
retention, loyalty and
purchasing while creating
direct revenue from
finance arrangements.
It also reduces our
cost of debt through
favorable credit rating
considerations.
LEARN MORE
Retail Financial
Performance p24
15
Nutrien Annual Report2020
Overview
Managementʼs Discussion & Analysis
Three-Year Highlights
Financial Statements
Other Information
A GLOBAL LEADER IN POTASH
We are the largest soft rock miner and potash producer in the world, with unmatched
competitive advantages.
We operate a flexible network of six mines with 5 million tonnes of available capacity we expect to deploy as demand
grows or as opportunities arise. We operate the most reliable, safe and efficient network of assets in the industry.
Our available capacity is positioned to deploy strategically, and we are busy leveraging technology across our operations
through our Next Generation Potash program.
What is the Next Generation Potash program? This program is a series of initiatives targeted to enhance and improve
production, from the mine face right through to the mill. The benefit from the collective program is larger than the sum of
its parts, and focuses on two key pillars to drive value:
SAFETY, COST EFFICIENCY
& FLEXIBILITY
ESG & SUSTAINABILITY
The active mining face presents the single largest safety
risk to our underground workers and we are implementing
tele-remote and autonomous operations to remove them
from that risk.
We are empowering safety and value-driven decisions with
real-time information supported by our digital capabilities,
advanced process controls and smart planning to optimize
our production process, increase production capabilities
and lower production costs per tonne.
We are also extending asset life by monitoring and
predicting key equipment parameters and performance.
The Next Generation Potash program is also expected
to reduce the environmental footprint of our potash
operations. The self-generation of power and thermal
energy will reduce CO2 intensity and lower our cash
production costs per tonne. At the same time, the use of
advanced process control systems are expected to reduce
natural gas consumption and leach water usage in the
milling process.
In addition, by using more of our existing available
capacity, we will also reduce the per tonne consumption
of energy and materials.
As we enhance and improve our potash operations, Nutrien
is committed to a fair transition into autonomous mining
operations by evaluating the required transformation of
our workforce.
100%
ROCANVILLE MINING FLEET
ENABLED TO RUN OPERATOR NOT
PRESENT DURING SHIFT CHANGES
(~3 HOURS)
2MINING MACHINES OUTFITTED
WITH SURFACE REMOTE OPERATION
CAPABILITIES AND AUTONOMOUS
CONTROL AT LANIGAN
ROCANVILLE
SELF-GENERATED POWER
UNDER CONSTRUCTION
WITH OPPORTUNITY FOR
FURTHER ROLL OUT
IMPROVED
SAFETY AND EFFICIENCY
FROM DIGITAL INITIATIVES
16
Nutrien Annual Report2020
Overview
Managementʼs Discussion & Analysis
Three-Year Highlights
Financial Statements
Other Information
WELL POSITIONED NITROGEN OPERATIONS
Nutrien has a leading Nitrogen business with strategically advantaged assets and an opportunity
to further optimize our business.
In addition to improving ammonia operating rates and enhancing safety and reliability, we have also invested to lower
GHG emissions and expand our product mix.
REDUCING GHG
EMISSIONS
BLUE/LOW CARBON
AMMONIA
ENVIRONMENTALLY
SMART PRODUCTS
For Nutrien, nitrogen production
represents more than three-quarters
of our total scope 1 & 2 emissions,
which is why we are focused on
reducing that footprint.
We have several projects underway
that are expected to reduce the
carbon footprint of our nitrogen
operations. Construction began
on abatement projects totaling
$50 million, that are expected to
reduce CO2 equivalent emissions
by over 1 million tonnes by 2023,
equating to an approximate 7 percent
reduction in our company wide scope
1 & 2 emissions. Further, we have
several other projects that will reduce
our overall emission intensity.
Nutrien is one of the world’s
largest blue/low carbon ammonia
producers. We capture CO2 at our
Redwater and Geismar facilities, and
sell it for industrial applications or
permanently store it in large-scale
carbon capture facilities.
We also produce low carbon
ammonia at our Joffre plant which
uses hydrogen as a feedstock. This
process significantly lowers the GHG
intensity per tonne of ammonia
compared to a typical steam methane
reforming process.
In 2020, we captured approximately
1 million tonnes of CO2 equivalent
with the capability to produce
approximately 1 million tonnes of
blue/low carbon ammonia.
Nutrien produces and sells a wide-
portfolio of products that minimize
nitrogen loss, maximizes nitrogen
utilization and reduces emissions.
We produce and sell over 400,000
tonnes of Environmentally Smart
Nitrogen (“ESN”) annually. This urea
granule is contained within a flexible
polymer coating which reduces
nitrogen loss, and releases nitrogen
at a rate matched with crop uptake.
We also produce and sell
approximately 600,000 tonnes of
diesel exhaust fluid (“DEF”) which is
a urea liquid solution that, when
combined with diesel in larger vehicles
and machinery, can improve fuel
efficiency and reduce emissions.
Transporting ammonia then extracting
its hydrogen can be a lower-risk and
lower carbon alternative to transporting
hydrogen, which can then be used in
applications such as fuel cells. We are
pursuing opportunities to leverage
our low-cost ammonia production
profile and strategically advantaged
assets to be at the forefront of this
developing market.
~1 MMT
BLUE/LOW CARBON AMMONIA
PRODUCTION CAPABILITY
>2 MMT
CO2 CAPTURED INCLUDING
BY PROJECTS IN CONSTRUCTION
~1 MMT
ENVIRONMENTALLY SMART
PRODUCTS SOLD IN 2020
17
Nutrien Annual Report2020 Overview
Managementʼs Discussion & Analysis
Three-Year Highlights
Financial Statements
Other Information
CAPITAL ALLOCATION
Nutrien is focused on creating long-term value through capital allocation. We have growth and
other value generating project options across our integrated business model and comprehensive
product and service offering.
Our capital allocation policy prioritizes sustaining
our assets, preserving the strength and resiliency
of our balance sheet, supporting a sustainable
and growing dividend, and applying a rigorous
compete-for-capital reinvestment strategy
to maximize shareholder value.
NUTRIEN CAPITAL ALLOCATION POLICY
Sustaining Our Industry Leading Asset Base
The first priority is to sustain
our assets to ensure we have
safe and reliable operations
to grow cash generation.
Maintain Strong Balance Sheet
Our balance sheet is built on two principles:
securing reliable access to low-cost debt and
preserving sufficient liquidity through our
operating cycle.
Sustainable & Growing
Dividend Supported
by Retail Stability
We are focused on delivering a stable and growing dividend.
This is core to our capital allocation policy. Nutrien’s dividend
provided an average yield of 4.6 percent in 2020, and has been
increased three times to $0.46, and by a total of 15 percent
over the previous three years.
Investment
Funds Allocated
on a Compete-
for-Capital
Basis
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, including
evaluating against share repurchases.
18
Nutrien Annual Report2020 OPERATING SEGMENT
PERFORMANCE &
OUTLOOK
WE REPORT OUR RESULTS IN FOUR REPORTABLE
OPERATING SEGMENTS: NUTRIEN AG SOLUTIONS
(“RETAIL”), POTASH, NITROGEN AND PHOSPHATE.
•
In 2020, we revised the measure with which we evaluate our
segments from EBITDA to adjusted EBITDA. Adjusted EBITDA
provides a better indication of the segment’s performance as it
excludes the impact of non-cash impairments and other costs
that are centrally managed by our corporate function. We have
presented adjusted EBITDA for the comparative period. Refer to
Note 3 to the financial statements for details.
•
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.
19
Nutrien Annual Report2020 NUTRIEN AG SOLUTIONS
(“RETAIL”)
10%
TOTAL RETAIL ADJUSTED
EBITDA/SALES
$1.08M
ACHIEVED 2020 TARGET OF
$1M OF RETAIL ADJUSTED EBITDA
PER US SELLING LOCATION
>$500M
EXPECTED ANNUAL NORMALIZED
RUN-RATE REVENUE ACHIEVED
IN BRAZIL (2021)
>$1.2B
DIGITAL PLATFORM
RETAIL SALES
20 Nutrien Annual Report
2020
Overview Managementʼs Discussion & Analysis Three-Year Highlights Financial Statements Other Information Overview
Managementʼs Discussion & Analysis
Three-Year Highlights
Financial Statements
Other Information
RETAIL OPERATING ENVIRONMENT
R
Our Business
Nutrien Ag Solutions is the world’s largest retailer of crop inputs and services. We are the leading
provider of whole-acre solutions across North America, South America and Australia, helping farmers
grow crops more efficiently, profitably and sustainably.
We operate over 2,000 retail
locations across the US, Canada,
Australia and South America, with
approximately 1,200 locations in the
US alone. The strength of our network
ensures we can deliver whole-acre
solutions when our grower customers
need them.
We have over 3,600 agronomists and
field experts, working directly with
our customers to provide advice
and support from the crop planning
stage right through to harvest. They
help growers to optimize crop yields,
maximize returns and improve on
sustainability practices.
Our award-winning Nutrien Ag
Solutions digital platform has
become the leading platform in
Ag retail, which helps to foster a
trusted relationship with our grower
customers by providing insight,
value-add solutions and convenience.
Our agronomists can collaborate in
a new and unique way that delivers
better grower outcomes and drives
value for Nutrien. We produce over
2,000 proprietary products that span
the crop input chain, including seed,
crop nutrients and crop protection,
including a portfolio of specialty
products that enhance sustainability
practices. Our proprietary products
deliver superior margins compared to
third-party products and we
produce and distribute from over
30 formulations facilities located in
all key markets where we operate.
Nutrien recently unveiled a
revolutionary end-to-end agricultural
Carbon Program that leverages our
unique and direct relationship with the
grower to agronomic expertise, digital
capabilities and our supply chain.
By combining these critical
building blocks we believe our
Carbon Program will enable us to
scale sustainability outcomes for
the grower by increasing productivity
and monetizing improved
carbon performance.
Competitive Landscape
The Ag retail industry is highly fragmented in most of our major markets, with a variety of ownership
structures and varying degrees of access to capital.
The major markets where we operate
are primarily comprised of many
small Ag retailers along with a small
number of mid-sized competitors.
In the US, cooperatives of various
sizes are also prominent. We believe
scale and size will be required in the
future in order to meet evolving
grower needs.
Growers want whole-acre solutions
In Brazil, the market is characterized
that can include a full suite of
by small to medium-sized
products, services and solutions,
independent owners and represents
rooted in sound unbiased agronomic
an opportunity for larger retailers,
advice and analytics, stressing the
including Nutrien, to enhance the
importance of timely delivery and
product, service and solution offerings
reliability of supply.
to growers.
21
Nutrien Annual Report2020 Overview
Managementʼs Discussion & Analysis
Three-Year Highlights
Financial Statements
Other Information
Our Strategy
We are building and enhancing trusted relationships with our grower customers by creating the leading
channel that provides whole-acre solutions.
Our position as the leading Ag
Drive Organic Growth: Our organic
strategy continues to add value as
retailer with a local presence, world-
growth strategy focuses on five key
we access new customers, further
class supply chain and portfolio of
pillars that are intended to drive the
expand our proprietary solutions
comprehensive solutions creates an
transformation of Ag retail, offer value
and integrate the business with our
advantageous position for Nutrien
added solutions for growers and
world-class supply chain network.
Ag Solutions to continue to perform
deliver efficiency and optimization
We are also growing our business in
and grow. Our strategy is focused on
throughout our network.
Brazil and we continue to execute in
driving organic growth by delivering
additional value to our customers,
becoming more efficient and offering
value-added products and services.
We also intend to grow through
strategic acquisitions.
LEARN MORE
Nutrien Ag Solutions p15
Execute on Accretive Acquisitions:
Nutrien Ag Solutions has a solid track
record of growing in key markets and
helping to consolidate the fragmented
retail industry. Our tuck-in acquisition
this significant and strategic market.
We established a corporate office
and leadership team in country,
where we intend to continue to grow
the business and bring to market
whole-acre, digital and sustainability
solutions, similar to our other more
mature markets.
2020 Performance
Nutrien Ag Solutions demonstrated growth, resilience and stability in the face of global volatility,
achieving record adjusted EBITDA and record crop nutrient sales volumes.
In addition to achieving record
and uptake of our digital capabilities
acquisition, which closed in late 2019.
adjusted EBITDA in 2020, we
was very apparent. Our award-
We achieved our targeted annual
improved our adjusted EBITDA
winning digital platform experienced
run-rate synergies of $30 million well
margins as a result of double-digit
significant acceleration of adoption
ahead of schedule, and identified
organic growth, strong proprietary
and usage in 2020, surpassing $1.2
an additional $20 million of run-rate
product sales and ongoing
billion in sales and representing 11
synergies that we expect to capture
optimization of our network. We
percent of total Retail sales in North
by the end of 2021.
lowered Retail adjusted average
America. We expect to expand the
working capital to sales by nearly
breadth of the platform to offer nearly
$900 million, resulting in a 15 percent
all of our products and services in
ratio and well below our 2023
2021. We will also be adding new
target. We also improved our Retail
functionalities to the platform such
cash operating coverage ratio and
as field planning enhancements,
increased Retail adjusted EBITDA per
precision Ag capabilities and
US selling location to over $1 million.
expansion into Brazil and Australia.
We also closed two acquisitions in
Brazil in 2020, Agrosema Comercial
Agricola Ltda. (“Agrosema”) and Tec
Agro Group. Our annual revenues in
Brazil are expected to surpass $500
million on a run-rate basis in 2021,
well on our way to reaching our
target of $1 billion in revenues in Brazil
We adapted quickly and effectively
2020 represented the first full
by 2023.
to COVID-19 risks, where the value
year of earnings from the Ruralco
22
Nutrien Annual Report2020 Overview
Managementʼs Discussion & Analysis
Three-Year Highlights
Financial Statements
Other Information
PROPORTION OF
DIGITAL PLATFORM
SALES1,2
(percent)
11%
DIGITAL PLATFORM
SALES1
($ millions)
$1,211
2%
$260
20193
2020
20193
2020
Source: Nutrien
1 Represents North America results.
2 North American digital Retail sales as a proportion of total North American Retail
sales. 2019 has been restated to align with how we calculated this measure in 2020.
3 The launch of the platform was in March 2019.
US GROWER CASH PRODUCTION MARGINS
(US$/acre)
US Corn Prices (US$/bushel)
$4.31
$4.51
$3.82
US Soybean Prices (US$/Bushel)
$11.82
$9.40
$10.66
R
$450
$360
$270
$180
$90
$0
10-Year
Avg
3-Year
Avg
2021
Forecast1
10-Year
Avg
3-Year
Avg
2021
Forecast1
Source: CRU, Fertecon, USDA, Bloomberg, Nutrien
1 2021F numbers are the December 2021 corn and November 2021 soybean
futures contracts as of February 16, 2021.
2020 MARKET CONDITIONS
MARKET OUTLOOK
Key crop prices surged in the second half of 2020 driven
We expect a rebound in US planted crop acreage will
by very tight global supply and demand fundamentals.
support increased crop input demand in 2021.
Growing conditions in North America improved
Assuming normal planting conditions in the US in the
considerably in 2020 relative to the 2019 season, however,
spring of 2021 and continued favorable crop margins, we
the US had prevented planting of about 10 million acres,
expect planted acreage of major US crops will increase
which is approximately twice the historic average. In
by approximately 10 million acres. US farmers were able
addition, the Derecho windstorm in the MidWest resulted
to make excellent progress on fertilizer applications in the
in significantly lower than expected production of US corn
fall of 2020, and with the expected increase in acreage
and soybeans. These factors and relatively low crop prices
and strong crop prices, we expect growth in crop input
resulted in lower than expected crop input spending during
expenditures in 2021.
the summer period.
The outlook for Australia is also strong as precipitation
The combination of lower than expected production and
remained good in major Eastern growing regions. Growers
the record pace of Chinese grain and oilseed imports in
benefited from higher global crop prices for their 2020
2020 resulted in US ending stocks for corn and soybeans
crop and, weather permitting, the outlook for crop input
projected to be at their lowest levels in six years, according
demand remains strong for 2021. In Brazil, growers are
to the USDA. This caused corn and soybean prices to rally
harvesting what is expected to be a record soybean crop,
in late 2020 and early 2021 to their highest levels in at least
despite late planting and dry weather. We anticipate strong
seven years.
Following several seasons of drought, Australian growers
received much needed precipitation in 2020, resulting
in a 76 percent increase in winter crop production. The
increased planted area supported increased demand for
crop inputs. While in Brazil, growers responded to strong
crop prices by increasing soybean planting in the fall of
2020, despite less than ideal weather.
planted acreage and crop input demand in 2021, although
there is some risk to the upcoming Safrinha corn plantings
given the slower than usual soybean crop process.
23
Nutrien Annual Report2020
Overview
Management’s Discussion & Analysis
Three-Year Highlights
Financial Statements
Other Information
RETAIL FINANCIAL PERFORMANCE
(millions of US dollars, except
as otherwise noted)
Sales
Crop nutrients
Crop protection products
Seed
Merchandise
Nutrien Financial
Services and other 1
Nutrien Financial elimination 2
Cost of goods sold
Gross margin
Expenses 1,3
Earnings before finance costs
and taxes (“EBIT”)
Depreciation and amortization
EBITDA/Adjusted EBITDA
Dollars
Gross Margin
Gross Margin (%)
2020
2019
%
Change
2020
2019
%
Change
2020
2019
1,130
1,303
363
157
129
774
(120)
3,736
1,032
1,173
336
109
–
651
–
3,301
9
11
8
44
n/m
19
n/m
13
22
23
20
17
100
62
100
25
21
24
20
18
n/m
65
n/m
25
5,200
5,602
1,790
943
129
1,241
(120)
14,785
11,049
3,736
2,974
762
668
1,430
4,989
4,983
1,712
598
–
1,000
–
13,282
9,981
3,301
2,665
636
595
1,231
4
12
5
58
n/m
24
n/m
11
11
13
12
20
12
16
1 Certain immaterial figures have been reclassified for the year ended
December 31, 2019.
2 Represents elimination for the interest and service fees charged by
Nutrien Financial to Retail branches.
3 Includes selling expenses of $2,795 million (2019 – $2,484 million).
The most significant contributors to the changes in our Retail financial performance were as follows:
Crop nutrients
Crop protection
products
Seed
Merchandise
Nutrien Financial
Services and other
Selling expenses
Adjusted EBITDA
2020 vs 2019
Sales and gross margin increased in 2020 as higher global sales volumes more than offset the impact of lower selling
prices. 2019 sales volumes in North America were negatively impacted by extreme weather. Gross margin percentage
increased due to a larger proportion of higher-margin proprietary product sales.
Sales and gross margin increased in 2020 primarily due to strong market share growth from contributions of our
Ruralco acquisition and increased applications in the US. Gross margin percentage decreased by 0.3 percentage points
compared to 2019 due to change in regional mix, with greater sales in lower-margin regions outside of the US.
Sales and gross margin increased in 2020 due to contributions from the Tec Agro Group and Agrosema acquisitions in
Brazil and Ruralco in Australia. Gross margin percentage was relatively flat as a one percentage point gain in the US was
offset by the growth in Australia where margins are lower.
Sales and gross margin increased in 2020 while gross margin percentage decreased due to strong demand in Australia
and the related change in product sales mix.
This was the first full year of operations for the Nutrien Financial business.
Sales and gross margin increased in 2020, while gross margin percentage decreased, despite the increased sales and
gross margin in Australia, where percentage margins are lower than in North America.
Expenses increased in 2020 due to higher sales from acquisitions and from strong organic growth while expenses as a
percentage of sales remained relatively flat.
Adjusted EBITDA was higher in 2020 primarily due to higher sales volumes from acquisitions and from organic growth
more than offsetting the impact of lower prices.
24 Nutrien Annual Report 2020
Overview
Management’s Discussion & Analysis
Three-Year Highlights
Financial Statements
Other Information
SELECTED RETAIL MEASURES
Proprietary products margin as a percentage of product line margin (%)
Crop nutrients
Crop protection products
Seed
All products
All products before reclassification 1
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
R
2020
25
32
46
22.9
23.3
9,746
2,986
12,732
421
367
408
99
55
89
2019
23
34
38
23.3
23.7
8,812
2,236
11,048
465
398
452
102
60
93
1 Adjusted to reflect what the metric would have been prior to a reclassification of certain immaterial figures.
Financial performance measures
2020 Target
2020 Actuals
2019 Actuals
Retail adjusted EBITDA to sales (“Retail adjusted EBITDA margin”)(%) 1,2
Retail adjusted average working capital to sales (%) 1,2
Retail adjusted average working capital to sales excluding Nutrien Financial (%) 1
Retail cash operating coverage ratio (%) 1,2
Retail cash operating coverage ratio before reclassification (%) 1,3
Retail adjusted EBITDA per US selling location (thousands of US dollars) 1
Retail normalized comparable store sales (%)
Retail digital platform sales to total sales (%) 4
Retail grower engagement (%) 5
Nutrien Financial net interest margin (%) 1
10
21
61
1,000
10
15
5
61.8
61.1
1,075
6
11
10
5.3
9
23
n/a
62.9
62.2
967
(1)
2
5
n/a
1 Rolling four quarters ended December 31, 2020 and December 31, 2019 respectively.
2 2019 has been restated due to certain reclassification of immaterial figures.
3 Adjusted to reflect what the metric would have been prior to a reclassification of certain immaterial figures.
4 Grower and employee orders directly from the digital platform as a percentage of total sales in North America. 2019 has been restated to align with the 2020
calculation.
5 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 field plan.
NUTRIEN FINANCIAL
We offer flexible financing solutions to our customers in support of Nutrien’s agricultural product and service sales. Qualifying retail
customers in the United States and Australia are offered extended payment terms, typically up to one year, to facilitate the alignment
of grower crop cycles with cash flows. Nutrien Financial revenues are primarily earned through interest and service fees that are
charged to our Retail branches or directly to our customers.
We hold a significant portion of receivables from customers that have historically experienced a low-default rate. We manage our
credit portfolio based on a combination of review of customer credit metrics, past experience with the customer and exposure to any
single customer. Nutrien Financial, which is a wholly owned finance captive, monitors and services the portfolio of our high- quality
receivables from customers that have the lowest risk of default among Retail’s receivables from customers. We monitor the results of
this portfolio of receivables separately because we calculate the cost of capital attributable to the high-quality receivables from
customers differently from our other receivables. Specifically, we assume a debt to equity ratio of 7:1 in funding Nutrien Financial
receivables, based on the underlying credit quality of the assets.
Nutrien Financial relies on corporate capital for funding. We estimate the deemed interest expense using an average borrowing rate
of 3.72 percent applied to the notional debt required to fund the portfolio of receivables from customers monitored and serviced by
Nutrien Financial. The balance of our Retail receivables (outside of Nutrien Financial) are subject to marginally higher credit risk.
As at December 31,
(millions of US dollars)
North America
International
Nutrien Financial receivables 2
Current
962
178
1,140
<31 days
past due
31-90 days
past due
>90 days
past due
Gross
Receivables
Allowance 1
2020 Total
2019 Total
130
2
132
44
16
60
38
47
85
1,174
243
1,417
(24)
(1)
(25)
1,150
242
1,392
821
–
821
1 Bad debt expense on the above receivables was $26 million (2019 – $5 million) in the Retail segment.
2 Includes $1,147 million (2019 – $762 million) of very low risk of default and $270 million (2019 – $64 million) of low risk of default.
2020 Nutrien Annual Report 25
POTASH
12.8MMT
POTASH SALES VOLUMES
$59POTASH CASH COST
OF PRODUCT MANUFACTURED
PER TONNE
+5MMT
AVAILABLE CAPACITY
2626 Nutrien Annual Report
2020
Nutrien Annual Report2020 Overview
Managementʼs Discussion & Analysis
Three-Year Highlights
Financial Statements
Other Information
POTASH OPERATING ENVIRONMENT
K
Our Business
Nutrien is the best positioned company to continue to create value in the potash industry due to its size,
high-quality and low-cost network of mines and flexible growth optionality.
Our extensive mine network
We have 5 million tonnes of available
and our stake in Canpotex ensures
provides for decades of reliable and
potash capacity that we expect to
efficient and effective marketing
safe production at a first-quartile
deploy over time as global demand
and delivery of potash to over
cost profile, and places us as the
grows, a characteristic that is unique
40 international markets.
world’s largest potash producer with
to Nutrien.
approximately 21 percent of global
potash capacity.
In addition, we have line of sight
to Nutrien’s culture and actions
to 5 million tonnes of incremental
and we are proud to operate one
Safety is of paramount importance
Nutrien’s Potash network is one of the
brownfield expansions which can be
of the safest potash operations in
lowest cost, most reliable and highest
brought online at a much lower cost
the world. This is made possible by
quality in the world. We have six
and much more quickly than any new
our investment in maintaining our
mines as part of a diverse and flexible
greenfield mine being contemplated
production network, decades of
network that allows us to optimize
in the industry today. We have an
developing best practices in potash
our assets to cost-effectively position
extensive distribution system to
mining and the adoption of
the right tonnes at the right time.
service the North American market,
new technologies.
Competitive Landscape
A limited number of countries around the world possess a significant quantity and quality of potash.
Canada has the largest known global potash reserves, accounting for approximately 40 percent of
the total.
More than 70 percent of the world’s
is an important difference between
2015, with the expectation of an
potash capacity is held by the six
potash and other major crop nutrient
additional 5 million tonnes of new
largest producers. Our primary
industries. Trade typically accounts
demand added by 2023.
competitors are located in Russia,
for approximately three-quarters of
Belarus, Canada, Germany, Israel
demand for potash resulting in a
and Jordan.
globally diversified marketplace.
This growth is driven by increasing
nutrient requirements of higher
yielding crops and improving soil
Most major potash consuming
The global demand growth rate
fertility practices, particularly in
countries in Asia and Latin America
for potash has outpaced that of
emerging markets where potash has
have limited or no indigenous
other primary nutrients, averaging
been historically under-applied and
production capability and rely on
approximately 2.4 percent cumulative
crop yields lag.
imports to meet their needs. This
annual growth rate (“CAGR”) since
27
Nutrien Annual Report2020 Overview
Managementʼs Discussion & Analysis
Three-Year Highlights
Financial Statements
Other Information
Our Strategy
Nutrien has a unique position in the potash industry. We will use our extensive network to respond
quickly and efficiently to market supply and demand dynamics, while we continue to incorporate new
technologies to lower our production costs and optimize our asset base.
Incremental capacity: We will use
Next Generation Potash: We are
Network optimization: We are
our production platform, which
investing in initiatives focused on
focused on achieving the optimal
includes 5 million tonnes of additional
leveraging automated and tele-
production mix from our world-class
available capacity, to grow as the
remote mining and other digital
platform, which maintains production
leader in the potash industry. We
technologies to continue to improve
flexibility while maximizing the
will deploy this capacity as demand
our safety performance, lower
benefits of our low-cost position
grows and serve tonnes into the
our production costs and reduce
on the cost curve and a leading
market when required. In addition, we
emissions. These improvements are
domestic and offshore distribution
have line of sight to 5 million tonnes
being made from the mine face right
network including our own integrated
of incremental brownfield capacity
through to the mill.
business. At the same time, we will
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.
LEARN MORE
Next Generation Potash p16
undertake preventative maintenance
to ensure the high-quality, reliability
and safety of our operations.
2020 Performance
We continue to enhance our network by effectively managing our production and supply chain and
optimizing volumes to minimize production costs.
Nutrien sold 12.8 million tonnes
network of mines and exceptional
control of mining machines.
of potash in 2020, up more than
commitment from our people
Predictive maintenance, value driven
1 million tonnes over 2019,
ensured that we were able to produce
planning and scheduling and real-
highlighting the flexibility of our
potash at targeted levels without
time connection of our workforce
network and ability to move tonnes
sacrificing quality, value or safety.
moved in lockstep to begin to unlock
into the market when needed. We
also reduced our cash COPM to
$59 per tonne, the lowest level on
record for Nutrien. This was despite
a fire at our Vanscoy mine loadout
facility and navigating the nuances
of underground mining during the
COVID-19 pandemic. Our strong
We continued to progress our
the full value of the program.
Next Generation Potash program.
We took additional steps earlier
Rocanville’s mining fleet is now
this year to optimize our network
able to run operator-not-present
by shifting production tonnes from
during shift change, and Lanigan
our higher-cost Vanscoy site to
has successfully piloted clay seam
other lower cost operations within
detection using artificial intelligence
our network.
which will allow for autonomous
28
Nutrien Annual Report2020
Overview
Managementʼs Discussion & Analysis
Three-Year Highlights
Financial Statements
Other Information
POTASH MANUFACTURED PRODUCT
SALES VOLUMES
(million tonnes)
2021 Potash Sales Volume Guidance Range
11.7
13.0
11.5
12.8
12.5-13.0
US MIDWEST FOB POTASH PRICE
($/tonne)
$392
$277
$310
$333
$280
$350
K
20171
2018
2019
2020
2021F2
Source: Nutrien
1 2017 represents the historical combined results of PotashCorp and Agrium.
2 Based on potash manufactured product sales volume guidance as provided
on February 17, 2021.
10-Year Avg
(2011-2020)
Source: CRU
2017
2018
2019
2020
Year-to-Date
Feb 11, 2021
2020 MARKET CONDITIONS
MARKET OUTLOOK
Demand for potash fertilizers was excellent in 2020
despite the COVID-19 pandemic, largely supported
by higher crop prices and improved agricultural
fundamentals in key markets.
We expect the robust potash consumption trend will
continue in 2021 supported by favorable crop economics,
high affordability levels for farmers around the world and
limited inventory build in major markets.
Deliveries to the North American market increased by
about 1.5 million tonnes in 2020, supported by favorable
application conditions, particularly during the extended
fall application season, and strengthening in crop prices.
Brazil imported record volumes of potash in 2020
supported by favorable crop economics. While palm oil
prices increased dramatically in the second half of 2020,
potash demand growth in Southeast Asia remained
relatively limited especially in Malaysia, where plantations
continue to struggle with COVID-19 related restrictions
and labor shortages.
Import demand in both China and India was strong
particularly in the second half of the year following the
contract settlements in the second quarter of 2020,
underpinned by tightened agricultural fundamentals.
Potash prices were pressured in many key spot markets
during the first half of the year, however, prices increased
steadily in the second half as the demand outlook
continued to improve and outpaced new capacity
additions from the Former Soviet Union (“FSU”) region.
Despite strong shipments in North America in 2020,
we believe almost all the potash delivered was applied
to ground, leading to very tight inventories throughout
the supply chain at the end of the year. Low inventories
combined with favorable crop prices and planting outlook,
should support strong potash demand in 2021. In Brazil,
growers continue to be incentivized to invest and secure
fertilizer needs for the 2021 soybean growing season.
Shipments to Southeast Asian countries are expected
to increase from 2020 levels, supported by a significant
improvement in palm oil prices and a more normalized
labor supply situation.
Potash consumption in India is expected to remain strong in
2021, while import growth can be subject to potential policy
changes. In China, the agronomic need for higher potash
application rates is well-known and domestic agricultural
fundamentals are robust. India and China each settled a 2021
potash agreement with one supplier at price levels below
what we considered to be reflective of market conditions.
It is unclear how these agreements will impact potential
contracts with other global potash suppliers. Global potash
producers are well-positioned for much of the first half of
2021, despite not having contracts with China and India, and
suppliers such as Canpotex have not placed volumes into
those markets ahead of new contracts. We forecast global
potash shipments will be 68 to 70 million tonnes in 2021.
We also project new supply additions will be limited in
2021, mostly from the FSU. With an expected increase in
demand from key markets, we anticipate global potash
market will be balanced to tight in 2021.
29
Nutrien Annual Report2020 Overview
Management’s Discussion & Analysis
Three-Year Highlights
Financial Statements
Other Information
POTASH FINANCIAL PERFORMANCE
(millions of US dollars, except as
otherwise noted)
Manufactured product
Net sales
North America
Offshore
Cost of goods sold
Gross margin – manufactured
Gross margin – other 1
Gross margin – total
Expenses 2
EBIT
Depreciation and amortization
EBITDA
Impairment of assets
Adjusted EBITDA
Dollars
Tonnes (thousands)
Average per Tonne
2020
2019
%
Change
2020
2019
%
Change
2020
2019
%
Change
908
1,238
2,146
1,183
963
–
963
248
715
452
1,167
23
1,190
978
1,625
2,603
1,103
1,500
1
1,501
298
1,203
390
1,593
–
1,593
(7)
(24)
(18)
7
(36)
(100)
(36)
(17)
(41)
16
(27)
n/m
(25)
4,815
8,009
4,040
7,481
12,824
11,521
19
7
11
Depreciation and amortization
Gross margin excluding depreciation
and amortization – manufactured
Potash cash cost of product
manufactured
189
155
167
92
75
35
242
217
226
96
130
34
(22)
(29)
(26)
(4)
(42)
3
110
164
(33)
59
63
(6)
1 Includes other potash and purchased products and is comprised of net sales of $Nil (2019 – $1 million) less cost of goods sold of $Nil (2019 – $Nil).
2 Includes provincial mining and other taxes of $201 million (2019 – $287 million).
The most significant contributors to the changes in our Potash financial performance were as follows:
2020 vs 2019
Sales volumes
North America and Offshore sales volumes increased in 2020 due to strong offshore demand, higher US
planted acreage and strong fall application in North America in anticipation of higher planting in 2021.
Net realized selling price
Average selling prices decreased in 2020 due to lower global benchmark prices compared to 2019.
Cost of goods sold per tonne
Costs decreased in 2020 due to efficiency gains, higher production tonnes and favorable changes in
mine production mix.
Provincial mining and other taxes
Adjusted EBITDA
We are subject to Saskatchewan provincial resource taxes, including the potash production tax and the
resource surcharge. Expenses decreased in 2020 primarily due to lower average potash selling prices,
which are the basis for certain taxes.
Adjusted EBITDA decreased in 2020 primarily due to lower net realized selling prices, which was partially
offset by higher volumes of product sold, lower cash cost of goods sold per tonne and lower provincial
mining and other taxes.
30 Nutrien Annual Report 2020
Overview
Management’s Discussion & Analysis
Three-Year Highlights
Financial Statements
Other Information
CANPOTEX SALES BY MARKET
(percentage of sales volumes except as otherwise noted)
2020
2019
Change
Latin America
Other Asian markets 1
China
India
Other markets
1 All Asian markets except China and India.
32
25
22
14
7
31
27
22
10
10
1
(2)
–
4
(3)
K
POTASH PRODUCTION
(million tonnes KCI)
Rocanville Potash
Allan Potash
Vanscoy Potash
Lanigan Potash
Cory Potash
Patience Lake Potash
Total
Shutdown weeks 3
Operational Capability 2
Production
2021
2020
2020
2019
Nameplate
Capacity 1
6.5
4.0
3.0
3.8
3.0
0.3
5.4
2.8
0.8
2.5
1.6
0.3
5.4
2.8
1.7
2.3
1.0
0.3
20.6
13.4
13.5
5.29
2.79
0.51
2.33
1.40
0.27
12.59
38
5.14
2.18
1.42
1.75
0.97
0.24
11.70
55
1 Represents estimates of capacity as at December 31, 2020. 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 the beginning of the year, and may vary during the
year, and year-to-year, including between our facilities). 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.
2020 Nutrien Annual Report 31
NITROGEN
11MMT
RECORD MANUFACTURED
PRODUCT SALES VOLUMES
~1MMT
BLUE/LOW CARBON
AMMONIA PRODUCTION
CAPABILITY
93%
AMMONIA OPERATING RATE
(excludes Trinidad and Joffre)
32
Nutrien Annual Report
2020
Overview
Managementʼs Discussion & Analysis
Three-Year Highlights
Financial Statements
Other Information
NITROGEN OPERATING ENVIRONMENT
N
Our Business
Nutrien has a large and diverse nitrogen portfolio, reinforced by a number of unique
strategic advantages.
We operate nine nitrogen facilities
the world and represent approximately
serve the growing agricultural markets
across North America and Trinidad
80 percent of our total nitrogen
in South America.
producing key nitrogen products
sales volume. We have an extensive
and with an ammonia capacity
network of almost 200 terminals and
of 7.1 million tonnes. Our sales
warehouses with over 1.3 million
portfolio represents a well-balanced
tonnes of storage capacity, providing
combination of agricultural and
the ability to place product and service
industrial products, providing
customers very efficiently.
One of Nutrien’s strategic priorities
is to be a leader in sustainability
in the agricultural sector. We have
made investments to reduce the
carbon footprint associated with
our nitrogen production including
flexibility to optimize our product
mix during changing market
conditions. Agriculture sales represent
approximately 60 percent of our
nitrogen sales.
Our Trinidad operations are
increasing blue/low carbon ammonia
advantageously situated on tide water,
production capability. We also have
where we deliver to approximately
many nitrogen-based fertilizer
30 countries, with a focus on
products that provide an innovative
industrial end markets. Gas costs
and effective role in reducing
Our North American operations
in Trinidad are primarily indexed to
farming’s environmental footprint,
are situated in market, providing a
ammonia prices, which provides
including our proprietary slow release
selling and delivery advantage. The
margin stability. We also have an
environmentally smart nitrogen.
operations have access to some of the
investment in a world-scale nitrogen
lowest cost natural gas feedstock in
facility in Argentina, which fits well to
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
The US remains one of the largest
expanded industry opportunity
close to the regions in which it is
importers of nitrogen and a key driver
as we look for more efficient and
produced due to the high cost of
of global trade despite a significant
environmentally friendly production
transportation, whereas urea and
increase in domestic capacity and
methods and application of
nitrogen solutions are more widely
production over the past few years.
nitrogen products.
transported and traded. We compete
In developed regions of the world,
with other producers in Canada, the
US and several offshore suppliers.
nitrogen producers are focused on
reducing CO2 emissions. This has
33
Nutrien Annual Report2020 Overview
Managementʼs Discussion & Analysis
Three-Year Highlights
Financial Statements
Other Information
Our Strategy
Nutrien is growing the nitrogen business through network optimization and strategic capacity
expansion. We are also enhancing our competitive cost position and expanding our product portfolio.
Reliability, efficiency and
integrated model that includes our
capacity at a fraction of the cost
productivity: We are investing in
Retail business.
LEARN MORE
Well Positioned Nitrogen
Operations p17
Brownfield capacity expansion:
We are growing and improving the
position of our assets through low
risk, high-return projects that enhance
our product mix, improve our energy
efficiency and expand our North
of a greenfield plant and the long-
term potential for producing
green ammonia.
Sustainability leader: We are
reducing the carbon footprint of our
nitrogen operations through energy
efficiency, carbon capture and CO2
abatement initiatives. We are also
expanding our portfolio of sustainable
products including blue/low carbon
American capacity. We are evaluating
ammonia, ESN and DEF.
potential nitrogen projects that
include 700,000 tonnes of additional
short-payback projects that improve
safety, increase production and
improve efficiency. In addition to
higher production levels, these
initiatives minimize production costs
and provide a safe environment for
our employees. We will continue
to optimize our Nitrogen network
to best leverage the production
flexibility of our low-cost facilities and
our extensive distribution network,
capitalizing on the benefits of our
2020 Performance
We set a historical record for manufactured nitrogen sales volumes of 11 million tonnes while achieving
the best safety performance on record despite the lower global nitrogen demand in 2020.
We achieved record sales volumes
product capacity by approximately
in 2020, while maintaining flexibility
in nitrogen in 2020, despite impacts
1 million tonnes between 2018
to respond to improvement in
that COVID-19 had on industrial
and 2021 at a total estimated cost
market conditions.
demand. Optimization initiatives in
of $330 million. These projects also
our production network contributed
increase production efficiencies
to our ammonia operating rate
and reduce emissions throughout
increasing to 93 percent, while our
our network. The cost of these
ammonia controllable cash cost of
projects is significantly lower and
product manufactured decreased by
quicker to bring online than
$2 per tonne.
greenfield economics.
We continued to advance on multi-
Due to historically low global
year brownfield projects that are
ammonia prices we curtailed
expected to increase total gross
production at our Trinidad facility
Sales of our ESN and DEF products
in 2020 grew by 8 percent and we
captured approximately 1 million
tonnes of CO2 equivalent.
34
Nutrien Annual Report2020
Overview
Managementʼs Discussion & Analysis
Three-Year Highlights
Financial Statements
Other Information
NITROGEN MANUFACTURED PRODUCT
SALES VOLUMES
(million tonnes)
2021 Nitrogen Sales Volume Guidance Range
10.2
10.6
10.3
11.0
10.9-11.4
US NOLA FOB UREA PRICE
($/tonne)
$334
$348
$285
$270
$250
$228
N
20171
2018
2019
2020
2021F2
Source: Nutrien
1 2017 represents the historical combined results of PotashCorp and Agrium.
2 Based on nitrogen manufactured product sales volume guidance as provided
on February 17, 2021.
10-Year Avg
(2011-2020)
Source: CRU
2017
2018
2019
2020
Year-to-Date
Feb 11, 2021
2020 MARKET CONDITIONS
MARKET OUTLOOK
Despite lower nitrogen demand for industrial use in
The combination of higher energy prices, improved
2020, we estimate fertilizer demand for agricultural use
global industrial nitrogen demand, coupled with strong
in 2020 was the strongest in several years, despite the
crop prices and robust fertilizer demand growth, should
COVID-19 pandemic.
support the nitrogen market in 2021.
Lower global energy prices in the first three quarters of
2020 reduced nitrogen production costs in many regions,
particularly in Europe and China. This, combined with
weaker industrial demand due to reduced industrial
activity and the global economic decline, resulted in lower
nitrogen prices, particularly for ammonia in the first half of
2020. However, later in 2020 and into early 2021 we have
seen higher energy prices in key producing regions, an
improved agricultural outlook, combined with recovering
industrial demand all of which supported global nitrogen
markets. Meanwhile, production curtailments and outages,
particularly in Trinidad, further contributed to tightened
ammonia supply and demand fundamentals.
Strong urea import demand in India, totaling 10.3 million
tonnes in 2020, played an essential role in supporting world
urea markets. Brazil also imported record volumes of urea
in 2020 of 7.1 million tonnes. Chinese urea exports were
limited throughout much of the year by strong domestic
fertilizer demand and limited exportable surplus, but the
pace increased later in the year in response to strong global
demand, resulting in exports of 5.5 million tonnes in 2020.
European gas and global liquified natural gas prices have
increased and the forward gas price curve indicates
a significantly higher seasonal bottom in 2021 than
2020, which should lift global nitrogen production
costs, particularly in Europe. In China, natural gas supply
shortages and increasing coal prices are also expected to
increase costs compared to historically low levels in 2020.
In the US, higher plantings, a positive outlook for the spring
application season and significantly lower offshore imports
supported urea prices entering 2021. Despite the potential
for increased domestic urea production, we believe India
will maintain imports between 9 and 10 million tonnes
in 2021. We expect that Chinese urea exports will decline
in 2021 to between 3 and 5 million tonnes as domestic
demand remains strong, supported by robust agricultural
fundamentals and more stringent environmental
regulations which are likely to reduce exportable supplies.
While we expect some urea projects to come online in
the second half of 2021, recent history suggests that
some projects are likely to be delayed. Given the slower
pace of projects anticipated to come on stream after
2021, we expect demand growth will outpace capacity
additions in the next few years.
We expect global energy prices to increase in 2021 relative
to 2020 and for North American natural gas price discounts
to widen relative to other markets.
35
Nutrien Annual Report2020 Overview
Management’s Discussion & Analysis
Three-Year Highlights
Financial Statements
Other Information
NITROGEN FINANCIAL PERFORMANCE
(millions of US dollars, except
as otherwise noted)
Manufactured product
Net sales
Ammonia
Urea
Solutions, nitrates and
sulfates
Cost of goods sold
Gross margin – manufactured
Gross margin – other 1
Gross margin – total
Income 2
EBIT
Depreciation and amortization
EBITDA
Adjustments 2
Adjusted EBITDA
Dollars
Tonnes (thousands)
Average per Tonne
2020
2019
%
Change
2020
2019
%
Change
2020
2019
%
Change
621
933
668
2,222
1,804
418
57
475
(225)
700
599
1,299
(219)
1,080
743
932
706
2,381
1,749
632
68
700
(4)
704
535
1,239
–
1,239
(16)
–
(5)
(7)
3
(34)
(16)
(32)
n/m
(1)
12
5
n/m
(13)
2,778
3,475
4,713
10,966
2,971
3,037
4,262
10,270
(6)
14
11
7
Depreciation and amortization
Gross margin excluding depreciation
and amortization – manufactured
Ammonia controllable cash cost
of product manufactured
224
268
142
203
165
38
55
93
43
250
307
166
232
170
62
52
114
45
(10)
(13)
(14)
(13)
(3)
(39)
6
(18)
(4)
1 Includes other nitrogen (including ESN® and Rainbow) and purchased products and is comprised of net sales of $518 million (2019 – $467 million) less cost
of goods sold of $461 million (2019 – $399 million).
2 The adjustments consist primarily of the net gain on disposal of investment in MOPCO, which was recorded in other income. See Note 3 to the financial
statements.
The most significant contributors to the changes in our Nitrogen financial performance were as follows:
Sales volumes
Net realized selling price
Cost of goods sold per tonne
Income
Adjusted EBITDA
2020 vs 2019
Sales volumes increased in 2020 due to recent expansion projects and strong operating rates at our
North American facilities. Ammonia sales volumes decreased slightly due to reduced industrial demand
and a plant closure in Trinidad.
Our average selling price for nitrogen products decreased in 2020 due to lower global and North
American benchmark prices.
Costs were slightly lower in 2020 due to lower natural gas prices and lower fixed costs. This more than
offset higher depreciation and amortization per tonne related to expansion and turnaround work
completed in late 2019.
Other income increased due to a gain of $250 million recognized from the $540 million sale of our
equity-accounted investment in MOPCO and settlement of related legal claims.
Adjusted EBITDA decreased in 2020 primarily due to lower net realized selling prices more than
offsetting higher sales volumes and lower cash cost of goods sold per tonne.
NATURAL GAS PRICES IN COST OF PRODUCTION
(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
36 Nutrien Annual Report 2020
2020
2019
% Change
2.31
0.05
2.36
2.08
1.68
2.47
0.11
2.58
2.63
1.22
(6)
(55)
(9)
(21)
38
Overview
Management’s Discussion & Analysis
Three-Year Highlights
Financial Statements
Other Information
Overall gas cost
Gas prices in our cost of production decreased in 2020 as lower US and Trinidad gas prices
and a lower realized derivative impact more than offset higher Canadian gas prices.
N
2020 vs 2019
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
2020
2019
6,750
4,216
1,467
755
217
179
5,554
4,716
1,466
915
264
194
NITROGEN PRODUCTION
(million tonnes product)
Trinidad Nitrogen 4
Redwater Nitrogen
Augusta Nitrogen
Lima Nitrogen
Geismar Nitrogen
Carseland Nitrogen
Fort Saskatchewan Nitrogen
Borger Nitrogen
Joffre Nitrogen
Total
Ammonia operating rate 5
Ammonia 1
Production
Urea 2
Production
Annual
Capacity 3
2020
2019
Annual
Capacity 3
2020
2019
2.2
0.9
0.8
0.7
0.5
0.5
0.5
0.5
0.5
7.1
1.57
0.85
0.66
0.61
0.55
0.55
0.48
0.40
0.39
6.06
93
1.76
0.76
0.70
0.68
0.54
0.45
0.48
0.37
0.42
6.16
91
0.7
0.7
0.5
0.5
0.4
0.8
0.4
0.6
–
4.6
0.73
0.75
0.46
0.40
0.35
0.74
0.44
0.53
–
4.40
0.66
0.60
0.51
0.48
0.33
0.61
0.45
0.46
–
4.10
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 In 2020, we indefinitely closed one of our four ammonia plants in Trinidad in response to market conditions and lower global prices for ammonia.
5 Excludes Trinidad and Joffre.
2020 Nutrien Annual Report 37
PHOSPHATE
$232M
PHOSPHATE
ADJUSTED EBITDA
85%
P205 OPERATING RATE
2.8MMT
MANUFACTURED PRODUCT
SALES VOLUMES
38 Nutrien Annual Report
2020
Overview
Managementʼs Discussion & Analysis
Three-Year Highlights
Financial Statements
Other Information
PHOSPHATE OPERATING ENVIRONMENT
P
Our Business
We are the second largest phosphate producer in North America and sell approximately 3 million tonnes
of finished product.
Nutrien has two integrated phosphate
Due to the high quality of our
including solid and liquid fertilizers,
facilities in the US, both located near
phosphate rock, we can produce a
feed and industrial acids.
key fertilizer consuming markets and
diverse mix of phosphate products,
industrial customers.
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
potential phosphate projects.
We compete with producers primarily
developing a rock deposit for mining.
Significant low-cost capacity has
from China, Morocco, Russia, Saudi
These include the quality of the
been commissioned over the past
Arabia and the US. To produce
phosphate rock, government stability
few years, including most notably
finished phosphate products (DAP,
and subsidies, access to financing,
in Morocco and Saudi Arabia. The
MAP), access to low-cost ammonia
environmental requirements and
ability of these countries and others
and sulfur is also an important
proximity to target markets. Given
to add low-cost capacity and operate
consideration.
the concentration of deposits in
under less stringent environmental
North Africa and the Middle East,
regulation, is resulting in a long-term
government stability is a major
oversupply in the global market.
consideration when evaluating
Our Strategy
We are focused on optimizing our plant sites, driving our rock costs down further, and evaluating
opportunities to increase production of higher-margin product.
We will leverage the quality and
and specialty fertilizer. We will
of our assets while generating positive
capabilities of our assets to produce
advance continuous improvement
cash flows.
and sell higher-margin industrial
to enhance the reliability and safety
39
Nutrien Annual Report2020 Overview
Managementʼs Discussion & Analysis
Three-Year Highlights
Financial Statements
Other Information
2020 Performance
In 2020 we lowered production costs per tonne and achieved record safety performance.
We achieved record safety results
rock. We also entered into an
to provide a stable stream of earnings
and lowered production costs per
agreement with Arkema Inc. to
starting in 2022.
tonne partly attributed to eliminating
produce anhydrous hydrofluoric acid
the need for imported phosphate
at our Aurora site, which is expected
PHOSPHATE MANUFACTURED PRODUCT
SALES VOLUMES
(million tonnes)
3.2
3.3
2.9
2.8
US TAMPA FOB DAP PRICE
($/tonne)
$432
$419
$354
$345
$323
$461
20171
2018
2019
2020
Source: Nutrien
1 2017 represents the historical combined results of PotashCorp and Agrium.
10-Year Avg
(2011-2020)
Source: CRU
2017
2018
2019
2020
Year-to-Date
Feb 11, 2021
2020 MARKET CONDITIONS
MARKET OUTLOOK
Global phosphate prices benefited from improved
We expect the phosphate market to remain firm in
agricultural fundamentals and strong import demand in
the near-term but with longer term uncertainty.
Raw material costs continue to increase, which has been
supportive of phosphate prices and are expected to provide
a higher floor in 2021. Global phosphate consumption is
forecast to grow at approximately 1.5 percent, with demand
growth projected for South Asia, North America and Latin
America, partly offset by expected additional supplies from
Morocco. However, we believe the ability of key low-
cost global producers to continue to add capacity could
limit the longevity of the recent recovery in prices in the
medium term.
key markets particularly in Brazil and India.
Brazil imported record volumes of MAP and DAP in 2020
amid favorable crop prices. India’s DAP imports were largely
flat in 2020 compared to the previous year, but we believe
DAP stocks in India ended the year at very low levels.
The combination of strong demand in Brazil and India in
the second half of 2020 tightened the global supply and
demand balance, leading to a rebound from historically low
prices. Meanwhile, a US countervailing duty petition against
Moroccan and Russian phosphates in June 2020 further
increased US domestic prices.
Chinese phosphate exports declined in 2020 as suppliers
were largely focused on their domestic market due to
better margins, low inventories and COVID-19 related
production impediments. Although Morocco continued to
increase dry phosphate exports throughout 2020, global
supplies did not keep pace with the strong demand in the
second half of the year.
40
Nutrien Annual Report2020 Overview
Management’s Discussion & Analysis
Three-Year Highlights
Financial Statements
Other Information
PHOSPHATE FINANCIAL PERFORMANCE
Dollars
Tonnes (thousands)
Average per Tonne
P
(millions of US dollars, except
as otherwise noted)
Manufactured product
Net sales
Fertilizer
Industrial and feed
Cost of goods sold
Gross margin – manufactured
Gross margin – other 1
Gross margin – total
Expenses
EBIT
Depreciation and amortization
EBITDA
Impairment of assets
Adjusted EBITDA
2020
2019
%
Change
2020
2019
% Change
2020
2019
2,048
733
2,781
2,130
759
2,889
(4)
(3)
(4)
Depreciation and amortization
Gross margin excluding depreciation
and amortization – manufactured
328
552
387
376
11
78
89
371
561
421
422
(1)
82
81
671
404
1,075
1,044
31
5
36
791
(755)
218
(537)
769
232
790
426
1,216
1,218
(2)
(3)
(5)
38
(43)
237
194
–
194
(15)
(5)
(12)
(14)
n/m
n/m
n/m
n/m
n/m
(8)
n/m
n/m
20
%
Change
(12)
(2)
(8)
(11)
n/m
(5)
10
1 Includes other phosphate and purchased products and is comprised of net sales of $127 million (2019 – $152 million) less cost of goods sold of $122 million
(2019 – $155 million).
The most significant contributors to the changes in our Phosphate financial performance were as follows:
2020 vs 2019
Sales volumes
Net realized selling price
Sales volumes decreased in 2020 from the conversion of the Redwater phosphate facility in the first half
of 2019 to produce ammonium sulfate for our Nitrogen segment and from a lower operating rate.
Our average realized phosphate fertilizer prices decreased in 2020 consistent with lower global
benchmark prices compared to 2019.
Cost of goods sold per tonne
Costs decreased in 2020 due to a change in estimate in the second quarter related to an asset
retirement obligation, favorable non-cash inventory adjustments and lower raw material costs.
Impairment of assets
Adjusted EBITDA
In 2020, we recorded non-cash impairments of assets relating to our property, plant and equipment at
Aurora and White Springs of $545 million and $215 million, respectively, primarily due to lower long-
term forecasted global phosphate prices. See the “Critical Accounting Estimates” section of this MD&A
and Note 13 to the financial statements.
Adjusted EBITDA increased in 2020 due to the impact of the change in estimates for our asset
retirement obligation and favorable non-cash inventory adjustments more than offsetting lower net
realized selling prices.
2020 Nutrien Annual Report 41
Overview
Management’s Discussion & Analysis
Three-Year Highlights
Financial Statements
Other Information
PHOSPHATE PRODUCTION
Phosphate Rock
Phosphoric Acid (P2O5)
Liquid Products
Solid Fertilizer Products
Production
Production
Production
Production
Annual
Capacity
2020
2019
Annual
Capacity
2020
2019
Annual
Capacity
2020
2019
Annual
Capacity
2020
2019
5.4
2.0
7.40
–
7.40
3.94
1.81
5.75
–
5.75
4.38
1.61
5.99
–
5.99
1.2
0.5
1.70
–
1.70
0.98
0.46
1.44
–
1.44
85
1.02
0.49
1.51
0.10
1.61
89
2.71
0.72
3.40
–
1.99
0.43
2.42
–
2.01
0.50
2.51
–
0.8
0.8
1.60
–
0.83
0.35
1.18
–
0.85
0.24
1.09
0.21
(million tonnes)
Aurora Phosphate
White Springs Phosphate
Total producing locations
Redwater Phosphate 3
Total
P2O5 operating rate
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 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.
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. Production in 2020 was 0.31 and 0.20, respectively, and 2019 production was 0.30 and 0.21, respectively.
42 Nutrien Annual Report 2020
Overview
Management’s Discussion & Analysis
Three-Year Highlights
Financial Statements
Other Information
CORPORATE AND OTHERS FINANCIAL PERFORMANCE
“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 2020 were $1,115 million
(2019 – $1,060 million) with gross margin recovery of $21 million (2019 – $5 million). Eliminations are not part of the Corporate and
Others segment.
(millions of US dollars, except as otherwise noted)
Sales 1
Cost of goods sold
Gross margin
Selling expenses
General and administrative expenses
Provincial mining and other taxes
Share-based compensation expense
Impairment of assets
Other expenses
EBIT
Depreciation and amortization
EBITDA
Adjustments 2
Adjusted EBITDA
2020
82
74
8
(24)
269
2
69
5
228
(541)
52
(489)
203
(286)
2019
133
133
–
(18)
264
2
104
120
171
(643)
42
(601)
364
(237)
% Change
(38)
(44)
n/m
33
2
–
(34)
(96)
33
(16)
24
(19)
(44)
21
1 Primarily relates to our non-core Canadian business that was sold in 2020.
2 See Note 3 to the financial statements.
The most significant contributors to the changes in our Corporate and Others financial performance were as follows:
Share-based compensation
expense
Impairment of assets
Other expenses
2020 vs 2019
Share-based compensation expense was lower in 2020 due to lower payout amounts and
lower share-based award fair values.
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.
Increase in expense is due to COVID-19 related expenses, higher acquisition and integration
related expenses and higher project costs related to our Retail enterprise resource planning
system as part of our digital transformation in 2020. These were partially offset by Merger
and related costs incurred in 2019 with no comparative in 2020.
COVID-19 expenses are directly attributable and incremental to the pandemic and primarily
consist of increased cleaning and sanitization costs, the purchase of personal protective
equipment, discretionary supplemental employee costs and costs related to construction
delays from access limitations and other government restrictions.
2020 Nutrien Annual Report 43
Overview
Management’s Discussion & Analysis
Three-Year Highlights
Financial Statements
Other Information
FINANCE COSTS, INCOME TAX (RECOVERY) EXPENSE
AND OTHER COMPREHENSIVE INCOME
(millions of US dollars, except as otherwise noted)
Finance costs
Income tax (recovery) expense
Other comprehensive income
2020
520
(77)
194
2019
554
316
36
% Change
(6)
n/m
439
The most significant contributors to the changes in our finance costs, income tax expense and other comprehensive income were
as follows:
2020 vs 2019
Finance costs
Finance costs decreased slightly as lower interest rates more than offset higher finance costs incurred
as we managed our immediate liquidity position during the initial months of the COVID-19 pandemic.
Weighted Average Debt Balances and Rates
(millions of US dollars, except as otherwise noted)
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 (%)
2020
2,329
1.7
9,282
4.5
1,089
3.1
2019
1,324
4.5
8,534
4.7
1,024
3.4
1 North American weighted average short-term debt balances were $2,092 million (2019 – $1,063 million) and rates were
1.4 percent (2019 – 2.4 percent).
Income tax
(recovery) expense
There was an income tax recovery in 2020 compared to an expense in 2019 primarily due to
significantly lower earnings and discrete tax adjustments in 2020. The discrete tax adjustments in
2020 were primarily related to recoveries of prior year taxes due to US legislative changes. The change
in effective tax rate is a result of a change in the proportionate earnings (loss) between jurisdictions.
Effective Tax Rates and Discrete Items
(millions of US dollars, except as otherwise noted)
Actual effective tax rate on earnings (%)
Actual effective tax rate including discrete items (%)
Discrete tax adjustments that impacted the rate
2020
2019
3
(20)
(80)
24
24
2
Other
comprehensive
income
Other comprehensive income increased primarily due to a higher gain on translation of our Retail
operations in Australia as the Australian dollar strengthened relative to the US dollar. There was also
an increase in the net actuarial gain on our defined benefit pension plans.
44 Nutrien Annual Report 2020
FINANCIAL OVERVIEW
Financial Highlights
Financial Condition Review
Liquidity and Capital Resources
Capital Structure and Management
Off-Balance Sheet Arrangements
Other Financial Information
Quarterly Results
2021 Guidance and Sensitivities
Enterprise Risk Management
Controls and Procedures
Forward-Looking Statements
46
47
48
51
52
53
55
57
58
62
63
Appendix – Non-IFRS Financial Measures 64
Three-Year Highlights
70
45
Nutrien Annual Report2020 Overview
Management’s Discussion & Analysis
Three-Year Highlights
Financial Statements
Other Information
FINANCIAL HIGHLIGHTS
(millions of US dollars, except as otherwise noted)
Sales 1
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
1 Certain immaterial figures have been reclassified for the year ended December 31, 2019.
2020
20,908
459
0.81
0.81
459
0.81
0.81
47,192
10,947
1.80
2019
20,084
992
1.70
1.70
992
1.70
1.70
46,799
9,431
1.33
2018
19,636
(31)
(0.05)
(0.05)
3,573
5.72
5.72
45,502
7,616
2.06
Sales
Net earnings and
earnings per share
from continuing
operations
Net earnings and
earnings per share
Assets and
non-current
financial liabilities
2020 vs 2019
2019 vs 2018
Sales increased as higher Retail sales from
acquisitions and strong organic growth coupled
with higher potash and nitrogen sales volumes,
more than offset the impact of lower crop
nutrient selling prices.
Sales increased primarily due to Retail acquisitions
and higher potash realized prices, driven by higher
global benchmark pricing in the first half of 2019,
more than offsetting lower potash and nitrogen
volumes.
Net earnings and earnings per share decreased
compared to 2019 due to a non-cash
impairment of our Phosphate property, plant
and equipment at Aurora and White Springs
and lower manufactured product margins from
lower crop nutrient selling prices more than
offsetting a net gain from disposal of our
investment in MOPCO.
Assets increased slightly from 2019. Recent
acquisitions and higher cash and cash
equivalents offset the non-cash impairment of
assets and disposal of our investment in
MOPCO in 2020.
Non-current financial liabilities increased due
to higher long-term debt from the issuance of
new notes.
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.
Assets increased primarily due to Retail acquisitions
and the addition of right-of-use assets from the
adoption of IFRS 16, “Leases”, partially offset by
a decrease in cash and cash equivalents.
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.
46 Nutrien Annual Report 2020
Overview
Management’s Discussion & Analysis
Three-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
and the consolidated statements of cash flows in our
financial statements.
Property, plant and equipment decreased due to non-cash
impairments recorded in 2020 primarily related to the
phosphate-related assets.
Goodwill increased as a result of additional goodwill from the
recent Retail acquisitions, primarily in Brazil.
Investments decreased as we sold our equity-accounted
investment in MOPCO.
Other assets increased due to additional long-term income tax
receivables recognized related to the US legislative changes
(CARES Act) and higher accrued pension benefit assets from
changes in actuarial assumptions.
Short-term debt decreased as we continue to manage our
working capital needs.
Long-term debt (including current portion) increased due to
the addition of $1.5 billion in notes issued in May 2020
exceeding the repayment of $500 million in notes that
matured earlier in 2020.
Payables and accrued charges increased due to a shift in
timing of vendor payments and additional vendor prepayment
arrangements, whereby we made financial commitments to
vendors to prepay for inventory in return for product discounts.
Shareholders’ Equity
Retained earnings decreased due to dividends declared
exceeding net earnings.
We do not hold material cash and cash equivalents in currencies other than the US dollar and Canadian dollar. We held
approximately $200 million US dollar equivalent in Australia and South America. We do not depend on repatriation of cash from our
foreign subsidiaries to meet our liquidity and capital resources needs in North America.
2020 Nutrien Annual Report 47
Overview
Management’s Discussion & Analysis
Three-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 2020 significant liquidity sources are listed below along with our expected ongoing
primary uses of liquidity.
2020 Key
Sources and Uses
Included:
Primary Uses of Liquidity
Primary Sources of Liquidity
(cid:129) operational expenses and prepayments
(cid:129) cash from operations (including customer
(cid:129) seasonal working capital requirements
(cid:129) sustaining and investing capital
(cid:129) business acquisitions
(cid:129) dividends and share repurchases
(cid:129) principal payments of debt securities
prepayments)
(cid:129) commercial paper issuances
(cid:129) increase of credit facility limits and drawdowns
(cid:129) debt capital markets
(cid:129) Invested to sustain and grow our safe, reliable and
(cid:129) Issued $1.5 billion of notes on May 13, 2020. See
cost-efficient operations. Sustaining capital
expenditures were $919 million. Investing capital
expenditures were $511 million.
(cid:129) Returned cash to our shareholders through
dividends and share repurchases (see Note 23 to
the financial statements). Dividends paid were
$1,030 million and share repurchases were
$160 million.
(cid:129) Repaid at maturity $500 million of 4.875 percent
notes. See Note 18 to the financial statements.
(cid:129) Repaid a net $650 million in commercial paper
and had none issued as at December 31, 2020.
Note 18 to the financial statements.
(cid:129) Established $1.5 billion of new committed
revolving credit facilities in March and April 2020,
in response to the market uncertainty caused by
the COVID-19 pandemic. We closed these credit
facilities after the issuance of the new notes, as
described above. In 2020, we drew down from and
later repaid $3.5 billion of our revolving credit
facilities to provide additional liquidity in the
volatile market caused by the COVID-19
pandemic. We continue to monitor our liquidity
position.
(cid:129) Received $540 million on disposal of our
investment in MOPCO and settlement of related
legal claims.
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 the foreseeable future. We
do not reasonably expect any presently known trend or uncertainty to affect our ability to access our historical sources of liquidity.
48 Nutrien Annual Report 2020
Overview
Management’s Discussion & Analysis
Three-Year Highlights
Financial Statements
Other Information
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 investing activities
Cash used in financing activities
Effect of exchange rate changes on cash and cash equivalents
Increase (decrease) in cash and cash equivalents
2020
3,323
(1,204)
(1,339)
3
783
2019
% Change
3,665
(2,798)
(2,479)
(31)
(1,643)
(9)
(57)
(46)
n/m
n/m
Cash and cash equivalents increased by $783 million in 2020 compared to a decrease of $1,643 million in 2019, due to:
(cid:129) proceeds of $540 million from the disposal of our investment in MOPCO and settlement of related legal claims,
(cid:129) a decrease of $1.8 billion in share repurchases compared to the same period in 2019,
(cid:129) a decrease of approximately $1 billion in Retail acquisitions and capital expenditures as we deferred or reduced capital projects
mainly due to lower crop nutrient prices and COVID-19 precautions, and
(cid:129) a decrease of approximately $500 million in long–term debt repayments compared to the same period in 2019.
The above factors were partially offset by:
(cid:129) lower cash from our operating activities as a result of lower crop nutrient prices compared to 2019, and
(cid:129) an increase of $1.1 billion in short-term net debt repayments compared to the same period in 2019 as a lower level of short-term
debt was required in 2020 due to improved working capital.
2020 Nutrien Annual Report 49
Overview
Management’s Discussion & Analysis
Three-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, 2020. The information presented in the table below does not include planned (but
not legally committed) cash requirements. Planned or anticipated cash requirements that are not fully included in the table below
include annual outflows for sustaining capital, investing capital, share repurchases, dividends and acquisitions. For information on
income taxes and pension and other post retirement benefit funding, refer to Note 8 and Note 21, respectively, to the financial
statements. Future cash requirements are subject to changes in regulations, actuarial assumptions, and our expected operating
results.
On February 17, 2021, our Board approved a share repurchase program of up to a maximum of 28,468,448 or 5 percent of our
outstanding common shares for cancellation. Subject to acceptance by the Toronto Stock Exchange, the 2021 share repurchase
program will commence on March 1, 2021, and will expire on the earlier of February 28, 2022, the date on which we have acquired
the maximum number of common shares allowable or the date we determine not to make any further repurchases.
(millions of US dollars) at December 31, 2020
Long-term debt
Estimated interest payments on long- term debt
Lease liabilities
Estimated interest payments on lease liabilities
Purchase commitments
Capital commitments
Other commitments
Derivatives
Asset retirement obligations and accrued
Financial
Statement Note
Reference
Note 18, 26
Note 26
Note 19, 26
Note 26
Note 26
Note 26
Note 26
Note 10
Payments Due by Period
Total
9,742
6,053
1,145
160
2,239
110
430
48
Within
1 Year
14
420
259
22
1,268
87
132
39
1 to 3
Years
1,543
835
371
37
757
16
118
9
3 to 5
Years
1,809
689
208
25
72
6
53
–
Over 5
Years
6,376
4,109
307
76
142
1
127
–
environmental costs 1
Note 22
2,788
124
225
145
2,294
Total
22,715
2,365
3,911
3,007
13,432
1 Commitments reflect the estimated cash outflows for these obligations. See Note 22 to the financial statements for details.
50 Nutrien Annual Report 2020
Overview
Management’s Discussion & Analysis
Three-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:
(millions of US dollars)
Credit facilities
Unsecured revolving term credit facility 1
Uncommitted revolving demand facility
Other credit facilities 2
Commercial paper
Total
Total Facility
Limit as at
December 31,
2020
4,500
500
740
Rate of
Interest
(%)
Nil
Nil
0.8 – 36.0
Nil
2020
2019
–
–
159
–
159
–
–
326
650
976
1 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.
2 Credit facilities are unsecured and consist of South American facilities with debt of $109 million (2019 – $149 million) and interest rates ranging from
1.7 percent to 36.0 percent, Australian facilities with debt of $19 million (2019 – $157 million) and an interest rate of 0.8 percent, and other facilities with
debt of $31 million (2019 – $20 million) and an interest rate of 1.0 percent.
Our long-term debt consists primarily of notes and debentures with the following maturities and interest rates:
2020 Nutrien Annual Report 51
Overview
Management’s Discussion & Analysis
Three-Year Highlights
Financial Statements
Other Information
We also have lease obligations totaling $1,140 million (including current portion) with a weighted average effective interest rate of
2.9 percent as at December 31, 2020.
Following the decision by global regulators to replace Interbank Offered Rates (“IBORs”) with alternative nearly risk-free rates
(“RFRs”), in August 2020 the International Accounting Standards Board completed Phase 2 of the Interest Rate Benchmark Reform.
We are in the process of identifying and updating existing contracts extending past 2021 that reference IBORs, 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, 2020.
The accompanying table summarizes the limit and result of our
key financial covenant.
At December 31
Limit
2020
Debt to capital ratio 1
0.65:1.00
0.34:1.00
1 Refer to Note 24 to the financial statements for the detailed calculation.
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
2020
2019
Baa2 (stable)
BBB (stable)
Baa2 (stable)
BBB (stable)
2020
P-2
A-2
2019
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 18, 2021
569,790,353
10,295,789
For more information on our capital structure
and management, see Note 24 to the financial
statements.
For more information on our short-term
debt and long-term debt, see Note 17 and
Note 18 to the financial statements.
OFF-BALANCE SHEET ARRANGEMENTS
Principal off-balance sheet activities primarily include:
(cid:129) Agreement to reimburse losses of Canpotex (see Note 29 to
(cid:129) Certain non-financial derivatives that were entered into and
the financial statements).
(cid:129) Issuance of guarantee contracts (see Note 22 and Note 27
to the financial statements).
(cid:129) Agency arrangement with a financial institution in relation
to certain customer loans (see Note 11 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 (see Note 10 to
the financial statements).
We do not reasonably expect any presently known trend or uncertainty to affect our ability to continue using these arrangements.
52 Nutrien Annual Report 2020
Overview
Management’s Discussion & Analysis
Three-Year Highlights
Financial Statements
Other Information
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 28 to the financial statements for information on our related party transactions.
Market Risks Associated With Financial Instruments
Market risk is the potential for loss from adverse changes in the market value of financial instruments. The level of market risk to
which we are exposed varies depending on the composition of our derivative instrument portfolio, as well as current and expected
market conditions. See Note 10 to the financial statements for information on our financial instruments, including the risks and risk
management associated with such instruments.
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.
Financial Statement
Reference 1
Note 13 and Note 30
Long-lived asset impairment
Critical Accounting Estimate Description
In 2020, we identified an impairment indicator in our Phosphate cash-generating units (“CGUs”) due to lower long-
term forecasted global phosphate prices, and recorded impairments to our property, plant and equipment at Aurora
and White Springs of $545 million and $215 million, respectively.
The recoverable amount of Aurora was determined using a fair value less costs of disposal (“FVLCD”) methodology
based on after-tax discounted cash flows (using a five-year projection and a terminal year thereafter to the expected
mine life) discounted at a post-tax rate of 10.5%. The recoverable amount of White Springs was determined using a
value in use methodology assuming an end of mine life in 2029 and a post-tax discount rate of 12.0%. The
recoverable amounts of Aurora and White Springs are most sensitive to the following key assumptions: our internal
sales price forecasts, which consider projections from an independent third-party data source, discount rates and
expected mine life. We used key assumptions that were based on historical data and estimates of future results from
internal sources, external price benchmarks, mineral reserve technical reports, as well as industry and market trends.
The following table highlights sensitivities to the recoverable amount, which could result in additional impairment
losses or reversals of previously recorded losses. The sensitivities have been calculated independently of changes in
other key variables.
Key Assumptions
Net selling price
Discount rate
Change in Assumption
±$10 per tonne
±1.0 percentage point
Aurora
Change in Recoverable Amount
(millions of US dollars)
±150
±120
For our White Springs CGU, there were no reasonably possible changes in the key assumptions that would result in a
substantial change in the recoverable amount.
In 2020, we performed impairment testing on the Trinidad CGU, part of our Nitrogen segment, due to the indefinite
closure of an ammonia plant in response to market conditions and lower long-term forecasted global ammonia
prices. No impairment resulted from comparing the carrying amount of the Trinidad CGU to its recoverable amount
determined on a FVLCD methodology. FVLCD was based on after-tax discounted cash flows (using a five-year
projection and a 2.0% terminal growth rate) discounted at a post-tax rate of 12.6%.
The following table indicates the percentages by which key assumptions would need to change individually for the
estimated Trinidad CGU recoverable amount to be equal to the carrying amount:
Key Assumptions
Net selling price (5-year average)
Production volumes (5-year average)
Discount rate (post-tax)
Change Required for Carrying
Amount to Equal Recoverable Amount
4 percent decrease
5 percent decrease
0.9 percentage point increase
2020 Nutrien Annual Report 53
Overview
Management’s Discussion & Analysis
Three-Year Highlights
Financial Statements
Other Information
Financial Statement
Reference 1
Note 14 and Note 30
Goodwill impairment
Critical Accounting Estimate Description
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 amount of each of our CGUs or groups
of CGUs containing goodwill was in excess of their carrying amounts. Key assumptions in our testing models may
change, and changes that could reasonably be expected to occur may cause impairment.
The excess of the recoverable amount of the Retail – North America group of CGUs over the carrying amount is
$1.7 billion, which is 13 percent. The sensitivity of Retail – North America’s recoverable amount 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
(millions of US dollars)
+0.1
-0.1
+0.1
-0.1
+5.0
-5.0
(270)
280
240
(230)
900
(900)
Note 25
Business combinations – measurement of assets acquired and liabilities assumed
Significant judgment for our business combinations included 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. 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. In 2020, all of the business combinations were in the Retail segment.
Note 8 and Note 29
Income taxes – measurement
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.
Note 22
Asset retirement obligations (“AROs”) and accrued environmental costs (“ERLs”) – measurement
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. For the Nitrogen segment, we have not
recorded any asset retirement obligations as 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.
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).
54 Nutrien Annual Report 2020
Overview
Management’s Discussion & Analysis
Three-Year Highlights
Financial Statements
Other Information
QUARTERLY RESULTS
2020
2019
(millions of US dollars, except as otherwise noted)
Sales 1
Net earnings (loss)
Adjusted EBITDA
Net earnings per share (“EPS”)
Basic
Diluted
Q4
4,052
316
768
0.55
0.55
Q3
4,227
(587)
670
(1.03)
(1.03)
Q2
8,431
765
1,721
1.34
1.34
Q1
4,198
(35)
508
(0.06)
(0.06)
Q4
3,462
(48)
664
(0.08)
(0.08)
Q3
4,185
141
787
0.25
0.24
Q2
8,704
858
1,870
1.48
1.47
Q1
3,733
41
704
0.07
0.07
1 Certain immaterial figures have been reclassified in each quarter of 2019 and in the first three quarters of 2020.
Seasonality in our business results from increased demand for products during the planting season. Crop input sales are generally
higher 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
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.
Since the fourth quarter of 2019, Potash earnings have been impacted by lower net realized selling prices caused by a temporary
slowdown in global demand. In the third quarter of 2020, earnings were impacted by non-cash impairments of property, plant and
equipment primarily in the Phosphate segment as a result of lower forecasted global phosphate prices. Earnings were impacted by a
net gain from disposal of our MOPCO investment and settlement of related legal claims in the fourth quarter of 2020.
Fourth Quarter Financial Performance
(millions of US dollars, unless otherwise noted)
Three months ended December 31
Retail
Crop nutrients
Crop protection products
Seed
Merchandise
Nutrien Financial
Services and other 1
Nutrien Financial elimination 2
Total
2020
1,108
828
152
240
37
290
(37)
2,618
Sales
2019
907
635
99
211
–
339
–
2,191
% Change
2020
2019
% Change
Gross Margin
22
30
54
14
n/m
(14)
n/m
19
236
343
58
41
37
207
(37)
885
186
281
60
44
–
185
–
756
27
22
(3)
(7)
n/m
12
n/m
17
1 Certain immaterial figures have been reclassified for the three months ended December 31, 2019.
2 Represents elimination for the interest and service fees charged by Nutrien Financial to Retail branches.
(US dollars, unless otherwise noted)
Three months ended December 31
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
Manufactured Product Sales Tonnes
(thousands)
Manufactured Product
Average Net Price per MT
2020
2019
% Change
2020
2019
% Change
1,041
1,613
2,654
730
853
1,262
2,845
466
182
648
651
1,234
1,885
571
695
1,096
2,362
466
181
647
60
31
41
28
23
15
20
–
1
–
192
156
170
116
54
216
270
133
195
162
33
387
551
433
410
23
226
164
186
112
74
245
278
152
212
171
41
334
581
403
395
8
(15)
(5)
(9)
4
(27)
(12)
(3)
(13)
(8)
(5)
(20)
16
(5)
7
4
188
2020 Nutrien Annual Report 55
Overview
Management’s Discussion & Analysis
Three-Year Highlights
Financial Statements
Other Information
Highlights of our 2020 fourth quarter compared to the 2019 fourth quarter results were as follows:
Retail
Potash
Nitrogen
Phosphate
Q4 2020 vs Q4 2019
Gross margin increased due to higher sales from recent acquisitions in Brazil and improved
weather conditions in the US and Australia. Selling expenses increased due to the
acquisitions and higher sales activity, but decreased as a percentage of sales.
Gross margin increased from higher sales volumes due to strong domestic and offshore
demand supported by improved crop prices, increased planted acreage in the US and strong
fall application in North America in anticipation of higher planting in 2021. This was partially
offset by decreased net realized selling prices due to lower year-over-year global benchmark
prices as well as increased cost of goods sold per tonne as a result of higher depreciation and
amortization related to production mix and the timing of maintenance projects relative to
the fourth quarter of 2019. Cost of goods sold per tonne was positively impacted by higher
production levels and production efficiencies.
Gross margin increased from higher sales volumes across all product lines due to favorable
weather conditions in North America supporting a strong application season and from a
lower cost of goods sold per tonne resulting from lower depreciation and amortization per
tonne which offset an increase in natural gas costs. These factors were partially offset by a
lower net realized selling price, which was consistent with lower global and North American
benchmark prices. Other income increased due to a gain on disposal of our MOPCO
investment and settlement of related legal claims in the fourth quarter of 2020.
Gross margin increased due to a higher realized fertilizer selling price from a recovery in
global benchmark prices which was partially offset by lower industrial and feed prices and
was impacted by timing lags to benchmark prices. This was partially offset by an increase in
cost of goods sold per tonne resulting from higher input costs and lower production
volumes, which more than offset lower depreciation and amortization following the
non-cash impairment in the third quarter of 2020.
Other fourth quarter financial
highlights
Impairment of assets decreased from $87 million to $1 million primarily due to certain
impairments of various intangible assets and property, plant and equipment recorded in the
fourth quarter of 2019 with no similar impairments in the fourth quarter of 2020.
Share-based compensation expense increased from $9 million to $60 million primarily due
to an increase in share price in the fourth quarter of 2020 compared to a decrease in the
fourth quarter of 2019.
An income tax recovery was recorded in the fourth quarter of 2020 as the $250 million net
gain on disposal of our investment in MOPCO did not increase income tax expense due to
available capital losses. We also had discrete tax adjustments primarily related to recoveries
of prior year taxes due to US legislative changes. An income tax recovery was recorded in the
fourth quarter of 2019 due to a loss before income taxes. The change in the actual effective
tax rate on earnings is a result of a change in the proportionate earnings (loss) between
jurisdictions.
We had higher cash flows in the fourth quarter of 2020 compared to the same period in
2019 from proceeds from disposal of investment in MOPCO and higher cash from
operations from higher Retail sales and working capital improvements.
56 Nutrien Annual Report 2020
Overview
Management’s Discussion & Analysis
Three-Year Highlights
Financial Statements
Other Information
2021 GUIDANCE
(billions of US dollars except as otherwise noted)
Adjusted net earnings per share (“Adjusted EPS”) 2
Adjusted EBITDA
Retail adjusted EBITDA
Potash adjusted EBITDA
Nitrogen adjusted EBITDA
Phosphate adjusted EBITDA (millions)
Potash sales tonnes (millions) 3
Nitrogen sales tonnes (millions) 3
Depreciation and amortization
Effective tax rate on adjusted earnings (%)
Sustaining capital expenditures
1 See the “Forward-Looking Statements” section.
2 Assumes 570 million shares outstanding for all EPS guidance and sensitivities.
3 Manufactured product only. Nitrogen sales tonnes excludes ESN® and Rainbow products.
ASSUMPTIONS
2021 Average Canadian to US dollar exchange rate
2021 NYMEX natural gas (US dollars per MMBtu)
2021 SENSITIVITIES
PRICE AND VOLUME SENSITIVITIES
INPUT COST SENSITIVITIES
(millions of US dollars, except EPS amounts)
Price
Potash changes by $25/tonne
Ammonia changes by $25/tonne
Urea changes by $25/tonne
Volume Potash changes by 100,000 tonnes
±0.35
±0.06
±0.11
±0.01
Nitrogen changes by 50,000 N tonnes
±0.01
Retail
Crop nutrients changes by 1% 1
Crop protection changes by 1% 1
Seed changes by 1% 1
±0.07
±0.07
±0.03
1 Gross margin as a percentage of sales.
Effect on
Adjusted
EPS
Adjusted
EBITDA
(millions of US dollars, except EPS amounts)
(impact on Nitrogen)
NYMEX natural
gas price
changes
by $1/MMBTu
Canadian to US
dollar changes
by $0.02
±260
± 47
± 82
± 11
± 7
± 55
± 54
± 20
2021 Guidance Ranges 1
Low
2.05
4.0
1.5
1.4
1.1
250
12.5
10.9
1.9
22
1.1
High
2.75
4.5
1.6
1.6
1.3
350
13.0
11.4
2.0
24
1.2
1.29
2.80
Effect on
Adjusted
EPS
Adjusted
EBITDA
±0.21
±155
±0.02
± 14
2020 Nutrien Annual Report 57
Overview
Management’s Discussion & Analysis
Three-Year Highlights
Financial Statements
Other Information
ENTERPRISE RISK MANAGEMENT
Nutrien integrates risk management into our strategic and business activities to facilitate informed risk taking. We focus
on identifying and managing risks that are critical to achieving our strategic objectives.
Risk Governance
Risk management is governed by our Board and Board committees, who oversee our Executive Leadership Team in understanding
the principal risks to our business and strategy. Responsibility and accountability for risk management are embedded in all levels of
our organization, and we strive to integrate risk management into key decision-making processes and strategy. By considering risk
throughout our business, we seek to align our strategy with our vision and effectively manage the risks that could have an impact on
our ability to deliver our strategy.
COVID-19 Update
We are continually assessing and responding to the effects of the COVID-19 pandemic on our employees, customers. and suppliers,
and evaluating governmental and other public health authority actions being taken to curtail its spread. Our operations have been
designated as part of critical infrastructure and as essential businesses (or equivalents) in our core markets, allowing us to continue
to operate. We have implemented COVID-19 safety protocols across our operations to help protect and support our employees,
customers and suppliers. We have also successfully shifted virtually all of our corporate staff to a work-from-home program. Our
crisis management team and leadership continue to monitor the COVID-19 situation and adjust plans accordingly. While COVID-19
has had limited impact on our reported results to date, future impacts will depend on future developments, which cannot currently
be predicted and may negatively impact our business, results of operations, financial condition or liquidity.
Key Risks
We characterize a Key Risk as a risk or combination of risks that could threaten the achievement of our vision and ability to deliver on
our strategy. We evaluate and develop responses for those risks that could have a significant safety and health, environmental,
financial or reputational impact. In addition to COVID-19, we consider the following to be Key Risks at this time. For a more detailed
discussion of all our risks, including COVID-19, refer to Nutrien’s 2020 Annual Information Form.
1
Agriculture Changes and Trends
Associated Key Priorities
Description
Risk Management Approach
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 including soil health; climate change;
water management; changes in consumer food
preferences; governments and climate-related
initiatives; and technological innovation and digital
business models.
Our integrated business platform and diversified earnings portfolio
are designed to respond and adapt to changes in agriculture.
Nutrien also provides a diverse portfolio of expertise, products,
services and digital analytics that support growers to produce higher
yields in a sustainable manner. We recently launched our plan to
create the agricultural industry’s most comprehensive Carbon
Program, designed to provide end-to-end support for growers to
drive improved sustainability and boost profitability. Our digital tools
also allow growers to track their sustainability outcomes, providing
transparency to value-chain partners. 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.
See pages 11 & 14 of this report for information on Nutrien’s
Strategy and our Carbon Program.
Sustainability
Growth & Capital Allocation
Innovation & Technology
Employees
58 Nutrien Annual Report 2020
Overview
Management’s Discussion & Analysis
Three-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 those relating to health and safety, taxes and
royalties, environmental and climate change, including
regulation of GHG emissions – 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,
allowing us to anticipate new policies and put the Company in the
best position for success while leveraging our industry association
allies. We have a sustainability strategy, an active Issues
Management Team and are in the process of developing a climate
action plan to assist in managing the impact of potential regulatory
changes.
4
Cybersecurity Threats
Associated Key Priorities
Description
Cyberattacks or breaches of our systems, including our
Retail 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 and/or personally identifiable
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.
Sustainability
Growth & Capital Allocation
Innovation & Technology
Employees
2020 Nutrien Annual Report 59
Overview
Management’s Discussion & Analysis
Three-Year Highlights
Financial Statements
Other Information
Enterprise Risk Management Continued
5
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.
6
Stakeholder Support
Associated Key Priorities
Description
Our stakeholders may not support our business plans,
structure, strategy or core sustainability such as ESG
initiatives and climate targets, 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 have an Issues Management Team that continuously monitors
stakeholder issues and that regularly engages with our stakeholders
to identify and address their concerns and communicate the long-
term value opportunities associated with our business plans. We
recently launched our plan to create the agricultural industry’s most
comprehensive Carbon Program and have a sustainability strategy
that is structured to support what matters most to our stakeholders.
We also are in the process of developing our climate action plan.
See page 13 of this report for information on our ESG strategy.
7
Talent and Organizational Culture
Associated Key Priorities
Description
An inability to attract, develop, engage or retain skilled
employees, or establish the right organizational culture,
could impact productivity, reliability, safety
performance, costs, customer relationships, and/or
our reputation.
Risk Management Approach
We have a proactive in-house Talent Attraction and Sourcing Team
that focuses on efficiently building a diverse and talented workforce
with the current and future skills we need. We are committed to the
career development of our employees and building a culture
grounded in our organizational purpose and the values of safety and
integrity. Our active listening strategy keeps a pulse on employee
experience and engagement and our inclusive culture. Our talent
succession process focuses on identifying and managing critical
roles and the proactive build of internal and external bench strength
with an eye to diversity. Our incentive programs are competitive and
performance-based and support our purpose-driven culture.
Sustainability
Growth & Capital Allocation
Innovation & Technology
Employees
60 Nutrien Annual Report 2020
Overview
Management’s Discussion & Analysis
Three-Year Highlights
Financial Statements
Other Information
Enterprise Risk Management Continued
8
Retail Business Model
Associated Key Priorities
Description
Risk Management Approach
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.
Refer to Nutrien’s 2020 Annual Information Form for risk
factors related to the implementation of our new
enterprise resource planning system.
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.
9
Capital Redeployment
Associated Key Priorities
Description
Our inability to deploy capital to efficiently achieve
sustained growth 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 our capital
allocation policy prioritizes sustaining our assets, preserving
the strength and resiliency of our balance sheet, supporting a
sustainable dividend, and applying a rigorous compete-for-capital
re-investment strategy to maximize shareholder value.
See page 18 of this report for our Capital Allocation Policy.
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 that involve independent audits and
assessments. 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
2020 Nutrien Annual Report 61
Overview
Management’s Discussion & Analysis
Three-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, 2020, 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). Based on this evaluation, our Chief Executive Officer and
Chief Financial Officer concluded that, as at December 31, 2020, Nutrien Ltd. did maintain effective internal control over financial
reporting.
In 2020, as part of our digital transformation, we implemented a new enterprise resource planning system in the Retail segment.
The Digital Transformation implementation in the Retail environment has resulted in a more automated control environment for
our Canadian and Loveland Products operations. This change has materially affected our internal control over financial reporting.
On September 30, 2019, we completed the Ruralco acquisition. The acquisition of Ruralco was previously 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. As a result of the acquisition of Ruralco and the integration of the Australian
Retail operations, the internal control over the Australian Retail operations came into scope of the Company’s internal control over
financial reporting in the fourth quarter of 2020. We completed the integration of our Ruralco control environment into the Nutrien
control environment to ensure controls were operating effectively as at December 31, 2020. Management used appropriate
procedures to ensure internal controls were in place during and after implementation. The integration of the Australian Retail
operations has materially affected our internal control over financial reporting.
COVID-19 has also affected our business. In 2020, corporate office staff and many site administrative staff have worked from home.
This change has required certain processes and controls that were previously done or documented manually to be completed and
retained in electronic form. This change has not materially affected our internal control over financial reporting.
Except as discussed herein, there have been no changes in, that have materially affected, or are reasonably likely to materially affect,
our internal control over financial reporting.
The effectiveness of the Company’s internal control over financial reporting as at December 31, 2020 was audited by KPMG LLP, as
reflected in their report, which is included in this 2020 Annual Report.
62 Nutrien Annual Report 2020
Overview
Management’s Discussion & Analysis
Three-Year Highlights
Financial Statements
Other Information
FORWARD-LOOKING STATEMENTS
Certain statements and other information included in this
document, including within the “2021 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 business strategies, plans, prospects and
opportunities; Nutrien’s 2021 annual guidance, including our
expectations regarding our adjusted net earnings per share
and adjusted EBITDA (consolidated and by segment);
expectations regarding adjusted EBITDA growth; expectations
regarding our growth and capital allocation intentions and
strategies; capital spending expectations for 2021;
expectations regarding performance of our operating
segments in 2021, including our operating segment market
outlooks and market conditions for 2021, and the 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 import and export volumes; expectations regarding
our sustainability, environmental (including climate), diversity
and inclusion and innovation and technology strategies,
initiatives, plans and targets; expectations regarding the
expansion and enhancement of our Retail digital platform;
expectations regarding repurchases of our common shares,
including the timing thereof; expectations regarding the
sufficiency of Nutrien’s liquidity, including the sources thereof,
to meet its anticipated capital expenditures and other cash
requirements; expectations regarding the impact to Nutrien of
the transition from interbank offered rates to nearly risk-free
rates; the negotiation of sales contracts; the implementation of
our carbon program and the benefits to Nutrien and growers
therefrom; and acquisitions and divestitures, and the expected
synergies associated with certain acquisitions, including the
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, having regard to our
experience and our perception of historical trends, 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. Current conditions, economic and otherwise,
render assumptions, although reasonable when made, subject
to greater uncertainty. 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 divestitures, and that we will be able
to implement our standards, controls, procedures and policies
in respect of any acquired businesses and 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;
assumptions with respect to global economic conditions and
the accuracy of our market outlook expectations for 2021 and
in the future; our expectations regarding the impacts, direct
and indirect, of the COVID-19 pandemic on our business,
customers, business partners, employees, supply chain, other
stakeholders and the overall economy; 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; our ability to successfully negotiate
sales contracts; our ability to successfully implement new
initiatives and programs; and our ability to redeploy capital to
generate higher returns for shareholders.
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, including our costs
of addressing or mitigating such risks; counterparty and
sovereign risk; delays in completion of turnarounds at our
major facilities; interruptions of or constraints in availability of
key inputs, including natural gas and sulfur; any significant
impairment of the carrying amount 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; the COVID-19 pandemic and its resulting effects
on economic conditions, restrictions imposed by public health
authorities or governments, fiscal and monetary responses by
governments and financial institutions and disruptions to
global supply chains; 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
and adjusted EBITDA (consolidated and by segment) guidance
ranges, as well as our adjusted earnings per share and adjusted
EBITDA price and volume and input costs sensitivities ranges,
are to assist readers in understanding our expected and
targeted financial results, and this information may not be
appropriate for other purposes.
The forward-looking statements in this document are made as
of the date hereof and 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.
2020 Nutrien Annual Report 63
Overview
Management’s Discussion & Analysis
Three-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 historical or future financial performance, financial position or cash flow that are not specified, defined or
determined under IFRS, and are not presented in our financial statements. Non-IFRS measures either exclude amounts that are
included in, or include amounts that are excluded from, the most directly comparable measure specified, defined or determined
under 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. Except as otherwise described herein, our non-IFRS financial
measures are calculated on a consistent basis from period to period and are adjusted for specific items in each period, as applicable.
As non-recurring or unusual items arise, we generally exclude these items in our calculation.
ADJUSTED EBITDA (CONSOLIDATED)
Most directly comparable IFRS financial measure: Net earnings (loss).
Definition: Adjusted EBITDA is calculated as net earnings (loss) before finance costs, income taxes, depreciation and amortization,
Merger and related costs, certain acquisition and integration related costs, share-based compensation, impairment of assets, certain
foreign exchange gain/loss (net of related derivatives), COVID-19 related expenses, loss on disposal of business and net gain on
disposal of investment in MOPCO. In 2020, we amended our calculation of adjusted EBITDA to adjust for the impact of COVID-19
related expenses, loss on disposal of business and net gain on disposal of investment in MOPCO. There were no similar income or
expenses in the comparative period. To align with the change in our segment performance measure effective in 2020, we will
primarily use adjusted EBITDA going forward as our consolidated performance measure.
Why we use the measure and why it is useful to investors: It is not impacted by long-term investment and financing decisions, but
rather focuses on the performance of our day-to-day operations. It provides a measure of our ability to service debt and to meet
other payment obligations.
(millions of US dollars)
Net earnings
Finance costs
Income tax (recovery) expense
Depreciation and amortization
EBITDA
Merger and related costs
Acquisition and integration related costs
Share-based compensation expense
Impairment of assets
COVID-19 related expenses
Foreign exchange loss, net of related derivatives
Loss on disposal of business
Net gain on disposal of investment in MOPCO
Adjusted EBITDA
64 Nutrien Annual Report 2020
2020
459
520
(77)
1,989
2,891
–
60
69
824
48
19
6
(250)
3,667
2019
992
554
316
1,799
3,661
82
16
104
120
–
42
–
–
4,025
Overview
Management’s Discussion & Analysis
Three-Year Highlights
Financial Statements
Other Information
ADJUSTED EBITDA (CONSOLIDATED), ADJUSTED NET EARNINGS PER SHARE AND
SUSTAINING CAPITAL EXPENDITURES GUIDANCE
Adjusted EBITDA, adjusted net earnings per share and sustaining capital expenditures guidance are forward-looking non-IFRS
financial measures. 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 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 for adjusted EBITDA and adjusted net earnings per share excludes the impacts of acquisition
and integration related costs, share-based compensation, certain foreign exchange gain/loss (net of related derivatives), and
COVID-19 related expenses. Guidance for sustaining capital expenditures includes expected expenditures required to sustain
operations at existing levels and includes major repairs and maintenance and plant turnarounds.
ADJUSTED NET EARNINGS AND ADJUSTED NET EARNINGS PER SHARE
Most directly comparable IFRS financial measure: Net earnings (loss) and net earnings (loss) per share.
Definition: Net earnings (loss) before certain acquisition and integration related costs, share-based compensation, certain foreign
exchange gain/loss (net of related derivatives), COVID-19 related expenses (including those recorded under finance costs), loss on
disposal of business, net gain on disposal of investment in MOPCO and impairment of assets, net of tax. We generally apply the
annual forecasted effective tax rate to our adjustments during the year and, at year-end, we apply the actual effective tax rate. If the
effective tax rate is significantly different from our forecasted effective tax rate due to adjustments or discrete tax impacts, we apply
a tax rate that excludes those items. For material adjustments, we apply a tax rate specific to the adjustment. In 2020, we amended
our calculation of adjusted net loss to adjust for the impact of COVID-19 related expenses, loss on disposal of business and net gain
on disposal of investment in MOPCO.
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
Adjustments:
Merger and related costs
Acquisition and integration related costs
Share-based compensation expense
Impairment of assets
COVID-19 related expenses
Foreign exchange loss, net of related
derivatives
Loss on disposal of business
Net gain on disposal of investment in MOPCO
(250)
Adjusted net earnings
2020
Increases
(Decreases)
Post-Tax
Per Diluted
Share
Increases
(Decreases)
–
60
69
824
67
19
6
459
–
44
50
657
49
14
4
(250)
1,027
0.81
–
0.08
0.09
1.15
0.09
0.02
–
(0.44)
1.80
82
16
104
120
–
42
–
–
2019
Post-Tax
992
62
12
79
91
–
32
–
–
Per Diluted
Share
1.70
0.10
0.02
0.14
0.16
–
0.05
–
–
1,268
2.17
FREE CASH FLOW AND FREE CASH FLOW INCLUDING CHANGES IN NON-CASH OPERATING
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. We also calculate a similar
measure that includes changes in non-cash operating working capital.
2020 Nutrien Annual Report 65
Overview
Management’s Discussion & Analysis
Three-Year Highlights
Financial Statements
Other Information
Why we use the measure and why it is useful to investors: For evaluation of liquidity and financial strength. These are also useful
as indicators 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
Sustaining capital expenditures
Free cash flow
Changes in non-cash operating working capital
Free cash flow including changes in non-cash operating working capital
2020
2,749
(919)
1,830
574
2,404
2019
3,175
(1,018)
2,157
490
2,647
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
2020
1,183
(10)
(12)
1,161
(424)
737
12,595
59
2019
1,103
10
(16)
1,097
(355)
742
11,700
63
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.
66 Nutrien Annual Report 2020
Overview
Management’s Discussion & Analysis
Three-Year Highlights
Financial Statements
Other Information
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
2020
2,265
(522)
(1,342)
401
(52)
349
(235)
114
2,649
43
2019
2,148
(462)
(1,226)
460
(57)
403
(273)
130
2,887
45
1 Includes changes in inventory balances and other adjustments.
2 Ammonia tonnes available for sale, as not upgraded to other Nitrogen products.
NUTRIEN FINANCIAL NET INTEREST MARGIN
Most directly comparable IFRS financial measure: Nutrien Financial gross margin divided by average Nutrien Financial receivables.
Definition: Nutrien Financial revenue less deemed interest expense divided by average Nutrien Financial receivables outstanding for
the last four rolling quarters.
Why we use the measure and why it is useful to investors: Used by credit rating agencies and other users to evaluate financial
performance of Nutrien Financial.
Rolling four quarters ended December 31, 2020
(millions of US dollars, except as otherwise noted)
Q1 2020
Q2 2020
Q3 2020
Q4 2020
Total/Average
Nutrien Financial revenue
Deemed interest expense 1
Net interest
16
(5)
11
40
(15)
25
36
(15)
21
37
(14)
23
Average Nutrien Financial receivables
795
2,108
1,711
1,392
Nutrien Financial net interest margin (%)
80
1,502
5.3
1 Average borrowing rate applied to the notional debt required to fund the portfolio of receivables from customers monitored and serviced by Nutrien
Financial.
SUSTAINING CAPITAL EXPENDITURES AND INVESTING CAPITAL EXPENDITURES
Most directly comparable IFRS financial measure: Cash additions to property, plant and equipment and intangible assets.
Definition: Sustaining capital expenditures are required to sustain operations at existing levels and include major repairs and
maintenance and plant turnarounds. Investing capital expenditures are 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.
2020 Nutrien Annual Report 67
Overview
Management’s Discussion & Analysis
Three-Year Highlights
Financial Statements
Other Information
Why we use the measure and why it is useful to investors: Sustaining capital expenditures show the capital investment required
to sustain our existing operations, and are the first priority in our capital allocation policy. Investing capital expenditures are an
important component in understanding how much we have invested to grow our business excluding business acquisitions and
investments in equity-accounted investees.
(millions of US dollars, except as otherwise noted)
Additions to property, plant and equipment
Additions to intangible assets
Consists of:
Sustaining capital expenditures
Investing capital expenditures
Other capital expenditures
2020
1,423
126
1,549
919
511
119
1,549
2019
1,728
163
1,891
1,018
772
101
1,891
RETAIL ADJUSTED AVERAGE WORKING CAPITAL TO SALES AND RETAIL ADJUSTED AVERAGE
WORKING CAPITAL TO SALES EXCLUDING NUTRIEN FINANCIAL
Most directly comparable IFRS financial measure: (Current assets minus current liabilities for Retail) divided by Retail sales.
Definition: Retail adjusted average working capital divided by Retail adjusted sales for the last four rolling quarters. We exclude in
our calculations the working capital and sales of certain acquisitions (such as Ruralco) during the first year following the acquisition.
We have amended our calculation to adjust for the sales of certain recently acquired businesses. We also look at this metric
excluding the sales and working capital of Nutrien Financial.
Why we use the measure and why it is useful to investors: To evaluate operational efficiency. A lower or higher percentage
represents increased or decreased efficiency, respectively. The metric excluding Nutrien Financial shows the impact that the working
capital of Nutrien Financial has on the ratio.
(millions of US dollars, except as otherwise noted)
Average working capital
Average working capital from certain recent acquisitions
Adjusted average working capital
Average Nutrien Financial working capital
Adjusted average working capital excluding Nutrien Financial
Sales 2
Sales from certain recent acquisitions
Adjusted sales
Nutrien Financial revenue 2
Adjusted sales excluding Nutrien Financial
2020
2019
2,173
(11)
2,162
(1,502)
660
14,785
(686)
14,099
(129)
13,970
3,097
(53)
3,044
n/a 1
n/a 1
13,282
(249)
13,033
n/a 1
n/a 1
1 We did not calculate this metric excluding Nutrien Financial in 2019 as it was in its first year of operations.
2 Certain immaterial figures have been reclassified for 2019.
Adjusted average working capital to sales (%)
Adjusted average working capital to sales excluding Nutrien Financial (%)
15
5
23
n/a 1
RETAIL CASH OPERATING COVERAGE RATIO
Most directly comparable IFRS financial measure: Retail operating expenses1 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.
68 Nutrien Annual Report 2020
Overview
Management’s Discussion & Analysis
Three-Year Highlights
Financial Statements
Other Information
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.
(millions of US dollars, except as otherwise noted)
Operating expenses 1,2
Depreciation and amortization in operating expenses
Operating expenses excluding depreciation and amortization
Gross margin 2
Depreciation and amortization in cost of goods sold
Gross margin excluding depreciation and amortization
Cash operating coverage ratio (%)
Cash operating coverage ratio before reclassification (%) 3
2020
2,974
(658)
2,316
3,736
10
3,746
61.8
61.1
2019
2,665
(585)
2,080
3,301
7
3,308
62.9
62.2
1 Includes Retail expenses below gross margin including selling expenses, general and administrative expenses and other (income) expenses.
2 Certain immaterial figures have been reclassified for 2019.
3 Adjusted to reflect what the metric would have been prior to a reclassification of certain immaterial figures.
RETAIL ADJUSTED EBITDA PER US SELLING LOCATION
Most directly comparable IFRS financial measure: Retail US adjusted EBITDA.
Definition: Total Retail US adjusted 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. This measure includes
locations we have owned for more than 12 months. In the third quarter of 2020, we revised this measure from US EBITDA to US
adjusted EBITDA to align with how we evaluate Retail results. There were no changes to this measure as a result of the change.
(millions of US dollars, except as otherwise noted)
Adjusted US EBITDA
Adjustments for acquisitions
Adjusted US EBITDA adjusted for acquisitions
Number of US selling locations adjusted for acquisitions
Adjusted EBITDA per US selling location (thousands of US dollars)
2020
985
(5)
980
912
1,075
2019
899
(27)
872
902
967
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 1
Comparable store sales (%)
Prior period normalized for benchmark prices and foreign exchange rates 1
Normalized comparable store sales (%)
1 Certain immaterial figures have been reclassified in 2020
2020
2019
13,546
13,282
2
12,784
6
12,568
12,520
0
12,636
(1)
2020 Nutrien Annual Report 69
Overview
Management’s Discussion & Analysis
Three-Year Highlights
Financial Statements
Other Information
THREE-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)
2020
2019
2018
Operations
Sales 1
Earnings before finance costs and income taxes
Net earnings (loss) from continuing operations
Net earnings
Diluted net earnings per share from continuing operations
Diluted net earnings per share
Finance costs
Adjusted EBITDA 2
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 1,3
Potash net sales
Nitrogen net sales 4
Phosphate net sales 4
Retail adjusted EBITDA
Potash adjusted EBITDA
Nitrogen adjusted EBITDA 4
Phosphate adjusted EBITDA 4
Capital Allocation
Sustaining capital expenditures
Investing capital expenditures
Mine development and pre-stripping expenditures
Business acquisitions (net of cash acquired)
Purchase of investments
Dividends paid
Payments for share repurchases
1 Certain immaterial figures have been reclassified for 2019 and 2018.
2 See the “Non-IFRS Financial Measures” section.
3 Certain immaterial figures have been reclassified or grouped together for 2018.
4 Restated 2018 for the reclassification of sulfate from the Phosphate segment to the Nitrogen segment.
70 Nutrien Annual Report 2020
20,908
902
459
459
0.81
0.81
520
3,667
3,323
47,192
11,360
22,365
570
48.16
5.5
14,785
2,146
2,740
1,202
1,430
1,190
1,080
232
919
511
109
233
102
1,030
160
20,084
1,862
992
992
1.70
1.70
554
4,025
3,665
46,799
11,104
22,869
583
47.91
5.5
13,282
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
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
1,606
1,215
255
985
320
100
433
135
952
1,800
Overview
Management’s Discussion & Analysis
Three-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
Total employee turnover rate (%)
Proportion of women (%)
Proportion of women in senior leadership (director level and above) (%)
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. 2018 figures were restated to exclude Redwater.
3 Restated 2018 for the reclassification of sulfate from the Phosphate segment.
2020
2019
2018
1.10
0.25
1
23
18
286
1.34
0.34
1
23
17
628
23,100
13
20
19
22,300
13
19
15
1.28
0.34
2
22
17
1,614
20,300
14
17
17
2020
2019
2018
12,595
6,063
1,444
12,732
12,824
10,966
2,781
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
2020 Nutrien Annual Report 71
FINANCIAL STATEMENTS & NOTES
Share-Based Compensation
2020 At a Glance
Consolidated Statements of Earnings
Consolidated Statements of Comprehensive Income
Consolidated Statements of Cash Flows
Consolidated Statements of Changes in Shareholders' Equity
Consolidated Balance Sheets
Note 1 Description of Business
Note 2 Basis of Presentation
Segment Information
Note 3
Note 4 Nature of Expenses
Note 5
Note 6 Other (Income) Expenses
Finance Costs
Note 7
Note 8
Income Taxes
Note 9 Net Earnings Per Share
Note 10 Financial Instruments and Related Risk Management
Note 11 Receivables
Note 12
Inventories
Note 13 Property, Plant and Equipment
Note 14 Goodwill and Other Intangible Assets
Note 15
Investments
Note 16 Other Assets
Note 17 Short-Term Debt
Note 18 Long-Term Debt
Note 19 Lease Liabilities
Note 20 Payables and Accrued Charges
Note 21 Pension and Other Post-Retirement Benefits
Note 22 Asset Retirement Obligations and Accrued
Environmental Costs
Note 23 Share Capital
Note 24 Capital Management
Note 25 Business Combinations
Note 26 Commitments
Note 27 Guarantees
Note 28 Related Party Transactions
Note 29 Contingencies and Other Matters
Note 30 Accounting Policies, Estimates and Judgments
79
80
80
81
82
83
84
84
85
89
90
92
92
93
95
95
99
100
101
103
105
105
106
107
108
108
109
113
114
115
117
119
120
121
121
123
46
Nutrien Annual Report2020
2020
Nutrien Annual Report
73
Overview
Management’s Discussion & Analysis
Three-Year Highlights
Financial Statements
Other Information
MANAGEMENT’S
RESPONSIBILITY
Management’s Responsibility for Financial Reporting
MANAGEMENT’S REPORT ON THE
CONSOLIDATED 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 (“IFRS”) as issued by the International Accounting
Standards Board 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 appointed by the Board
of Directors is composed entirely of independent directors.
The audit committee discusses and analyzes the Company’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’s 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 of Independent
Registered Public Accounting Firm for 2020. KPMG LLP has full
and independent access to the audit committee to discuss
their audit and related matters.
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 Securities 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 in
Internal Control – Integrated Framework (2013). Based on this
evaluation, management concluded that, as of December 31,
2020, the Company did maintain effective internal control
over financial reporting.
The effectiveness of the Company’s internal control over
financial reporting as at December 31, 2020 has been audited
by KPMG LLP, as reflected in their Report of Independent
Registered Public Accounting Firm for 2020.
Chuck Magro
President and Chief Executive Officer
February 18, 2021
Pedro Farah
Executive Vice
President and Chief
Financial Officer
February 18, 2021
74 Nutrien Annual Report 2020
In millions of US dollars unless otherwise noted
Overview
Management’s Discussion & Analysis
Three-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,
2020, 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, 2020, 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, 2020 and 2019, the related consolidated
statements of earnings, comprehensive income, cash flows,
and changes in shareholders’ equity for the years then ended,
and the related notes (collectively, the “consolidated financial
statements”), and our report dated February 18, 2021
expressed an unqualified opinion on those consolidated
financial statements.
BASIS FOR OPINION
The Company’s management is responsible for maintaining
effective internal control over financial reporting and for its
assessment of the effectiveness of internal control over financial
reporting, included in the accompanying Management’s Annual
Report on Internal Control over Financial Reporting. 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 18, 2021
In millions of US dollars unless otherwise noted
2020 Nutrien Annual Report 75
Overview
Management’s Discussion & Analysis
Three-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, 2020 and 2019, the related consolidated
statements of earnings, comprehensive income, cash flows,
and changes in shareholders’ equity 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, 2020 and 2019,
and its financial performance 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, 2020, 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 18, 2021 expressed
an unqualified opinion on the effectiveness of the Company’s
internal control over financial reporting.
BASIS FOR OPINION
These consolidated financial statements are the responsibility
of the Company’s management. Our responsibility is to express
an opinion on these consolidated financial statements based on
our 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 US 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.
GOODWILL IMPAIRMENT ASSESSMENT OF
THE RETAIL NORTH AMERICA GROUP OF
CASH GENERATING UNITS
As discussed in Note 14 to the consolidated financial
statements, the carrying amount of goodwill as of December 31,
2020 was $12,198 million, of which $6,869 million of goodwill
has been allocated to the Retail North America group of cash
generating units (“Retail North America CGU”). The Retail North
America CGU is tested for impairment annually, and whenever
events or changes in circumstances may indicate the carrying
amount, including goodwill, exceeds its estimated recoverable
amount. The calculation of the recoverable amount of the Retail
North America CGU involved estimates including forecasted
earnings before tax, interest, depreciation and amortization
(“EBITDA”), terminal growth rate and the discount rate.
76 Nutrien Annual Report 2020
In millions of US dollars unless otherwise noted
Overview
Management’s Discussion & Analysis
Three-Year Highlights
Financial Statements
Other Information
Report of Independent Registered Public Accounting Firm Continued
We identified the calculation of the recoverable amount of
goodwill for the Retail North America CGU as a critical audit
matter. A high degree of auditor judgment was required to
evaluate the Company’s forecasted EBITDA, terminal growth
rate and discount rate used to calculate the recoverable
amount of the Retail North America CGU. Minor changes to
these assumptions could have had a significant effect on the
Company’s calculation of the recoverable amount of the Retail
North America CGU. Additionally, the audit effort associated
with this estimate required specialized skills and knowledge.
The following are the primary procedures we performed to
address this critical audit matter. We evaluated the design and
tested the operating effectiveness of certain internal controls
related to the calculation of the recoverable amount of
goodwill for the Retail North America CGU. This included
controls related to the determination of forecasted EBITDA,
terminal growth rate and the discount rate. We evaluated the
Company’s forecasted EBITDA for the Retail North America
CGU by comparing to historical results and forecasted planted
acreage in the United States. We evaluated the terminal
growth rate by comparing to the historical growth of the Retail
North America CGU and to market information, including
forecasted inflation and forecasted gross domestic product in
the United States. We evaluated the Company’s historical
forecasts of EBITDA by comparing 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 determination of the discount
rate by comparing the inputs to the discount rate to publicly
available market data for comparable entities and assessing
the resulting discount rate, and
(cid:129) evaluating the Company’s estimate of the recoverable
amount of the Retail North America cash generating unit
by comparing the results of the Company’s estimate to
publicly available market data and valuation metrics for
comparable entities.
IMPAIRMENT OF THE AURORA CASH
GENERATING UNIT
As discussed in Note 13 to the consolidated financial
statements, the Company recorded an impairment of assets for
the Aurora cash generating unit (“Aurora CGU”) of $545 million
during the year ended December 31, 2020. The Company is
required to assess each cash generating unit for an indicator
of impairment at each reporting date, and whenever events or
changes in circumstances may indicate the carrying amount
of a cash generating unit exceeds its recoverable amount. An
indicator of impairment was identified for the Aurora CGU at
September 30, 2020, due to negative revisions to long-term
forecasted global phosphate prices, which resulted in the
Company performing an impairment test to calculate the
recoverable amount. The calculation of the recoverable amount
of the Aurora CGU involved estimates including the forecasted
product net selling price, discount rate and the useful life of the
mine. The useful life of the mine is derived from the most recent
mineral reserves estimate, which requires the expertise of
independent reserve engineering specialists.
We identified the calculation of the recoverable amount of the
Aurora CGU as a critical audit matter. A high degree of auditor
judgment was required to evaluate the Company’s estimate of
the forecasted product net selling prices and discount rate used
to calculate the recoverable amount of the Aurora CGU. Minor
changes to these assumptions could have had a significant
effect on the Company’s calculation of the recoverable amount
and the resultant impairment loss. Auditor judgment was also
required to assess the mineral reserves estimate which forms
the basis of the useful life of the mine. Additionally, the audit
effort associated with this estimate required specialized skills
and knowledge.
In millions of US dollars unless otherwise noted
2020 Nutrien Annual Report 77
Overview
Management’s Discussion & Analysis
Three-Year Highlights
Financial Statements
Other Information
Report of Independent Registered Public Accounting Firm Continued
The following are the primary procedures we performed to
address this critical audit matter. We evaluated the design and
tested the operating effectiveness of certain internal controls
related to the calculation of the recoverable amount of the
Aurora CGU. This included controls related to the determination
of forecasted product net selling prices, the discount rate, as
well as the mineral reserves and useful life of the mine. We
evaluated certain forecasted product net selling prices of the
Company by comparing to external forecasts. We evaluated
the current year product net selling prices by comparing to
those assumptions used in the prior year forecast to assess
the Company’s ability to accurately forecast. We assessed the
methodology used by the Company to estimate the mineral
reserves and resources for consistency with industry and
regulatory standards. We evaluated the Company’s estimate
of mineral reserves and resources by comparing the Company’s
historical estimates to actual results. We assessed the
competence, capabilities and objectivity of the Company’s
personnel and third-party engineers who prepared the mineral
reserve estimate. We involved valuation professionals with
specialized skills and knowledge who assisted in evaluating the
Company’s determination of the discount rate by comparing
the inputs to the discount rate to publicly available market data
and assessing the resulting discount rate.
IMPAIRMENT ASSESSMENT OF THE
TRINIDAD CASH GENERATING UNIT
As discussed in Note 13 to the consolidated financial
statements, the Company is required to assess each cash
generating unit for an indicator of impairment at each reporting
date, and whenever events or changes in circumstances may
indicate the carrying amount of a cash generating unit exceeds
its recoverable amount. An indicator of impairment was
identified for the Trinidad cash generating unit (“Trinidad CGU”)
at September 30, 2020, due to the indefinite closure of an
ammonia plant in response to market conditions and lower
long-term forecasted global ammonia prices, which resulted in
the Company performing an impairment test to calculate the
recoverable amount. The calculation of the recoverable amount
of the Trinidad CGU involved estimates including forecasted
production volumes, forecasted ammonia net selling price and
the discount rate.
We identified the calculation of the recoverable amount of the
Trinidad CGU as a critical audit matter. A high degree of auditor
judgment was required to evaluate the Company’s estimate of
the forecasted production volumes, ammonia net selling price
and discount rate used to calculate the recoverable amount of
the Trinidad CGU. Minor changes to these assumptions could
have had a significant effect on the Company’s calculation of
the recoverable amount of the Trinidad CGU. Additionally, the
audit effort associated with this estimate required specialized
skills and knowledge.
The following are the primary procedures we performed to
address this critical audit matter. We evaluated the design and
tested the operating effectiveness of certain internal controls
related to the calculation of the recoverable amount of
the Trinidad CGU. This included controls related to the
determination of forecasted production volumes, ammonia net
selling prices and the discount rate. We evaluated forecasted
ammonia net selling prices by comparing to external forecasts.
We evaluated forecasted production volumes by comparing
to recent actual production, adjusted for the plant closure. We
evaluated the current year actual ammonia net selling prices
and production volumes by comparing to those assumptions
used in the prior year forecast to assess the Company’s ability
to accurately forecast. We involved valuation professionals with
specialized skills and knowledge, who assisted in evaluating the
Company’s determination of the discount rate by comparing the
inputs to the discount rate to publicly available market data and
assessing the resulting discount rate.
Chartered Professional Accountants
We have served as the Company’s auditor since 2018.
Calgary, Canada
February 18, 2021
78 Nutrien Annual Report 2020
In millions of US dollars unless otherwise noted
Overview
Management’s Discussion & Analysis
Three-Year Highlights
Financial Statements
Other Information
2020 AT A GLANCE
FIND OUT MORE AT NUTRIEN.COM
In millions of US dollars unless otherwise noted
2020 Nutrien Annual Report 79
Overview
Management’s Discussion & Analysis
Three-Year Highlights
Financial Statements
Other Information
CONSOLIDATED FINANCIAL STATEMENTS
CONSOLIDATED STATEMENTS OF EARNINGS
For the years ended December 31
NOTE
2020
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 (income) expenses
Earnings before finance costs and income taxes
Finance costs
Earnings before income taxes
Income tax (recovery) expense
Net earnings
Net earnings per share (“EPS”)
Basic
Diluted
Weighted average shares outstanding for basic EPS
Weighted average shares outstanding for diluted EPS
3
4
4
4
4
4
5
13, 14
6
7
8
9
9
9
CONSOLIDATED STATEMENTS OF
COMPREHENSIVE INCOME
For the years ended December 31 (net of related income taxes)
Net earnings
Other comprehensive income
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 on currency translation of foreign operations
Other
Other comprehensive income
Comprehensive income
(See Notes to the Consolidated Financial Statements)
2019
Note 2
20,084
768
13,814
5,502
2,505
404
292
104
120
215
1,862
554
1,308
316
992
1.70
1.70
20,908
855
14,814
5,239
2,813
429
204
69
824
(2)
902
520
382
(77)
459
0.81
0.81
569,657,000
569,686,000
582,269,000
583,102,000
2020
459
2019
992
75
(7)
142
(16)
194
653
7
(25)
47
7
36
1,028
80 Nutrien Annual Report 2020
In millions of US dollars unless otherwise noted
Overview
Management’s Discussion & Analysis
Three-Year Highlights
Financial Statements
Other Information
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the years ended December 31
Operating activities
Net earnings
Adjustments for:
Depreciation and amortization
Share-based compensation
Impairment of assets
Net gain on disposal of investment in Misr Fertilizers Production Company S.A.E.
(“MOPCO”)
(Recovery of) provision for deferred income tax
Other long-term assets, 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 investment in MOPCO
Proceeds from disposal of discontinued operations, net of tax
Purchase of investments
Other
Cash used in investing activities
Financing activities
Transaction costs on long-term debt
(Repayment of) proceeds from 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
Increase (decrease) in cash and cash equivalents
Cash and cash equivalents – beginning of year
Cash and cash equivalents – end of year
Cash and cash equivalents comprised of:
Cash
Short-term investments
Supplemental cash flows information
Interest paid
Income taxes paid
Total cash outflow for leases
(See Notes to the Consolidated Financial Statements)
NOTE
2020
2019
5
13, 14
15
16
13
14
25
15
17
18
18
18, 19
23
23
23
459
1,989
69
824
(250)
(9)
(333)
2,749
145
85
(10)
354
3,323
(1,423)
(126)
(233)
540
–
(102)
140
(1,204)
(15)
(892)
1,541
(509)
(274)
(1,030)
(160)
–
(1,339)
3
783
671
1,454
1,375
79
1,454
498
156
345
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
In millions of US dollars unless otherwise noted
2020 Nutrien Annual Report 81
Overview
Management’s Discussion & Analysis
Three-Year Highlights
Financial Statements
Other Information
CONSOLIDATED STATEMENTS OF CHANGES IN
SHAREHOLDERS’ EQUITY
Accumulated Other Comprehensive (Loss) Income (“AOCI”)
Number of
Common
Shares
Share
Capital
Contributed
Surplus
Net Fair Value
Loss on
Investments
Net
Actuarial
Gain on
Defined
Benefit
Plans 1
Loss on
Currency
Translation
of Foreign
Operations
Balance –
December 31, 2018
Net earnings
Other comprehensive
(loss) income
Shares repurchased
(Note 23)
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 –
608,535,477
–
16,740
–
–
–
(36,067,323)
–
(992)
–
231
–
–
–
–
474,655
23
17
–
–
–
–
–
–
–
–
–
December 31, 2019
572,942,809
15,771
248
Net earnings
Other comprehensive
(loss) income
Shares repurchased
(Note 23)
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
cash flow hedges
Balance –
–
–
–
–
(3,832,580)
–
(105)
–
150,177
–
–
7
–
–
–
–
(55)
–
12
–
–
(7)
–
(25)
–
–
–
–
3
–
(29)
–
(7)
–
–
–
–
–
December 31, 2020
569,260,406
15,673
205
(36)
–
–
7
–
–
–
(7)
–
–
–
–
(251)
–
47
–
–
–
–
–
–
(204)
–
Other
Total
AOCI
Retained
Earnings
Total
Equity 2
(33)
–
(291)
–
7,745
992
24,425
992
7
–
–
–
–
–
8
36
–
36
–
–
–
(7)
3
8
(886)
(754)
(1,878)
(754)
–
7
(3)
–
40
–
–
8
(18)
(251)
7,101
22,869
–
–
459
459
194
75
142
(16)
194
–
–
–
–
(75)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(75)
13
13
–
(1,029)
(160)
(1,029)
–
75
–
19
–
13
(62)
(21)
(119)
6,606
22,365
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)
82 Nutrien Annual Report 2020
In millions of US dollars unless otherwise noted
Overview
Management’s Discussion & Analysis
Three-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
2020
2019
11
12
13
14
14
15
16
17
18
19
20
18
19
8
21
22
23
1,454
3,581
4,930
1,505
11,470
19,660
12,198
2,388
562
914
47,192
159
14
249
8,058
8,480
10,047
891
3,149
454
1,597
209
24,827
15,673
205
(119)
6,606
22,365
47,192
671
3,542
4,975
1,477
10,665
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
23,930
15,771
248
(251)
7,101
22,869
46,799
Director
Director
In millions of US dollars unless otherwise noted
2020 Nutrien Annual Report 83
Overview
Management’s Discussion & Analysis
Three-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, 2020, the Company had assets as follows:
(cid:129) one large-scale operation in Trinidad
(cid:129) six upgrade facilities in North America: three in Alberta and
one each in Georgia, Missouri, and Washington
(cid:129) 50 percent investment in Profertil S.A. (“Profertil”), a nitrogen
NUTRIEN AG SOLUTIONS (“RETAIL”)
producer based in Argentina
(cid:129) various retail facilities across the US, Canada, Australia and
South America
PHOSPHATE
(cid:129) private label and proprietary crop protection products and
nutritionals
(cid:129) an innovative integrated digital platform for growers and
crop consultants
POTASH
(cid:129) two mines and processing plants: one in Florida and one in
North Carolina
(cid:129) phosphate feed plants in Illinois, Missouri and Nebraska
(cid:129) an industrial phosphoric acid plant in Ohio
CORPORATE AND OTHERS
(cid:129) six operations in the province of Saskatchewan
(cid:129) investment in Canpotex Limited (“Canpotex”), a Canadian
NITROGEN
potash export, sales and marketing company owned in equal
shares by Nutrien and another potash producer
(cid:129) eight production facilities in North America: four in Alberta
(cid:129) 22 percent investment in Sinofert Holdings Limited
and one each in Georgia, Louisiana, Ohio and Texas
(“Sinofert”), a fertilizer supplier and distributor in China
NOTE 2 Basis of Presentation
These consolidated financial statements have been prepared in
accordance with International Financial Reporting Standards
(“IFRS”) as issued by the International Accounting Standards
Board (“IASB”). 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 the
accounting standards adopted effective January 1, 2020, as
disclosed in Note 30.
Certain immaterial 2019 figures have been reclassified in the
consolidated statements of earnings, segment information,
nature of expenses and other (income) expenses.
These consolidated financial statements were authorized for
issue by the Board of Directors on February 18, 2021.
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. Details of our accounting policies are primarily disclosed
in Note 30.
84 Nutrien Annual Report 2020
In millions of US dollars unless otherwise noted
Overview
Management’s Discussion & Analysis
Three-Year Highlights
Financial Statements
Other Information
NOTE 2 Basis of Presentation Continued
On March 11, 2020, the World Health Organization declared the
spread of the novel strain of coronavirus (“COVID-19”) a global
pandemic. We have assessed our accounting estimates and
other matters that require the use of forecasted financial
information for the impact of the COVID-19 pandemic. The
assessment included estimates of the unknown future impacts
of the pandemic using information that is reasonably available at
this time. Accounting estimates and other matters assessed
include the allowance for expected credit losses of receivables
from customers, valuation of inventory, goodwill and other
long-lived assets, financial assets, tax assets, pension obligations
and assets, and revenue recognition. Based on the current
assessment, there was not a material impact to these
consolidated financial statements. As a result of the pandemic,
we incurred directly attributable and incremental COVID-19
related expenses in other (income) expenses (Note 6). As
additional information becomes available, the future
assessment of these estimates, including expectations about the
severity, duration and scope of the pandemic, could differ
materially in future reporting periods.
NOTE 3 Segment Information
The Company has four reportable operating segments: Nutrien Ag Solutions (“Retail”), Potash, Nitrogen and Phosphate.
The Retail segment distributes crop nutrients, crop protection products, seed and merchandise, and it provides services
directly to growers through a network of farm centers in North America, South America and Australia. The Potash,
Nitrogen and Phosphate segments are differentiated by the chemical nutrient contained in the products that each produce.
The Executive Leadership Team (“ELT”), comprised of officers
at the Executive Vice President level and above, is the Chief
Operating Decision Maker (“CODM”). In 2020, the CODM
changed the measure used to evaluate the performance of our
operating segments from net earnings (loss) before finance
costs, income taxes, and depreciation and amortization
(“EBITDA”) to adjusted EBITDA. The CODM considers adjusted
EBITDA to be a more 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 addition, it provides a better indication of the
segment’s performance compared to EBITDA as it excludes
the impact of impairments and other costs that are centrally
managed by our corporate function. Due to the change in the
measurement of the segments, we have presented adjusted
EBITDA for the comparative period.
We determine the composition of the reportable segments
based on factors including risks and returns, internal
organization, and internal reports reviewed by the CODM. We
allocate certain expenses across segments based on reasonable
considerations such as production capacities or historical trends.
In millions of US dollars unless otherwise noted
2020 Nutrien Annual Report 85
Overview
Management’s Discussion & Analysis
Three-Year Highlights
Financial Statements
Other Information
NOTE 3 Segment Information Continued
Financial information on each of these segments is summarized in the following tables:
2020
Retail
Potash
Nitrogen
Phosphate
Corporate
and Others
Eliminations
Consolidated
Sales – third party
– intersegment
Sales – total
Freight, transportation
and distribution
Net sales
Cost of goods sold
Gross margin
Selling expenses
General and
14,748
37
14,785
–
14,785
11,049
3,736
2,795
administrative expenses
135
Provincial mining and
other taxes
Share-based
compensation expense
Impairment of assets
(Note 13)
Other expenses (income)
Earnings (loss) before finance
costs and income taxes
Depreciation
and amortization
EBITDA
Acquisition and integration
related costs
Share-based
compensation expense
Impairment of assets
(Note 13)
COVID-19 related expenses
Foreign exchange loss, net of
related derivatives
Loss on disposal of business
Net gain on disposal of
investment in MOPCO
(Note 15)
2,265
248
2,513
367
2,146
1,183
963
9
7
201
–
23
8
715
452
–
–
–
44
762
668
1,430
1,167
–
–
–
–
–
–
–
–
–
23
–
–
–
–
2,572
628
3,200
460
2,740
2,265
475
27
8
1
–
27
(288)
1,241
202
1,443
241
1,202
1,166
36
6
10
–
–
769
6
700
(755)
599
1,299
4
–
27
–
–
–
(250)
218
(537)
–
–
769
–
–
–
–
82
–
82
–
82
74
8
(24)
269
2
69
5
228
(541)
52
(489)
56
69
5
48
19
6
–
Adjusted EBITDA
1,430
1,190
1,080
Assets
20,526
12,032
10,612
232
1,462
(286)
2,983
–
(1,115)
(1,115)
(213)
(902)
(923)
21
–
–
–
–
–
–
21
–
21
–
–
–
–
–
–
20,908
–
20,908
855
20,053
14,814
5,239
2,813
429
204
69
824
(2)
902
1,989
2,891
60
69
824
48
19
6
–
21
(423)
(250)
3,667
47,192
86 Nutrien Annual Report 2020
In millions of US dollars unless otherwise noted
Overview
Management’s Discussion & Analysis
Three-Year Highlights
Financial Statements
Other Information
NOTE 3 Segment Information Continued
2019
Sales – third party
– intersegment
Sales – total
Freight, transportation and
distribution
Net sales
Cost of goods sold
Gross margin
Selling expenses
General and administrative expenses
Provincial mining and other taxes
Share-based compensation expense
Impairment of assets (Note 13 and 14)
Other expenses (income)
Earnings (loss) before finance costs
and income taxes
Depreciation and amortization
EBITDA
Merger and related costs
Acquisition and integration
related costs
Share-based compensation expense
Impairment of assets (Note 13 and 14)
Foreign exchange loss, net of
related derivatives
Adjusted EBITDA
Assets
Retail
Potash
Nitrogen
Phosphate
Corporate
and Others
Eliminations
Consolidated
13,244
38
13,282
–
13,282
9,981
3,301
2,484
112
–
–
–
69
636
595
1,231
–
–
–
–
–
2,702
207
2,909
305
2,604
1,103
1,501
9
6
287
–
–
(4)
1,203
390
1,593
–
–
–
–
–
2,608
612
3,220
372
2,848
2,148
700
25
15
2
–
–
(46)
704
535
1,239
–
–
–
–
–
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
194
2,198
133
–
133
–
133
133
–
(18)
264
2
104
120
171
(643)
42
(601)
82
16
104
120
42
(237)
2,129
–
(1,060)
(1,060)
(141)
(919)
(924)
5
–
–
–
–
–
–
5
–
5
–
–
–
–
–
5
(205)
20,084
–
20,084
768
19,316
13,814
5,502
2,505
404
292
104
120
215
1,862
1,799
3,661
82
16
104
120
42
4,025
46,799
Our Retail segment primarily generates revenue from sales of the following:
Crop nutrients
Crop protection products
Seed
Merchandise
Nutrien Financial
Services and other revenues
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.
Financing solutions provided to Retail branches and customers in support of Nutrien’s
agricultural product and service sales.
Product application, soil and leaf testing, crop scouting and precision agriculture services,
water services and livestock marketing.
In millions of US dollars unless otherwise noted
2020 Nutrien Annual Report 87
Overview
Management’s Discussion & Analysis
Three-Year Highlights
Financial Statements
Other Information
NOTE 3 Segment Information Continued
Our Potash, Nitrogen and Phosphate segments generate revenue from sales of the following products:
Potash
(cid:129) North American – primarily granular
(cid:129) North American prices referenced at
Products
Sales prices impacted by
(cid:129) Offshore (international) – primarily granular
and standard
Nitrogen
(cid:129) Ammonia, urea, urea ammonium nitrate,
industrial grade ammonium nitrate and
ammonium sulfate
delivered prices (including transportation and
distribution costs)
(cid:129) International prices pursuant to term and spot
contract prices (excluding transportation and
distribution costs)
(cid:129) Global energy costs and supply
Phosphate
(cid:129) Solid fertilizer, liquid fertilizer, industrial products
(cid:129) Global prices and supplies of ammonia and sulfur
and feed products
Revenue reported under our Corporate and Others segment primarily relates to our non-core Canadian business, which was sold
in 2020.
Presented below is revenue from contracts with customers disaggregated by product line or geographic location for each
reportable segment.
Retail sales by product line
Crop nutrients
Crop protection products
Seed
Merchandise
Nutrien Financial
Services and other
Nutrien Financial elimination 1
Potash sales by geography
Manufactured product
North America
Offshore 2
Other potash and purchased products
Nitrogen sales by product line
Manufactured product
Ammonia
Urea
Solutions, nitrates and sulfates
Other nitrogen and purchased products
Phosphate sales by product line
Manufactured product
Fertilizer
Industrial and feed
Other phosphate and purchased products
2020
2019
5,200
5,602
1,790
943
129
1,241
(120)
4,989
4,983
1,712
598
–
1,000
–
14,785
13,282
1,275
1,238
–
2,513
779
1,040
816
565
3,200
838
454
151
1,283
1,625
1
2,909
884
1,019
812
505
3,220
944
475
181
1,443
1,600
1 Represents elimination for the interest and service fees charged by Nutrien Financial to Retail branches.
2 Relates to Canpotex (Note 28).
88 Nutrien Annual Report 2020
In millions of US dollars unless otherwise noted
Overview
Management’s Discussion & Analysis
Three-Year Highlights
Financial Statements
Other Information
NOTE 3 Segment Information Continued
Financial information by geographic area is summarized in the following tables:
United States
Canada
Australia
Canpotex (Note 28)
Trinidad
Other
Sales – Third Party
Non-Current Assets 1
2020
12,373
2,565
3,231
1,238
101
1,400 2
20,908
2019
12,561
2,504
1,961
1,625
113
1,320 2
20,084
2020
15,268
17,435
1,305
–
644
564
35,216
2019
15,685
17,503
1,172
–
691
639
35,690
1 Excludes financial instruments (other than equity-accounted investees), deferred tax assets and post-employment benefit assets.
2 Other third-party sales primarily relate to Argentina of $372 (2019 – $404), Brazil of $284 (2019 – $109), Europe of $183 (2019 – $210), and Others of $561
(2019 – $597).
Canpotex sales volumes by geographical area were as follows:
Canpotex Sales by market (%)
Latin America
China
India
Other Asian markets
Other markets
NOTE 4 Nature of Expenses
Purchased and produced raw materials and product for resale 1
Depreciation and amortization
Employee costs 2
Freight
Impairment of assets (Note 13 and 14)
Provincial mining and other taxes 3
Offsite warehouse costs
Merger and related costs
Acquisition and integration related costs
Contract services
Lease expense 4
Fleet fuel, repairs and maintenance
COVID-19 related expenses
Net gain on disposal of investment in MOPCO (Note 15)
Other
Total cost of goods sold and expenses
2020
2019
32
22
14
25
7
2020
12,110
1,989
2,450
963
824
204
60
–
60
617
60
222
48
(250)
649
20,006
31
22
10
27
10
2019
11,335
1,799
2,205
845
120
292
51
82
16
567
66
202
–
–
642
18,222
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.
3 Includes Saskatchewan potash production tax, and Saskatchewan resource surcharge and other of $86 and $118 (2019 – $190 and $102), respectively, as
required under Saskatchewan provincial legislation.
4 Includes lease expense relating to short-term leases, leases of low value and variable lease payments.
In millions of US dollars unless otherwise noted
2020 Nutrien Annual Report 89
Overview
Management’s Discussion & Analysis
Three-Year Highlights
Financial Statements
Other Information
NOTE 5 Share-based Compensation
We have share-based compensation plans (including those assumed from Potash Corporation of Saskatchewan Inc.
(“PotashCorp”) and Agrium Inc. (“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”).
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:
Plans
Stock Options
PSUs
RSUs
DSUs
SARs/TSARs 2
Eligibility
Officers and
eligible
employees
Officers and
eligible
employees
Granted
Annually
Annually
Eligible
employees
Annually
Non-executive
directors
Awards no
longer granted;
legacy awards
only
At the discretion
of the Board of
Directors
Awards no
longer granted;
legacy awards
only
Vesting Period
Maximum Term
Settlement
25% per year over four years
10 years
Shares
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
Not applicable
Cash
Not applicable
Cash
Not applicable
Cash 1
25% per year over four years
10 years
Cash
1 Directors can redeem their DSUs for cash only when they leave the Board of Directors for an amount equal to the market value of the common shares at the
time of redemption or as mandated by the Nutrien DSU Plan.
2 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 2020 was $7.18 (2019 –
$11.27). The weighted average assumptions by year of grant that impacted current year results are as follows:
Assumptions
Based On
Exercise price per option
Expected annual dividend yield (%)
Expected volatility (%)
Risk-free interest rate (%)
Average expected life of options (years)
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 the 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
2020
42.23
4.36
29
1.51
8.5
2019
53.54
3.22
27
2.55
7.5
90 Nutrien Annual Report 2020
In millions of US dollars unless otherwise noted
Overview
Management’s Discussion & Analysis
Three-Year Highlights
Financial Statements
Other Information
NOTE 5 Share-based Compensation Continued
The following table summarizes the activity related to our stock option plans:
Number of Shares Subject to Option
Weighted Average Exercise Price
Outstanding – beginning of year
Granted
Exercised
Forfeited or cancelled
Expired
2020
2019
9,191,480
2,293,802
(123,403)
(34,506)
(329,481)
9,044,237
1,376,533
(451,574)
(502,016)
(275,700)
Outstanding – end of year
10,997,892
9,191,480
2020
56.88
42.23
42.24
57.45
75.92
53.59
2019
58.41
53.54
42.73
86.53
76.59
56.88
The aggregate grant-date fair value of all stock options granted in 2020 was $16. The average share price in 2020 was $38.87
per share.
The following table summarizes information about our stock options outstanding as at December 31, 2020, with expiry dates
ranging from May 2021 to February 2030:
Range of Exercise Prices
$37.84 to $41.60
$41.61 to $43.36
$43.37 to $45.40
$45.41 to $52.75
$52.76 to $78.86
$78.87 to $130.78
Options Outstanding
Options Exercisable
Weighted
Average
Remaining
Life in Years
Weighted
Average
Exercise
Price
5
9
7
5
7
2
6
38.71
42.23
44.50
48.74
57.60
94.31
53.59
Weighted
Average
Exercise
Price
38.71
–
44.50
48.91
61.68
94.31
57.97
Number
1,647,297
– 1
988,275
2,098,294
821,067
1,678,901
7,233,834
Number
1,647,297
2,293,802
1,492,667
2,239,358
1,645,867
1,678,901
10,997,892
1 Options granted in this range of exercise prices have not yet met the vesting period.
Information for all employee and director share-based compensation plans is summarized below:
Stock Options
PSUs
RSUs
DSUs
SARs/TSARs
Units Granted
in 2020
Units Outstanding
as at December 31, 2020
2,293,802
794,017
486,194
49,424
–
10,997,892
1,879,160
1,304,858
369,267
1,576,172
Compensation Expense
2020
14
31
22
2
–
69
2019
19
65
18
2
–
104
In millions of US dollars unless otherwise noted
2020 Nutrien Annual Report 91
Overview
Management’s Discussion & Analysis
Three-Year Highlights
Financial Statements
Other Information
NOTE 6 Other (Income) Expenses
Merger and related costs
Acquisition and integration related costs
Foreign exchange loss, net of related derivatives
Earnings of equity-accounted investees
Bad debt expense
COVID-19 related expenses
Loss on disposal of business
Net gain on disposal of investment in MOPCO (Note 15)
Other expenses
NOTE 7 Finance Costs
Interest expense
Short-term debt
Long-term debt
Lease liabilities (Note 19)
COVID-19 related
Unwinding of discount on asset retirement obligations (Note 22)
Interest on net defined benefit pension and other post-retirement plan obligations (Note 21)
Borrowing costs capitalized to property, plant and equipment
Interest income
2020
–
60
18
(73)
6
48
6
(250)
183
(2)
2019
82
16
42
(66)
24
–
–
–
117
215
2020
2019
50
392
34
19
33
13
(20)
(1)
520
87
387
34
–
54
15
(18)
(5)
554
Borrowing costs capitalized to property, plant and equipment in 2020 were calculated by applying an average capitalization rate of
3.9 percent (2019 – 4.6 percent) to expenditures on qualifying assets.
92 Nutrien Annual Report 2020
In millions of US dollars unless otherwise noted
Overview
Management’s Discussion & Analysis
Three-Year Highlights
Financial Statements
Other Information
NOTE 8 Income Taxes
Income Taxes Included in Net Earnings
We operate in a specialized industry and in several tax jurisdictions; as a result, our earnings are subject to various rates of taxation.
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:
Recovery of prior year taxes due to US legislative changes
Non-taxable income
Change in recognition of tax losses and deductible temporary differences
Impact of foreign tax rates
Production-related deductions
Impact of tax rate changes
Non-deductible expenses
Foreign accrual property income
Other
Income tax (recovery) expense included in net earnings
Total income tax (recovery) expense, included in net earnings, was comprised of the following:
Current income tax
Tax (recovery) expense for current year
Adjustments in respect of prior years
Total current income tax (recovery) expense
Deferred income tax
Origination and reversal of temporary differences
Adjustments in respect of prior years
Change in recognition of tax losses and deductible temporary differences
Impact of tax rate changes
Total deferred income tax (recovery) expense
Income tax (recovery) expense included in net earnings
2020
525
(506)
83
(44)
324
382
27
103
(94)
(59)
(20)
(18)
(12)
(3)
13
7
6
(77)
2019
765
315
27
(28)
229
1,308
27
353
–
(19)
–
(45)
(17)
16
15
18
(5)
316
2020
2019
(38)
(30)
(68)
72
(58)
(20)
(3)
(9)
(77)
161
(22)
139
152
9
–
16
177
316
In millions of US dollars unless otherwise noted
2020 Nutrien Annual Report 93
Overview
Management’s Discussion & Analysis
Three-Year Highlights
Financial Statements
Other Information
NOTE 8 Income Taxes Continued
Deferred Income Taxes
In respect of each type of temporary difference, unused tax loss and unused tax credit, the amounts of deferred tax assets and
liabilities recognized in the consolidated balance sheets as at December 31 and the amount of the deferred tax (recovery) expense
recognized in net earnings were:
Deferred Income Tax (Assets)
Liabilities
Deferred Income Tax (Recovery)
Expense Recognized
in Net Earnings
2020
2019
2020
2019
(376)
(370)
(201)
(161)
(102)
(50)
(37)
–
(12)
3,637
471
72
36
2,907
(387)
(270)
(227)
(168)
(107)
(51)
(59)
(25)
(22)
3,647
523
–
42
2,896
Deferred income tax assets
Asset retirement obligations and accrued environmental costs
Tax loss and other carryforwards
Lease liabilities
Pension and other post-retirement benefit liabilities
Long-term debt
Receivables
Inventories
Payables and accrued charges
Other assets
Deferred income tax liabilities
Property, plant and equipment
Goodwill and other intangible assets
Payables and accrued charges
Other liabilities
Reconciliation of net deferred income tax liabilities:
Balance – beginning of year
Business acquisitions (Note 25)
Income tax (recovery) expense recognized in net earnings
Income tax charge recognized in other comprehensive income (“OCI”)
Other
Balance – end of year
20
(98)
26
(12)
3
2
20
25
17
(12)
(67)
72
(5)
(9)
2020
2,896
–
(9)
17
3
2,907
25
(9)
55
(14)
3
7
(5)
(5)
14
147
(58)
–
17
177
2019
2,691
29
177
2
(3)
2,896
Amounts and expiry dates of unused tax losses and unused tax credits as at December 31, 2020, were:
Unused federal operating losses
Unused federal capital losses
Unused investment tax credits
Amount
Expiry Date
1,425
583
23
2021 – Indefinite
Indefinite
2021 – 2040
The unused tax losses and credits with no expiry dates can be
carried forward indefinitely.
equity-accounted investees amounting to $8,911 as at
December 31, 2020 (2019 – $9,183).
As at December 31, 2020, we had $735 of federal 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.
We did not recognize deferred tax liabilities related to temporary
differences associated with investments in subsidiaries and
In 2020, previously unrecognized capital losses were utilized
primarily as a result of the net gain on disposal of investment in
MOPCO. In addition, as a result of the non-cash impairment of
assets relating to our property, plant and equipment at White
Springs, management revised its estimate of future taxable
profits and derecognized deferred tax assets related to Florida
tax losses and deductible temporary differences. In aggregate,
the net decrease in unrecognized deferred tax assets was $20.
94 Nutrien Annual Report 2020
In millions of US dollars unless otherwise noted
Overview
Management’s Discussion & Analysis
Three-Year Highlights
Financial Statements
Other Information
NOTE 9 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
2020
569,657,000
29,000
–
569,686,000
2019
582,269,000
777,000
56,000
583,102,000
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
2020
9,875,797
2011 – 2017
2015, 2017 – 2020
2019
4,539,529
2010 – 2015
2015, 2019
NOTE 10 Financial Instruments and Related Risk Management
Our ELT, along with the Board of Directors (including Board of Directors Committees), is responsible for monitoring our risk
exposures and managing our policies to address these risks. Our strategic and risk management processes are integrated to ensure
we understand the benefit from the relationship between strategy, risk and value creation. Outlined below are our risk management
strategies we have developed to mitigate the financial market risks which we are exposed to.
Credit Risk
Receivables from
customers
Risk Management Strategies
(cid:129) establish credit approval policies and procedures for new and existing customers
(cid:129) extend credit to qualified customers through:
(cid:129) review of credit agency reports, financial statements and/or credit references, as available
(cid:129) review of existing customer accounts every 12 – 24 months based on the credit limit
amounts
(cid:129) evaluation of customer and country risk for international customers
(cid:129) establish credit period:
(cid:129) 15 and 30 days for wholesale fertilizer customers
(cid:129) 30 days for industrial and feed customers
(cid:129) 30 – 360 days for Retail, including Nutrien Financial, customers
(cid:129) up to 180 days for select export sales customers, including Canpotex
(cid:129) transact on a cash basis with certain customers who may not meet specified benchmark
creditworthiness or cannot provide other evidence of ability to pay
(cid:129) execute an agency arrangement with a financial institution with which we have only a limited
recourse involvement
(cid:129) sell receivables to financial institutions which substantially transfer the risks and rewards
(cid:129) set eligibility requirements for Nutrien Financial to limit the risk of the receivables
(cid:129) may require security over certain crop or livestock inventories
(cid:129) set up provision using the lifetime expected credit loss method considering all possible default
events over the expected life of a financial instrument. Receivables are grouped based on days
past due and/or customer credit risk profile. Estimated losses on receivables are based on
known troubled accounts and historical experience of losses incurred. 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
Cash and cash equivalents
and derivative assets
(cid:129) require acceptable minimum counterparty credit ratings
(cid:129) limit counterparty or credit exposure
(cid:129) select counterparties with investment-grade quality
In millions of US dollars unless otherwise noted
2020 Nutrien Annual Report 95
Overview
Management’s Discussion & Analysis
Three-Year Highlights
Financial Statements
Other Information
NOTE 10 Financial Instruments and Related Risk Management Continued
Maximum exposure to credit risk as at December 31:
Cash and cash equivalents
Receivables 1
Other current assets – derivatives
1 Excluding income tax receivable.
2020
1,454
3,498
45
4,997
2019
671
3,438
5
4,114
Risk
Risk Management Strategies
Liquidity
(cid:129) establish an external borrowing policy to maintain sufficient liquid financial resources to fund our
operations and meet our commitments and obligations in a cost-effective manner
(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
(cid:129) uphold long-term relationships with a sufficient number of high-quality and diverse lenders
Refer to Note 17 for our available credit facilities.
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.
2020
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
159
5,781
10,061
1,140
48
17,189
159
5,781
15,795
1,305
48
23,088
Within
1 Year
159
5,781
434
281
39
6,694
1 to 3
Years
–
–
2,378
408
9
2,795
3 to 5
Years
–
–
2,498
233
–
2,731
Over 5
Years
–
–
10,485
383
–
10,868
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, 2020.
2 Excludes non-financial liabilities and includes trade payables of approximately $1.5 billion that are related to our prepaid inventory to secure product
discounts. We consider these amounts to be part of our working capital. For these payables, we participated in arrangements where the vendors sold their
right to receive payment to financial institutions without extending the original payment terms. These payables were paid in January and February 2021.
96 Nutrien Annual Report 2020
In millions of US dollars unless otherwise noted
Overview
Management’s Discussion & Analysis
Three-Year Highlights
Financial Statements
Other Information
NOTE 10 Financial Instruments and Related Risk Management Continued
Foreign Exchange Risk
Foreign currency denominated
accounts
Risk Management Strategies
(cid:129) execute foreign currency derivative contracts within certain prescribed limits for both
forecast operating and capital expenditures to manage the earnings impact, including
those related to our equity-accounted investees, that could occur from a reasonably
possible strengthening or weakening of the US dollar
The fair value of our net foreign exchange currency derivative assets (liabilities) at December 31, 2020 was $14 (2019 – $2). The
following table presents the significant foreign currency derivatives that existed at December 31:
2020
2019
Sell/buy
Notional
Maturities
Derivatives not designated as hedges
Average
contract
rate
1.2796
1.2804
1.3661
1.3640
1.3147
1.3665
1.3216
Notional
Maturities
337
120
78
47
–
–
–
–
2020
2020
2020
2020
–
–
–
–
Average
contract
rate
1.3096
1.3138
1.4593
1.4563
–
–
–
–
514
126
28
92
70
55
61
2021
2021
2021
2021
2021
2021
2021
254
2021
1.3190
Forwards
USD/CAD 1
CAD/USD
USD/AUD 2
AUD/USD
Options
USD/CAD – buy USD puts
USD/CAD – sell USD calls
AUD/USD – buy USD calls
Derivatives designated as hedges
Forwards
USD/CAD
1 Canadian Dollar
2 Australian Dollar
Market Risks
Type
Risk Management Strategies
Interest rate
Price
Price
Short-term
and long-
term debt
Natural gas
derivative
instruments
(cid:129) use a portfolio of fixed and floating rate instruments
(cid:129) align current and long-term assets with demand and
fixed-term debt
(cid:129) monitor the effects of market changes in interest rates
(cid:129) use interest rate swaps, if desired
(cid:129) 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
(cid:129) acquire a reliable supply of natural gas feedstock and fuel on a
location-adjusted, cost-competitive basis
Investment
at fair value
(cid:129) ensure the security of principal amounts invested
(cid:129) provide for an adequate degree of liquidity
(cid:129) achieve a satisfactory return
We do not believe we
have material exposure
to interest or price risk
on our financial
instruments as at
December 31, 2020
and 2019.
In 2020, we entered into cash flow hedges on our interest rate derivative contracts which matured in the same year and had a total
notional amount of $680.
In millions of US dollars unless otherwise noted
2020 Nutrien Annual Report 97
Overview
Management’s Discussion & Analysis
Three-Year Highlights
Financial Statements
Other Information
NOTE 10 Financial Instruments and Related Risk Management Continued
Natural gas derivatives outstanding:
Notional 1
NYMEX swaps
14
2020
2019
Average
Contract
Price 2
Fair Value
of Assets
(Liabilities)
Notional 1
3.89
(18)
16
Average
Contract
Price 2
Fair Value
of Assets
(Liabilities)
4.26
(30)
Maturities
2020 –
2022
Maturities
2021 –
2022
1 In millions of Metric Million British Thermal Units (“MMBtu”).
2 US dollars per MMBtu.
2020
2019
Financial assets (liabilities)
Gross
Offset
Derivative instrument liabilities
Natural gas derivatives 1
Other long-term debt instruments 2
(18)
(150)
(168)
–
150
150
Net
Amounts
Presented
(18)
–
(18)
Gross
Offset
(30)
(150)
(180)
–
150
150
Net
Amounts
Presented
(30)
–
(30)
1 Cash margin deposits of $9 (2019 – $17) 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, 2020.
Fair Value
Financial instruments included in the consolidated balance sheets are measured either at fair value or amortized cost. The following
tables 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 at Fair Value
Fair Value Method
Cash and cash equivalents
Equity securities
Debt securities
Foreign currency derivatives not traded in an
active market
Foreign exchange forward contracts, swaps and
options and natural gas swaps 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
Based on a discounted cash flow model. 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.
Financial Instruments at Amortized Cost
Receivables, short-term debt and payables and
accrued charges
Long-term debt
Other long-term debt instruments
Fair Value Method
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)
Carrying amount
98 Nutrien Annual Report 2020
In millions of US dollars unless otherwise noted
Overview
Management’s Discussion & Analysis
Three-Year Highlights
Financial Statements
Other Information
NOTE 10 Financial Instruments and Related Risk Management Continued
The following table presents our fair value hierarchy for financial instruments carried at fair value on a recurring basis or measured at
amortized cost:
Financial assets (liabilities) measured at
Fair value on a recurring basis
Cash and cash equivalents
Derivative instrument assets
Other current financial assets – marketable
securities 2
Investment at fair value through other
comprehensive income (“FVTOCI”)
(Note 15)
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
Carrying
Amount
1,454
45
161
153
(48)
–
(14)
2020
2019
Level 1 1
Level 2 1
Carrying
Amount
Level 1 1
Level 2 1
–
–
24
153
–
–
–
1,454
45
137
–
(48)
–
(14)
671
5
193
161
(33)
(494)
(8)
–
–
27
161
–
–
–
671
5
166
–
(33)
(503)
(8)
(9,994)
(53)
(3,801)
–
(7,955)
(53)
(8,528)
(25)
(1,726)
–
(7,440)
(25)
1 During 2020 and 2019, 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.
NOTE 11 Receivables
Segment
2020
2019
Retail (Nutrien Financial) 1
Retail
Potash, Nitrogen, Phosphate
Potash (Note 28)
Receivables from customers
Third parties
Related party – Canpotex
Less allowance for expected credit
losses of receivables from
customers
Rebates
Income taxes (Note 8)
Other receivables
1,417
1,158
391
122
826
1,682
428
194
(69)
(83)
3,019
256
83
223
3,581
3,047
190
104
201
3,542
1 Includes $1,147 of very low risk of default and $270 of low risk of default (2019 – $762 of very low risk of default and $64 of low risk of default).
In millions of US dollars unless otherwise noted
2020 Nutrien Annual Report 99
Overview
Management’s Discussion & Analysis
Three-Year Highlights
Financial Statements
Other Information
NOTE 11 Receivables Continued
Qualifying receivables from customers financed by Nutrien
Financial represents high-quality receivables from customers
that have been rated very low to low risk of default among
Retail’s receivables from customers.
Customer credit with a financial institution of $444 at
December 31, 2020, related to our agency agreement, is not
recognized in our consolidated balance sheets. Through the
agency agreement, we only have a limited recourse
involvement to the extent of an indemnification of the
financial institution to a maximum of 5 percent (2019 – 5
percent) of the qualified customer loans. Historical
indemnification losses on this arrangement have been
negligible, and the average aging of the customer loans with
the financial institution is current.
NOTE 12 Inventories
Product purchased for resale 1
Finished products
Intermediate products
Raw materials
Materials and supplies
2020
3,655
384
227
215
449
4,930
2019
3,592
524
244
205
410
4,975
1 Includes biological assets of $7 (December 31, 2019 – $33) measured at
fair value less costs of disposal (“FVLCD”).
Inventories expensed to cost of goods sold during the year were
$14,347 (2019 – $13,465).
100 Nutrien Annual Report 2020
In millions of US dollars unless otherwise noted
Overview
Management’s Discussion & Analysis
Three-Year Highlights
Financial Statements
Other Information
NOTE 13 Property, Plant and Equipment
The majority of our tangible assets are buildings, machinery and equipment used to produce or distribute our
products and render our services. Right-of-use (“ROU”) assets primarily include railcars, marine vessels, real estate
and mobile equipment.
Land and
Improvements
Buildings and
Improvements
Machinery
and
Equipment
Mine
Development
Costs
Assets Under
Construction
Useful life range (years)
Carrying amount – December 31, 2019
Acquisitions (Note 25)
Additions
Additions – ROU assets
Disposals
Transfers
Foreign currency translation and other
Depreciation
Depreciation – ROU assets
Impairment
Carrying amount – December 31, 2020
Balance – December 31, 2020
comprised of:
Cost
Accumulated depreciation and
impairments
Carrying amount – December 31, 2020
Balance – December 31, 2020
comprised of:
Owned property, plant and equipment
ROU assets
Carrying amount – December 31, 2020
Carrying amount – December 31, 2018
ROU assets recognized on adoption of
IFRS 16, “Leases” (“IFRS 16”)
Acquisitions (Note 25)
Additions
Additions – ROU assets
Disposals
Transfers
Foreign currency translation and other
Depreciation
Depreciation – ROU assets
Impairment
2 – 80
1,160
8
25
–
(5)
46
(15)
(39)
(2)
(88)
1,090
1,530
(440)
1,090
1,061
29
1,090
1,018
48
17
14
–
(3)
108
(4)
(36)
(2)
–
1 – 60
6,409
27
91
24
(9)
58
–
(198)
(55)
(42)
6,305
1 – 80
10,641
42
224
299
(34)
923
30
(1,060)
(222)
(507)
10,336
2 – 60
747
–
1
–
–
164
30
(82)
–
(137)
723
8,377
19,730
2,279
(2,072)
6,305
(9,394)
10,336
(1,556)
723
5,986
319
6,305
6,044
307
136
30
22
(5)
145
(37)
(187)
(46)
–
9,665
671
10,336
9,882
704
61
225
177
(84)
932
(14)
(1,004)
(186)
(52)
723
–
723
709
–
–
–
–
–
110
5
(77)
–
–
747
n/a
1,378
–
1,077
–
–
(1,191)
(10)
–
–
(48)
1,206
1,206
–
1,206
1,206
–
1,206
1,143
–
37
1,487
–
–
(1,295)
6
–
–
Total
20,335
77
1,418
323
(48)
–
35
(1,379)
(279)
(822)
19,660
33,122
(13,462)
19,660
18,641
1,019
19,660
18,796
1,059
251
1,756
199
(92)
–
(44)
(1,304)
(234)
(52)
Carrying amount – December 31, 2019
1,160
6,409
10,641
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
n/a = not applicable
1,474
(314)
1,160
1,117
43
1,160
8,207
18,548
2,068
(1,798)
6,409
(7,907)
10,641
(1,321)
747
6,065
344
6,409
9,973
668
10,641
747
–
747
1,378
20,335
1,378
–
1,378
1,378
–
1,378
31,675
(11,340)
20,335
19,280
1,055
20,335
In millions of US dollars unless otherwise noted
2020 Nutrien Annual Report 101
Overview
Management’s Discussion & Analysis
Three-Year Highlights
Financial Statements
Other Information
NOTE 13 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
2020
138
1,111
393
56
1,698
132
1,830
2019
137
1,008
344
40
1,529
161
1,690
Impairment
In 2020, we recorded the following impairments:
Cash-generating units (“CGUs”)
Segment
Impairment indicator
Pre-tax impairment loss ($)
Recoverable amount ($)
Valuation technique
Key assumptions
Aurora
White Springs
Phosphate
Lower long-term forecasted global phosphate prices
545
995 (post-tax)
FVLCD a Level 3 measurement
215
160 (pre-tax)
Value in use (“VIU”)
End of mine life (proven and probable reserves) (year)
Post-tax discount rate (%)
2050
10.5
2029
12.0 (pre-tax – 16.0)
For our Aurora CGU, the recoverable amount was based on
after-tax discounted cash flows (using a five-year projection and
a terminal year thereafter to the expected mine life), which
incorporated assumptions an independent market participant
would apply. For our White Springs CGU, the recoverable
amount was based on pre-tax discounted cash flows until the
end of the mine life.
The recoverable amount is most sensitive to the following key
assumptions: our internal sales price forecasts, which consider
projections from independent third-party data sources, discount
rates, and expected mine life. We used key assumptions that were
based on historical data and estimates of future results from
internal sources, external price benchmarks, and mineral reserve
technical reports, as well as industry and market trends.
The following table highlights sensitivities to the recoverable amount which could result in additional impairment losses or reversals
of previously recorded losses:
Key Assumptions
Net selling price
Discount rate
Change in Assumption
Increase (Decrease) to Recoverable Amount ($)
Aurora
±
±
10 per tonne ±
1.0 percentage point ±
150
120
102 Nutrien Annual Report 2020
In millions of US dollars unless otherwise noted
Overview
Management’s Discussion & Analysis
Three-Year Highlights
Financial Statements
Other Information
NOTE 13 Property, Plant and Equipment Continued
For our White Springs CGU, there were no reasonably possible
changes in the key assumptions that would result in a
substantial change in the recoverable amount.
We also performed impairment testing on the Trinidad CGU,
part of our Nitrogen segment, due to the indefinite closure of an
ammonia plant in response to market conditions and lower
long-term forecasted global ammonia prices. No impairment
resulted from comparing the carrying amount of the Trinidad
CGU to its recoverable amount determined on a FVLCD
methodology. FVLCD was based on after-tax discounted cash
flows (using a five-year projection and a 2.0% terminal growth
rate) discounted at a post-tax rate of 12.6%.
The following table indicates the percentages by which key assumptions would need to change individually for the estimated
Trinidad CGU recoverable amount to be equal to the carrying amount:
Key Assumptions
Net selling price (5-year average)
Production volumes (5-year average)
Discount rate (post-tax)
Change Required for Carrying Amount to Equal Recoverable Amount
4 percent decrease
5 percent decrease
0.9 percentage point increase
In 2020, we also recorded $64 of impairment losses relating to other non-current assets (2019 – $52).
NOTE 14 Goodwill and Other Intangible Assets
Customer
Relationships 2
3 – 15
Technology
3 – 30
Other Intangibles
Trade
Names
1 – 20 3
Other
1 – 20
Useful life range (years)
Carrying amount – December 31, 2019
Acquisitions (Note 25)
Additions – internally developed
Foreign currency translation and other
Disposals
Amortization 1
Carrying amount – December 31, 2020
Goodwill
n/a
11,986
167
–
45
–
–
12,198
Balance – December 31, 2020 comprised of:
Cost
Accumulated amortization and
impairment
12,205
1,971
(7)
Carrying amount – December 31, 2020
12,198
Carrying amount – December 31, 2018
Acquisitions (Note 25)
Additions – internally developed
Foreign currency translation and other
Impairment
Amortization 1
Carrying amount – December 31, 2019
11,431
543
–
12
–
–
11,986
Balance – December 31, 2019 comprised of:
Cost
Accumulated amortization and
impairment
Carrying amount – December 31, 2019
11,986
11,993
1,906
(7)
(322)
1,584
1,584
74
–
22
–
(165)
1,515
(456)
1,515
1,554
173
–
2
–
(145)
1,584
351
2
106
20
(3)
(39)
437
544
(107)
437
117
43
197
9
–
(15)
351
429
(78)
351
62
8
–
14
–
(9)
75
111
(36)
75
90
13
–
18
(35)
(24)
62
92
(30)
62
431
6
16
(22)
–
(70)
361
597
(236)
361
449
115
2
(25)
(33)
(77)
431
597
(166)
431
Total
2,428
90
122
34
(3)
(283)
2,388
3,223
(835)
2,388
2,210
344
199
4
(68)
(261)
2,428
3,024
(596)
2,428
1 Amortization of $254 was included in selling expenses during the year ended December 31, 2020 (2019 – $234).
2 The average remaining amortization period of customer relationships at December 31, 2020, was approximately 6 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 unless otherwise noted
2020 Nutrien Annual Report 103
Overview
Management’s Discussion & Analysis
Three-Year Highlights
Financial Statements
Other Information
NOTE 14 Goodwill and Other Intangible Assets Continued
Goodwill Impairment Testing
We performed our annual impairment test on goodwill 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 a CGU or 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 CGU or group of CGUs for the risk
associated with achieving our forecasts (five-year projections)
and for the country risk premium 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 CGU or 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 (%)
2020
2019
2020
2019
2.5
2.0
2.5
2.0
2.5
2.0
2.5
2.0
7.5
7.8 – 16.0
8.0
8.0
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.
The Retail – North America group of CGUs recoverable amount exceeds its carrying amount by $1.7 billion, which is 13% of the
carrying amount. Most of our goodwill arose from the merger between PotashCorp and Agrium in 2018 (the “Merger”), representing
fair values at the merger date. 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 EBITDA could cause impairment in the future. The following table indicates the percentage by which key assumptions
would need to change individually for the estimated recoverable amount to be equal to the carrying amount:
Key Assumptions
Terminal growth rate
Forecasted EBITDA over forecast period
Discount rate
Change Required for Carrying
Amount to Equal
Recoverable Amount
0.8 percentage point decrease
9.1 percent decrease
0.7 percentage point increase
Value Used in Impairment
Model
2.5%
$6 billion
7.5%
104 Nutrien Annual Report 2020
In millions of US dollars unless otherwise noted
Overview
Management’s Discussion & Analysis
Three-Year Highlights
Financial Statements
Other Information
NOTE 15 Investments
Equity-accounted investees and investments at FVTOCI as at December 31 were comprised of:
Name
Principal Activity
Equity-accounted investees
MOPCO
Profertil
Canpotex
Other associates and joint ventures
Nitrogen Producer
Nitrogen Producer
Marketing and Logistics
Total equity-accounted investees
Investments at FVTOCI
Sinofert
Fertilizer Supplier and Distributor
Total investments at FVTOCI
Principal Place
of Business and
Incorporation
Proportion of Ownership
Interest and
Voting Rights Held
(%)
Carrying Amount
2020
2019
2020
2019
Egypt
Argentina
Canada
–
50
50
26
50
50
China/Bermuda
22
22
–
233
–
176
409
153
153
270
212
–
178
660
161
161
In 2020, as a result of our strategic decision to dispose of our
investment in MOPCO, we received cash consideration of $540
for the disposal of the investment and settlement of legal
claims. This resulted in a pre-tax gain of $250 recorded in
other (income) expenses.
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 elected to account for our investment in Sinofert
as FVTOCI as it is held for strategic purposes.
Future conditions related to Profertil may be affected by
political, economic and social instability. We are exposed to
foreign exchange risk related to fluctuations in the Argentine
peso against the US dollar. This may also restrict our ability to
obtain dividends from Profertil.
NOTE 16 Other Assets
Other assets as at December 31 were comprised of:
Deferred income tax assets (Note 8)
Ammonia catalysts – net of accumulated amortization of $76 (2019 – $71)
Long-term income tax receivable (Note 8)
Accrued pension benefit assets (Note 21)
Other – net of accumulated amortization of $44 (2019 – $41)
2020
242
89
305
109
169
914
2019
249
89
36
25
165
564
In millions of US dollars unless otherwise noted
2020 Nutrien Annual Report 105
Overview
Management’s Discussion & Analysis
Three-Year Highlights
Financial Statements
Other Information
NOTE 17 Short-Term Debt
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:
Rate of Interest (%)
Total Facility Limit as
at December 31, 2020
2020
2019
Credit facilities
Unsecured revolving term
credit facility 1
Uncommitted revolving
demand facility
Other credit facilities 2
Commercial paper
Nil
Nil
0.8 – 36.0
Nil
4,500
500
740
–
–
159
–
159
–
–
326
650
976
1 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.
2 Credit facilities are unsecured and consist of South American facilities with debt of $109 (2019 – $149) and interest rates ranging from 1.7 percent to
36.0 percent, Australian facilities with debt of $19 (2019 – $157) and an interest rate of 0.8 percent, and other facilities with debt of $31 (2019 – $20) and an
interest rate of 1.0 percent.
The amount available under the commercial paper program is
limited to the availability of backup funds under the Nutrien
Credit Facility and excess cash invested in highly liquid securities.
As at December 31, 2020, we were authorized to issue
commercial paper up to $4,500 (2019 – $4,500). Principal
covenants and events of default under the Nutrien Credit Facility
include a debt to capital ratio (refer to Note 24) 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, 2020.
In 2020, we entered into new committed revolving credit
facilities totaling approximately $1,500, all with the same
principal covenants and events of default as our existing credit
facilities. We closed these credit facilities after the issuance of
the new notes as described in Note 18.
106 Nutrien Annual Report 2020
In millions of US dollars unless otherwise noted
Overview
Management’s Discussion & Analysis
Three-Year Highlights
Financial Statements
Other Information
NOTE 18 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.
Long-term debt as at December 31 was comprised of:
Rate of Interest (%)
Maturity
2020
2019
Notes 1
4.875
3.150
1.900
3.500
3.625
3.375
3.000
4.000
4.200
2.950
4.125
7.125
5.875
5.625
6.125
4.900
5.250
5.000
3.950
7.800
March 30, 2020
October 1, 2022
May 13, 2023
June 1, 2023
March 15, 2024
March 15, 2025
April 1, 2025
December 15, 2026
April 1, 2029
May 13, 2030
March 15, 2035
May 23, 2036
December 1, 2036
December 1, 2040
January 15, 2041
June 1, 2043
January 15, 2045
April 1, 2049
May 13, 2050
February 1, 2027
–
500
500
500
750
550
500
500
750
500
450
300
500
500
500
500
500
750
500
125
67
9,742
404
(85)
10,061
(14)
–
(14)
10,047
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
Debentures 1
Other
Add net unamortized fair value adjustments
Less net unamortized debt issue costs
Less current maturities
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. As calculated in Note 24, we were in compliance with these covenants as at December 31, 2020.
In millions of US dollars unless otherwise noted
2020 Nutrien Annual Report 107
Overview
Management’s Discussion & Analysis
Three-Year Highlights
Financial Statements
Other Information
NOTE 18 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
Current
Portion of
Lease
Liabilities
Long-Term
Debt
Lease
Liabilities
1,478
(1,401)
–
11
85
173
1,624
–
(794)
–
500
148
1,478
214
(274)
107
194
8
249
8
196
(234)
50
178
16
214
8,553
1,526
–
(11)
(21)
10,047
7,579
–
1,481
–
(500)
(7)
8,553
859
–
213
(194)
13
891
12
863
–
75
(178)
87
859
Total
11,104
(149)
320
–
85
11,360
9,223
1,059
453
125
–
244
11,104
Balance – December 31, 2019
Cash flows 1
Additions and other adjustments to ROU assets
Reclassifications
Foreign currency translation and other non-cash changes
Balance – December 31, 2020
Balance – December 31, 2018
Adoption of IFRS 16 (Note 13)
Cash flows 1
Additions and other adjustments to ROU assets
Reclassifications
Foreign currency translation and other non-cash changes
Balance – December 31, 2019
1 Cash inflows and cash outflows are presented on a net basis.
NOTE 19 Lease Liabilities
Lease liabilities – non-current
Current portion of lease liabilities
Total
NOTE 20 Payables and Accrued Charges
Average
Rate of Interest (%)
3.0
2.7
2020
891
249
1,140
2019
859
214
1,073
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 and other payables
Customer prepayments
Dividends
Accrued compensation
Current portion of asset retirement obligations and accrued environmental costs (Note 22)
Accrued interest
Current portion of share-based compensation (Note 5)
Current portion of derivatives
Income taxes (Note 8)
Current portion of pension and other post-retirement benefits (Note 21)
Other accrued charges and others
2020
4,415
1,800
256
513
162
99
95
39
48
15
616
8,058
2019
4,016
1,693
258
434
148
103
118
13
43
15
596
7,437
108 Nutrien Annual Report 2020
In millions of US dollars unless otherwise noted
Overview
Management’s Discussion & Analysis
Three-Year Highlights
Financial Statements
Other Information
NOTE 21 Pension and Other Post-Retirement Benefits
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.
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
Canada
(cid:129) guaranteed annual pension payments
for life,
(cid:129) benefits generally depend on years of
service and compensation level in the final
years leading up to age 65,
(cid:129) benefits available starting at age 55 at a
reduced rate, and
(cid:129) plans provide for maximum pensionable
salary and maximum annual benefit limits.
Supplemental Plans
in US and Canada for
Senior Management
(cid:129) non-contributory,
(cid:129) unfunded, and
(cid:129) supplementary pension benefits.
requirements of the Employee Retirement Income
Security Act of 1974 and associated Internal
Revenue Service regulations and procedures.
(cid:129) made to meet or exceed minimum funding
requirements based on provincial statutory
requirements and associated federal
taxation rules.
(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 practices in each country, as is
the nature of the relationship between the Company and the
trustees and their composition.
Description of Other Post-Retirement Plans
(cid:129) for certain plans, maximum lifetime benefits;
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) coordination with government-provided medical insurance
in each country;
(cid:129) certain unfunded cost-sharing features such as
co-insurance, deductibles and co-payments – benefits
subject to change;
(cid:129) 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 toward annual cost of
the plans.
We provide non-contributory life insurance plans for certain
retired employees who meet specific age and service eligibility
requirements.
In millions of US dollars unless otherwise noted
2020 Nutrien Annual Report 109
Overview
Management’s Discussion & Analysis
Three-Year Highlights
Financial Statements
Other Information
NOTE 21 Pension and Other Post-Retirement Benefits Continued
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.
110 Nutrien Annual Report 2020
In millions of US dollars unless otherwise noted
Overview
Management’s Discussion & Analysis
Three-Year Highlights
Financial Statements
Other Information
NOTE 21 Pension and Other Post-Retirement Benefits Continued
Financial Information
Movements in the pension and other post-retirement benefit assets (liabilities) were as follows:
recognized in earnings
28
(80)
(52)
(143)
Balance – beginning of year
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 1
Foreign exchange rate changes and other
Subtotal of components of defined benefit expense (recovery)
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
Gain 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 2
Balance comprised of:
Non-current assets
Other assets (Note 16)
Current liabilities
Payables and accrued charges (Note 20)
Non-current liabilities
Pension and other post-retirement benefit liabilities
2020
Plan
Assets
Obligation
Net
Obligation
2019
Plan
Assets
Net
(2,044)
1,621
(423)
(1,797)
1,416
(381)
(36)
(66)
133
(3)
–
53
(132)
(1)
(36)
(13)
1
(4)
(40)
(74)
–
(29)
–
59
–
13
72
(40)
(15)
–
(16)
(71)
–
–
(199)
14
193
193
5
21
(86)
(60)
193
8
–
21
–
21
(153)
12
–
(141)
(5)
–
96
91
–
–
(153)
12
230
230
230
89
5
26
(96)
(65)
–
26
–
26
(199)
14
–
(185)
(5)
–
86
81
(2,066)
1,706
(360)
(2,044)
1,621
(423)
109
(15)
(454)
25
(15)
(433)
1 During 2020, we transferred certain pension plan obligations to an insurance company.
2 Obligations arising from funded and unfunded pension plans are $(1,690) and $(376), respectively (2019 – $(1,652) and $(392)). Other post-retirement
benefit plans have no plan assets and are unfunded.
In millions of US dollars unless otherwise noted
2020 Nutrien Annual Report 111
Overview
Management’s Discussion & Analysis
Three-Year Highlights
Financial Statements
Other Information
NOTE 21 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:
2020
2019
Quoted Prices
in Active
Markets for
Identical Assets
Other 1
Total
Quoted Prices
in Active
Markets for
Identical Assets
Cash and cash equivalents
Equity securities and equity funds
US
International
Debt securities 2
International balanced fund
Other
Total pension plan assets
9
19
158
–
–
–
186
33
879
–
571
–
37
42
898
158
571
–
37
1,520
1,706
8
1
35
–
–
–
44
Other 1
112
Total
120
571
62
698
112
22
572
97
698
112
22
1,577
1,621
1 Approximately 76 percent (2019 – 60 percent) of the Other plan assets are held in funds whose fair values are estimated using their net asset value per share.
For the majority of these funds, the redemption frequency is immediate. The Plan Committee manages the asset allocation based upon our current liquidity
and income needs.
2 Debt securities included US securities of 60 percent (2019 – 82 percent) and International securities of 40 percent (2019 – 18 percent).
We use letters of credit or surety bonds to secure certain Canadian unfunded defined benefit plan liabilities as at
December 31, 2020.
We expect to contribute approximately $125 to all pension and post-retirement plans in 2021. Total contributions recognized as
expense under all defined contribution plans for 2020 was $116 (2019 – $88).
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:
Assumptions used to determine the benefit obligations 1 :
Discount rate (%)
Rate of increase in compensation levels (%)
Medical cost trend rate – assumed (%)
Medical cost trend rate – year reaches ultimate trend rate
Mortality assumptions 3 (years)
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)
Pension
Other
2020
2019
2020
2019
2.83
4.57
n/a
n/a
20.6
22.8
15.4
3.35
4.66
n/a
n/a
20.5
22.7
14.6
2.66
n/a
4.50 – 5.80 2
2037
3.20
n/a
4.50 – 6.10 2
2037
20.2
22.8
15.2
20.3
22.9
15.8
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 5.80 percent in 2020, moving to 4.50 percent by 2037 (2019 – 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.
112 Nutrien Annual Report 2020
In millions of US dollars unless otherwise noted
Overview
Management’s Discussion & Analysis
Three-Year Highlights
Financial Statements
Other Information
NOTE 21 Pension and Other Post-Retirement Benefits Continued
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
2020
2019
Benefit
Obligations
Expense in
Earnings Before
Income Taxes
Benefit
Obligations
Expense in
Earnings Before
Income Taxes
2,066
360
(280)
52
10
(10)
2,044
340
(270)
71
10
(10)
NOTE 22 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.
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, 2020, were as follows:
Asset retirement obligations
Retail
Potash
Phosphate
Corporate and other 4, 5
Accrued environmental costs
Retail
Corporate and other
Cash Flow
Payments
(years) 1
Discounted
Cash
Flows 2,3
1 – 30
33 – 441
1 – 80
1 – 482
1 – 30
1 – 20
25
76
468
640
89
461
Discount Rate
+0.5%
-0.5%
(70)
90
(10)
5
1 Time frame in which payments are expected to principally occur from December 31, 2020. Adjustments to the years can result from changes to the mine life
and/or changes in the rate of tailing volumes.
2 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.
Risk-free rates range from 1.2 percent to 6.5 percent.
3 Total undiscounted cash flows are $2.8 billion. For the Potash segment, this 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 407 years.
4 For nitrogen sites, we have not recorded any asset retirement obligations as 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 55 years.
In millions of US dollars unless otherwise noted
2020 Nutrien Annual Report 113
Overview
Management’s Discussion & Analysis
Three-Year Highlights
Financial Statements
Other Information
NOTE 22 Asset Retirement Obligations and Accrued Environmental Costs Continued
Following is a reconciliation of asset retirement obligations and accrued environmental costs:
Asset
Retirement
Obligations
Accrued
Environmental
Costs
Balance – December 31, 2019
Acquisitions
Disposals
Change in estimates
Recorded in earnings
Settled during the year
Foreign currency translation and other
Balance – December 31, 2020
Balance – December 31, 2020 comprised of:
Current liabilities
Payables and accrued charges (Note 20)
Non-current liabilities
Asset retirement obligations and accrued environmental costs
1,254
12
–
(9)
31
(88)
9
1,209
121
1,088
Total
1,798
27
(3)
(7)
34
(109)
19
1,759
544
15
(3)
2
3
(21)
10
550
41
162
509
1,597
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 23 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, 2019
Issued under option plans and share-settled plans
Repurchased
Balance – December 31, 2020
Number of
Common Shares
572,942,809
150,177
(3,832,580)
569,260,406
Share
Capital
15,771
7
(105)
15,673
114 Nutrien Annual Report 2020
In millions of US dollars unless otherwise noted
Overview
Management’s Discussion & Analysis
Three-Year Highlights
Financial Statements
Other Information
NOTE 23 Share Capital Continued
Share Repurchase Programs
2019 Normal Course Issuer Bid 1
2020 Normal Course Issuer Bid 2
Commencement Date
Expiry
Maximum Shares
for Repurchase
February 27, 2019
February 27, 2020
February 26, 2020
February 26, 2021
42,164,420
28,572,458
1 The 2019 normal course issuer bid permitted the repurchase of up to 7 percent of our outstanding common shares for cancellation. As of the expiry date, we
had repurchased 33,256,668 of the maximum shares for repurchase.
2 The 2020 normal course issuer bid permits the repurchase of up to 5 percent of our outstanding common shares for cancellation and can expire earlier than
the date above if we acquire the maximum number of common shares allowable or otherwise decide not to make any further repurchases. As at February 18,
2021, we had repurchased 710,100 of the maximum shares for repurchase.
On February 17, 2021, our Board of Directors approved a share repurchase program of up to a maximum of 28,468,448 or 5 percent
of our outstanding common shares for cancellation. Subject to acceptance by the Toronto Stock Exchange, the 2021 share
repurchase program will commence on March 1, 2021, and will expire on the earlier of February 28, 2022, the date on which we have
acquired the maximum number of common shares allowable or the date we determine 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:
Number of common shares repurchased for cancellation
Average price per share (US dollars)
Total cost
Dividends Declared
Dividends declared for the years ended December 31 were as follows:
2020
2019
3,832,580
41.96
160
36,067,323
52.07
1,878
Declared
February 19, 2020
May 6, 2020
August 10, 2020
December 10, 2020
2020
Per Share
0.45
0.45
0.45
0.45
1.80
Declared
May 10, 2019
July 30, 2019
December 13, 2019
2019
Per Share
0.43
0.45
0.45
1.33
Subsequent to year-end, our Board of Directors declared a quarterly dividend of $0.46 per share payable on April 15, 2021, to
shareholders of record on March 31, 2021. The total estimated dividend to be paid is $262.
NOTE 24 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.
In millions of US dollars unless otherwise noted
2020 Nutrien Annual Report 115
Overview
Management’s Discussion & Analysis
Three-Year Highlights
Financial Statements
Other Information
NOTE 24 Capital Management Continued
We include total debt, adjusted total debt, adjusted net debt and adjusted shareholders’ equity as components of our capital
structure. 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.
We monitor the following ratios:
Adjusted net debt to adjusted EBITDA
Debt to capital 1 (Limit: 0.65:1.00)
Adjusted EBITDA to adjusted finance costs
1 Calculated as adjusted total debt to adjusted capital.
2020
2019
2.6
0.34:1.00
7.4
2.5
0.33:1:00
8.0
Adjusted EBITDA is calculated in Note 3, while the calculation of the remaining components included in the above ratios are set out
in the following tables:
Short-term debt
Current portion of long-term debt
Current portion of lease liabilities
Long-term debt
Lease liabilities
Total debt
Letters of credit – financial
Adjusted total debt
Total debt
Cash and cash equivalents
Unamortized fair value adjustments
Adjusted net debt
Total shareholders’ equity
Accumulated other comprehensive loss
Adjusted shareholders’ equity
Adjusted total debt
Adjusted capital
2020
159
14
249
10,047
891
11,360
150
11,510
2020
11,360
(1,454)
(404)
9,502
2020
22,365
119
22,484
11,510
33,994
2019
976
502
214
8,553
859
11,104
158
11,262
2019
11,104
(671)
(424)
10,009
2019
22,869
251
23,120
11,262
34,382
116 Nutrien Annual Report 2020
In millions of US dollars unless otherwise noted
Overview
Management’s Discussion & Analysis
Three-Year Highlights
Financial Statements
Other Information
NOTE 24 Capital Management Continued
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
2020
520
(33)
20
(13)
494
2019
554
(54)
18
(15)
503
In 2020, we filed a universal base shelf prospectus in Canada and
the US qualifying the issuance of up to $5.0 billion of common
shares, debt securities and other securities during a period of
25 months from March 16, 2020. In 2020, we filed a prospectus
supplement to issue $1,500 of notes, as discussed in Note 18.
NOTE 25 Business Combinations
The Company’s business combinations include the acquisition of Retail businesses, including Ruralco Holdings Limited
(“Ruralco”), and various digital agriculture, proprietary products and agricultural services.
Acquisition date
September 30, 2019
$330
Purchase price,
net of cash and
cash equivalents
acquired
Ruralco
Other Acquisitions
Various
2020 – $233
On the acquisition date, we acquired 100% of the
Ruralco stock that was issued and outstanding.
(2019 – $581, net of $100 previously held equity-
accounted interest in Agrichem)
Transaction costs are recorded in acquisition and
integration related costs in other expenses.
Goodwill and
expected benefits
of the acquisition
$236
The expected benefits of the acquisitions resulting
in goodwill include:
$133 (2019 – $341)
(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
Description
An agriservices business in Australia with
approximately 250 operating locations.
2020 – 43 Retail locations including Tec Agro
Group, a leading agriculture retailer in Brazil
(2019 – 68 Retail locations including Actagro, LLC,
a developer, manufacturer and marketer of
environmentally sustainable soil and plant health
products and technologies)
In millions of US dollars unless otherwise noted
2020 Nutrien Annual Report 117
Overview
Management’s Discussion & Analysis
Three-Year Highlights
Financial Statements
Other Information
NOTE 25 Business Combinations Continued
We allocated the following values to the acquired assets and assumed liabilities based upon fair values at their respective
acquisition date:
2020
Ruralco
2019
Preliminary 1
Adjustments
Final
Fair Value 2
Other
Acquisitions 3
Other
Acquisitions 3
Receivables
Inventories
Prepaid expenses and other
current assets
Property, plant and equipment
Goodwill
Other intangible assets
Other non-current assets
Total assets
Short-term debt
Payables and accrued charges
Lease liabilities, including
current portion
Other non-current liabilities
Total liabilities
Total consideration
Previously held equity-accounted
interest in Agrichem
Total consideration, net of cash and
cash equivalents acquired
289
117
8
136
202
165
31
948
112
345
110
51
618
330
–
330
27
(5)
(1)
4
34
43
(14)
88
55
(21)
–
54
88
–
–
–
3164
112
7
140
236
208
17
1,036
167
324
110
105
706
330
–
330
68
63
4
73
133
47
2
390
36
108
2
11
157
233
–
233
68
145
38
115
341
179
2
888
25
156
1
25
207
681
100
581
1 Preliminary value as previously reported in our 2019 annual consolidated financial statements.
2 We have completed our assessment of identifying and measuring all the assets acquired and liabilities assumed. This assessment included a thorough review
of all internal and external sources of information available on circumstances that existed at the acquisition date. We engaged independent valuation experts
to assist in determining the fair value of certain assets acquired and liabilities assumed. Adjustments recorded to the preliminary fair value primarily related to
changes in the preliminary valuation assumptions, including refinement of our intangible assets and liabilities. All measurement 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 $260, of which $7 are considered to be uncollectible.
118 Nutrien Annual Report 2020
In millions of US dollars unless otherwise noted
Overview
Management’s Discussion & Analysis
Three-Year Highlights
Financial Statements
Other Information
NOTE 25 Business Combinations Continued
Other
Acquisitions
Valuation Technique and Judgments Applied
Assets
Property, plant and
equipment
Ruralco
X
Other intangible
assets
X
X
X
Other provisions
and contingent
liabilities
X
X
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.
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.
Financial Information Related to the Acquired Operations
2020 Proforma 1
Sales
EBIT
Other Acquisitions
350
26
1 Estimated annual sales and earnings before finance costs and income taxes (“EBIT”) if acquisitions occurred at the beginning of the year.
From date of acquisition
Sales
EBIT
NOTE 26 Commitments
2020 Actuals
2019 Actuals
Other Acquisitions
Ruralco
Other Acquisitions
190
12
249
(2)
312
(1)
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.
At December 31, 2020, minimum future commitments under our contractual arrangements were as follows:
Within 1 year
1 to 3 years
3 to 5 years
Over 5 years
Total
Lease
Liabilities 1
Long-Term
Debt 1
Purchase
Commitments
Capital
Commitments
Other
Commitments
281
408
233
383
1,305
434
2,378
2,498
10,485
15,795
1,268
757
72
142
2,239
87
16
6
1
110
132
118
53
127
430
Total
2,202
3,677
2,862
11,138
19,879
1 Includes principal portion and estimated interest.
In millions of US dollars unless otherwise noted
2020 Nutrien Annual Report 119
Overview
Management’s Discussion & Analysis
Three-Year Highlights
Financial Statements
Other Information
NOTE 26 Commitments Continued
Purchase Commitments
We have a long-term natural gas purchase agreement in
Trinidad that expires on 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
that 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.
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
contracts, the latest of which expires in 2026, and mineral lease
commitments, the latest of which expires in 2038.
NOTE 27 Guarantees
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
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, 2020, no amounts have been
accrued in the consolidated financial statements (except for
accruals relating to certain underlying liabilities).
We directly guarantee our share of certain commitments of
Canpotex (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.
120 Nutrien Annual Report 2020
In millions of US dollars unless otherwise noted
Overview
Management’s Discussion & Analysis
Three-Year Highlights
Financial Statements
Other Information
NOTE 28 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.
Sale of Goods
We sell potash outside Canada and the US exclusively through
Canpotex. Canpotex sells potash to buyers in export markets
pursuant to term and spot contracts at agreed upon prices. Our
revenue is recognized at the amount received from Canpotex
representing proceeds from their sale of potash, less net costs of
Canpotex. Sales to Canpotex are shown in Note 3. The receivable
outstanding from Canpotex is shown in Note 11 and arose from
sale transactions described above. It is unsecured and bears
no interest. There are no provisions held against this receivable.
Key Management Personnel Compensation and Transactions with Post-Employment Benefit Plans
Compensation to key management personnel was comprised of:
Salaries and other short-term benefits
Share-based compensation
Post-employment benefits
Termination benefits
2020
2019
16
26
2
–
44
15
31
3
12
61
Disclosures related to our post-employment benefit plans, and associates and joint ventures, are shown in Note 21 and
Note 15, respectively.
NOTE 29 Contingencies and Other Matters
Contingent liabilities, which are not recognized in the consolidated financial statements but may be disclosed, are possible
obligations as a result of uncertain future events outside 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
Supporting Information
(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.
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, 2020, we are not aware of any operating losses or
other liabilities.
In millions of US dollars unless otherwise noted
2020 Nutrien Annual Report 121
Overview
Management’s Discussion & Analysis
Three-Year Highlights
Financial Statements
Other Information
NOTE 29 Contingencies and Other Matters Continued
Mining Risk
The risk of underground water inflows and other underground
risks is insured on a limited basis, subject to insurance market
availability. Through December 31, 2020, we are not aware
of any material losses or other liabilities that we have not
accrued for.
Environmental Remediation, 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 22.
We have established provisions for environmental site
assessment and/or remediation matters to the extent that we
consider expenses associated with those matters 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:
(cid:129) The United States Environmental Protection Agency (“US
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 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.
(cid:129) We operate in countries that are parties to the Paris
Agreement adopted in December 2015 pursuant to the
United Nations Framework Convention on Climate Change.
Each country that is a party to the Paris Agreement submitted
an Intended Nationally Determined Contribution (“INDC”)
toward the control of greenhouse gas emissions. The impacts
on 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.
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.
122 Nutrien Annual Report 2020
In millions of US dollars unless otherwise noted
Overview
Management’s Discussion & Analysis
Three-Year Highlights
Financial Statements
Other Information
NOTE 30 Accounting Policies, Estimates and Judgments
The following discusses the significant accounting policies,
estimates, judgments and assumptions that we have adopted
and applied 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.
Basis of Consolidation
These consolidated financial statements include the accounts of the Company and entities we control.
(cid:129) Subsidiaries are fully consolidated from the date on which
control is transferred to the Company until the date on
which control ceases. They are deconsolidated from the
date that control ceases.
(cid:129) Intercompany balances and transactions are eliminated
on consolidation.
Principal (wholly owned) Operating Subsidiaries
Location
Principal Activity
Potash Corporation of Saskatchewan Inc.
Agrium Inc.
Agrium Canada Partnership
Agrium Potash Ltd.
Agrium U.S. Inc.
Cominco Fertilizer Partnership
Loveland Products Inc.
Nutrien Ag Solutions (Canada) Inc.
Nutrien Ag Solutions, Inc.
Nutrien Ag Solutions Limited
PCS Nitrogen Fertilizer, LP
PCS Nitrogen Trinidad Limited
PCS Phosphate Company, Inc.
Phosphate Holding Company, Inc.
Canada
Canada
Canada
Canada
US
US
US
Canada
US
Australia
US
Trinidad
US
US
Mining and/or processing of crop nutrients and
corporate functions
Manufacturer and distributor of crop nutrients and
corporate functions
Manufacturer and distributor of crop nutrients
Crop input retailer
Production of nitrogen products in the US
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 US
Combined Rural Traders Pty Limited
Australia
Crop input retailer
Foreign Currency Transactions
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”). 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.
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 (income)
expenses, as applicable, in the period in which they arise.
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.
In millions of US dollars unless otherwise noted
2020 Nutrien Annual Report 123
Overview
Management’s Discussion & Analysis
Three-Year Highlights
Financial Statements
Other Information
NOTE 30 Accounting Policies, Estimates and Judgments Continued
Restructuring Charges
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 a
detailed formal plan for restructuring has been demonstrably
committed to and a reliable estimate can be made.
Revenue
We recognize revenue when we transfer control over a good or service to a customer.
Transfer of Control for Sale of Goods
Transfer of Control for Sale of Services
At the point in time when the product is
(cid:129) purchased at our Retail farm center
(cid:129) delivered and accepted by customers at their premises or
(cid:129) loaded for shipping
Judgment is used to determine whether we are acting as
principal or agent by evaluating who:
(cid:129) has the primary responsibility for fulfilling the promised good;
(cid:129) bears the inventory risk; and
(cid:129) has discretion for establishing the price.
For transactions in which we act as an agent rather than the
principal, revenue is recognized net of any commissions earned.
The related commissions are recognized as the sales occurred or
as unconditional contracts are signed.
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.
Our sales revenue relating to our Potash, Nitrogen and
Phosphate segments is generally 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). 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.
Over time as the promised service is rendered
For Retail, we do not provide general warranties; however, our
customer contracts may provide certain product quality
specification guarantees. 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.
Transportation costs are generally recovered from the customer
through sales pricing. 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.
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 generally less than 12 months, we apply
the practical expedient as provided in IFRS 15, “Revenue from
Contracts with Customers,” and do not adjust the promised
amount of consideration for the effects of financing.
Intersegment sales are made under terms that approximate
market value.
Seasonality in our business results from increased demand for
products during planting season. Crop input sales are generally
higher 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 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.
124 Nutrien Annual Report 2020
In millions of US dollars unless otherwise noted
Overview
Management’s Discussion & Analysis
Three-Year Highlights
Financial Statements
Other Information
NOTE 30 Accounting Policies, Estimates and Judgments Continued
Share-based Compensation
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
For plans settled through cash
(cid:129) fair value for stock options is determined on grant date using
(cid:129) a liability is recorded based on the fair value of the awards
the Black-Scholes-Merton option-pricing model, and
each period.
(cid:129) fair value for PSUs is determined on grant date by projecting
the outcome of performance conditions.
Estimation involves determining:
(cid:129) stock option-pricing model assumptions as described in the
weighted average assumptions table in Note 5;
(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 return,
Income Taxes
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.
Taxation on earnings (loss) is comprised of current and deferred income tax and requires significant judgment and
estimation. Taxation is recognized in the statements of earnings unless it relates to items recognized either in OCI or directly in
shareholders’ equity.
Current income tax
Deferred income tax
(cid:129) is the expected tax payable on the taxable earnings for the
(cid:129) is recognized using the liability method
year
(cid:129) is calculated using rates enacted or substantively enacted at
the dates of the consolidated balance sheets in the countries
where our subsidiaries and equity-accounted investees
operate and generate taxable earnings
(cid:129) includes any adjustments made to income tax payable or
recoverable in respect of previous years
(cid:129) is based on temporary differences between carrying
amounts of assets and liabilities and their respective
income tax bases
(cid:129) is 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
Current and deferred income tax assets and liabilities are offset only if certain criteria are met.
The realized and unrealized excess tax benefits from share-based compensation arrangements are recognized in contributed
surplus as current and deferred tax, respectively.
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).
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.
In millions of US dollars unless otherwise noted
2020 Nutrien Annual Report 125
Overview
Management’s Discussion & Analysis
Three-Year Highlights
Financial Statements
Other Information
NOTE 30 Accounting Policies, Estimates and Judgments Continued
Deferred income tax is not accounted for
Deferred tax assets are
(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.
(cid:129) recognized to the extent it is probable 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.
(cid:129) 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.
Financial Instruments
Financial assets are measured at amortized cost 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 and
is not designated as fair value through profit or loss (“FVTPL”).
Financial instruments are classified and measured as follows:
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.
Fair Value Classification
Instrument type
Fair value gains and losses
Interest and dividends
Impairment of assets
Foreign exchange
Transaction costs
FVTPL
Cash and cash
equivalents and
derivatives
Profit or loss
Profit or loss
—
Profit or loss
Profit or loss
FVTOCI
Equity investments
not held for trading
OCI
Profit or loss
—
OCI
OCI
Amortized Cost
Receivables, short-term debt,
payables and accrued charges,
long-term debt, lease
liabilities, other long-term debt
instruments
—
Profit or loss: effective
interest rate
Profit or loss
Profit or loss
Included in cost of instrument
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, interest
rates 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 assess whether our derivatives 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. Potential sources of ineffectiveness are changes in
timing of forecast transactions, changes in volume delivered, or
changes in our credit risk or the counterparty. Measurement of
ineffectiveness relating to our foreign exchange and interest rate
hedges is based on a comparison of the cumulative changes in fair
value of the hedging instrument and the cumulative change in the
fair value of a hypothetical derivative with terms based on the
hedged forecast cash flows. Potential sources of ineffectiveness are
changes in timing or amounts of forecasted cash flows, embedded
optionality, and changes in our credit risk or the credit risk of a
counterparty.
126 Nutrien Annual Report 2020
In millions of US dollars unless otherwise noted
Overview
Management’s Discussion & Analysis
Three-Year Highlights
Financial Statements
Other Information
NOTE 30 Accounting Policies, Estimates and Judgments 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
Financial assets and financial liabilities are offset, and the net
amount is presented in the consolidated balance sheets
when we:
similar to a cash flow hedge; and
(cid:129) currently have a legally enforceable right to offset the
(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.
recognized amounts; and
(cid:129) intend either to settle on a net basis, or to realize the assets
and settle the liabilities simultaneously.
Fair Value Measurements
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.
(cid:129) Level 3 – Prices or valuation techniques that require inputs
that are both unobservable and significant to the overall
measurement.
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.
Fair value measurements are categorized into levels based on
the degree to which inputs are observable and their significance:
Fair value estimates:
(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) 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.
Cash and Cash Equivalents
Highly liquid investments with a maturity of three months or less
from the date of purchase are considered to be cash equivalents.
Receivables
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.
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.
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.
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.
Inventories
Inventories are valued monthly at the lower of cost and net
realizable value. Costs are allocated to inventory using the
weighted average cost method.
In millions of US dollars unless otherwise noted
2020 Nutrien Annual Report 127
Overview
Management’s Discussion & Analysis
Three-Year Highlights
Financial Statements
Other Information
NOTE 30 Accounting Policies, Estimates and Judgments Continued
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
business) less the estimated costs of completion and
estimated costs to make the sale
(cid:129) replacement cost
A writedown is recognized if the carrying amount exceeds net
realizable value and may be reversed if the circumstances that
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.
Property, plant and equipment
Measurement
(cid:129) cost, which includes capitalized borrowing
(cid:129) cost less accumulated depreciation and any
Owned
Right-of-use (leased)
Depreciation
method
costs, less accumulated depreciation and any
accumulated impairment losses
(cid:129) cost of major inspections and overhauls is
capitalized
(cid:129) maintenance and repair expenditures that do
not improve or extend productive life are
expensed in the period incurred
accumulated impairment losses
(cid:129) lease payments are allocated between finance costs,
and a reduction of the liability and discounted using
the interest rate implicit in the lease, if available, or
an incremental borrowing rate, 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
(cid:129) certain property, plant and equipment
(cid:129) straight-line – over the shorter of the asset’s useful
life and the lease term
directly related to our Potash, Nitrogen and
Phosphate segments – units-of-production –
based on the shorter of estimates of reserves
or service lives
(cid:129) pre-stripping costs – units-of-production –
over the ore mined from the mineable
acreage stripped
(cid:129) remaining assets – straight-line
Estimated useful lives, expected patterns of consumption, depreciation method and residual values are
reviewed at least annually.
128 Nutrien Annual Report 2020
In millions of US dollars unless otherwise noted
Overview
Management’s Discussion & Analysis
Three-Year Highlights
Financial Statements
Other Information
NOTE 30 Accounting Policies, Estimates and Judgments Continued
Judgment/
practical
expedients
Owned
Right-of-use (leased)
Determining:
We have chosen to:
(cid:129) costs, including income or expenses derived
from an asset under construction, that are
eligible for capitalization;
(cid:129) include the use of a single discount rate for a
portfolio of leases with reasonably similar
characteristics,
(cid:129) exclude initial direct costs in measuring ROU assets
at the date of initial application,
(cid:129) not separate non-lease components and instead to
account for lease and non-lease components as a
single arrangement, and
(cid:129) use exemptions for short-term and low value leases
which allow payments to be expensed as incurred.
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.
(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.
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.
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.
In millions of US dollars unless otherwise noted
2020 Nutrien Annual Report 129
Overview
Management’s Discussion & Analysis
Three-Year Highlights
Financial Statements
Other Information
NOTE 30 Accounting Policies, Estimates and Judgments Continued
Goodwill and Other intangible assets
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. Goodwill is allocated to a
CGU or group 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 the
CGU or group of CGUs expected to benefit from the business
combination in which the goodwill arose.
Other intangible assets are generally measured at cost less
accumulated amortization and any accumulated impairment
Impairment of long-lived assets
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 to be held and used (including property, plant
and equipment, and investments), and our goodwill and other
intangible assets. When such indicators exist, impairment testing is
performed. Regardless, goodwill is tested at least annually (in the
fourth quarter).
We review at each reporting period for possible reversal of the
impairment for non-financial assets, other than goodwill.
Equity-Accounted Investments
losses. We use judgment to determine which expenditures are
eligible for capitalization as intangible assets. Costs incurred
internally from researching and developing a product are
expensed as incurred until technological feasibility is
established, at which time, the costs are capitalized until the
product is available for its intended use. Judgment is required
in determining when technological feasibility of a product is
established. Intangible assets with finite lives are amortized
on a straight-line basis over their estimated useful lives. At
least annually, the useful lives are reviewed and adjusted
if appropriate.
Estimates and judgment involves:
(cid:129) identifying the appropriate asset, group of assets 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 or a reversal of
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.
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.
Pension and Other Post-Retirement Benefits
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 (a) when a plan amendment or curtailment occurs; or (b)
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.
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.
130 Nutrien Annual Report 2020
In millions of US dollars unless otherwise noted
Overview
Management’s Discussion & Analysis
Three-Year Highlights
Financial Statements
Other Information
NOTE 30 Accounting Policies, Estimates and Judgments Continued
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
(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.
Asset Retirement Obligations and Accrued Environmental Costs
Provisions are:
(cid:129) decommissioning of underground and surface operating
(cid:129) measured at the present value of the cash flows expected to
facilities;
be required to settle the obligation; and
(cid:129) general cleanup activities aimed at returning the areas to an
(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 amount that would be recognized if the liability
becomes probable.
Asset retirement obligations and accrued environmental
costs include:
(cid:129) reclamation and restoration costs at our potash and
phosphate mining operations, including management of
materials generated by mining and mineral processing, such
as various mine tailings and gypsum;
(cid:129) land reclamation and revegetation programs;
Business Combinations
(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. Foreign exchange hedge
gains or losses which we designated a cash flow hedge are
included in the consideration.
(cid:129) Identifiable assets acquired and liabilities assumed are
generally measured at fair value.
environmentally acceptable condition; and
(cid:129) post-closure care and maintenance.
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.
(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) For each business combination, we elect to measure the
non-controlling interest in the acquired entity either at
fair value or at the proportionate share of the acquiree’s
identifiable net assets.
In millions of US dollars unless otherwise noted
2020 Nutrien Annual Report 131
Overview
Management’s Discussion & Analysis
Three-Year Highlights
Financial Statements
Other Information
NOTE 30 Accounting Policies, Estimates and Judgments Continued
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. 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.
Transaction costs are recorded in acquisition and integration
related costs in other (income) expenses.
Standards, Amendments and Interpretations Effective and Applied
The IASB and IFRS Interpretations Committee (“IFRIC”) have
issued certain standards and amendments or interpretations to
existing standards that were effective, and we have applied.
(cid:129) Conceptual Framework for Financial Reporting
(cid:129) Amendments to IAS 1 and IAS 8, Definition of Material
We have adopted the following amended standards and
interpretations with no material impact on our consolidated
financial statements:
(cid:129) Amendments to IFRS 3, “Business Combinations”, Definition
of a business
(cid:129) Interest Rate Benchmark Reform – Phase 1 – Amendments to
IFRS 9, IAS 39 and IFRS 7
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, 2020. The
following amended standards and interpretations are being
reviewed to determine the potential impact on our consolidated
financial statements:
(cid:129) Amendments to IAS 1, Classification of liabilities as current or
non-current
(cid:129) Amendment to IAS 16, “Property, plant and equipment”
(cid:129) Amendment to IAS 37, Onerous contracts
(cid:129) Annual improvements 2018 – 2020
(cid:129) Interest Rate Benchmark Reform – Phase 2 – Amendments to
IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16
(cid:129) IFRS 17, “Insurance contracts”
132 Nutrien Annual Report 2020
In millions of US dollars unless otherwise noted
Overview
Management’s Discussion & Analysis
Three-Year Highlights
Financial Statements
Other Information
TERMS & DEFINITIONS
Terms
AECO
Argus
Bloomberg
CDP Climate
CRU
ESG
FTSE Russell
ISS Quality Scores
Moody’s
MSCI ESG Rating
NYMEX
NYSE
S&P/S&P Global CSA
Sustainalytics ESG Risk
TSX
USDA
CAD
USD
AUD
Scientific Terms
Potash
Nitrogen
Phosphate
Product Measures
K2O tonne
N tonne
P2O5 tonne
Product tonne
Alberta Energy Company, Canada
Argus Media group, UK
Bloomberg Finance L.P., USA
CDP Worldwide, England
CRU International limited, UK
Environmental, social and governance
FTSE International Limited, England
Institutional Shareholder Services Inc., USA
Moody’s Corporation (NYSE: MCO), USA
MSCI Inc., USA
New York Mercantile Exchange, USA
New York Stock Exchange, USA
S&P Global Inc., USA
Sustainalytics, a Morningstar, Inc. company, Netherlands
Toronto Stock Exchange, Canada
United States Department of Agriculture, USA
Canadian dollar
United States dollar
Australian dollar
KCI
NH3
UAN
CO2e
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)
carbon dioxide equivalent
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)
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
Standard measure of the weights of all types of potash, nitrogen and
phosphate products
2020 Nutrien Annual Report 133
Overview
Management’s Discussion & Analysis
Three-Year Highlights
Financial Statements
Other Information
Definitions
Blue/low carbon ammonia
Brownfield
Capital deployment
Community investment
Compound Annual Growth Rate
Environmental Incidents
Total Employee Turnover Rate
Greenfield capacity
Latin America
Lost-Time Injury Frequency
Merger
Mmt
North America
Offshore
Taxes and royalties
Total Recordable Injury Frequency
Total Shareholder Return
Voluntary Employee Turnover
Ammonia produced primarily utilizing carbon capture utilization & storage (“CCUS”) or
other low-emission production technologies to significantly reduce the carbon intensity
of resultant production.
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 voluntary and
involuntary terminations, including retirements and deaths, as a percentage of average
permanent employees for the year.
New operation built on an undeveloped site.
South America, Central America, Caribbean and Mexico.
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.
Million metric tonnes
Canada and the US.
All markets except Canada and the US.
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 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.
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.
The number of permanent employees who left the Company due to voluntary
terminations as a percentage of average permanent employees for the year. Includes
voluntary retirements and resignations.
Working capital ratio
Current assets divided by current liabilities.
134 Nutrien Annual Report 2020
Overview
Managementʼs Discussion & Analysis
Three-Year Highlights
Financial Statements
Other Information
BOARD OF DIRECTORS
Mayo Schmidt
Christopher Burley
Maura Clark
Russell Girling
Miranda Hubbs
Alice Laberge
Consuelo Madere
Charles (Chuck) Magro
Keith Martell
Aaron Regent
Nelson Luiz Costa Silva
SENIOR MANAGEMENT
Charles (Chuck) Magro
President and Chief
Executive Officer
Pedro Farah
Executive Vice
President and Chief
Financial Officer
Michael J. Frank
Executive Vice
President and CEO
of Retail
Ken Seitz
Executive Vice
President and CEO
of Potash
Raef Sully
Executive Vice President
and CEO of Nitrogen and
Phosphate
Noralee Bradley
Executive Vice
President and Chief
Legal Officer
Mark Thompson
Executive Vice
President and Chief
Corporate Development
and Strategy Officer
Brent Poohkay
Executive Vice
President and Chief
Information Officer
Michael Webb
Executive Vice
President and Chief
Human Resources and
Administrative Officer
135
Nutrien Annual Report2020 Overview
Managementʼs Discussion & Analysis
Three-Year Highlights
Financial Statements
Other Information
SHAREHOLDER INFORMATION
DIVIDENDS
Dividend amounts paid to shareholders resident 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, Computershare Investor Services Inc.
OWNERSHIP
On February 18, 2021,
there were 583 holders of
record of the Company’s
common shares.
COMMON SHARE PRICES
The Company’s common shares
are traded on the Toronto Stock
Exchange and the New York Stock
Exchange. Nutrien is included in
the S&P/TSX 60 and the S&P/TSX
Composite indices.
It also has corporate offices at:
13131 Lake Fraser Drive SE
Calgary, Alberta
Canada T2J 7E8
5296 Harvest Lake Drive
Loveland, Colorado
US 80538
OFFICES
Nutrien’s registered head office is:
Suite 500, 122 – 1st Avenue South
Saskatoon, Saskatchewan
Canada S7K 7G3
Investor Relations
Investor Relations Department
Email
investors@nutrien.com
Phone
(403) 225-7451
NYSE CORPORATE GOVERNANCE
The certifications required by Section 302 of the
Sarbanes-Oxley Act of 2002 are filed as exhibits to our
2020 Annual Report on Form 40-F.
TRANSFER AGENT
You can contact Computershare Investor Services Inc.,
the Company’s transfer agent, as follows:
Phone
1-800-564-6253
(toll-free within Canada and the US)
1-514-982-7555
(from any country other than Canada and the US)
By Fax
1-888-453-0330
(all countries)
By Mail
Computershare
100 University Ave,
8th Floor, North Tower
Toronto, ON M5J 2Y1
Internet
Access your registered account on the Investor
Centre website:
www.investorcentre.com
136
Nutrien Annual Report2020
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