Nutrien sees strong buyer interest for South American farm stores, CEO says
FILE PHOTO: The Nutrien Redwater Fertilizer plant near Fort Saskatchewan, Alberta, Canada, October 7, 2021. REUTERS/Todd Korol/File Photo
By Rod Nickel
(Reuters) – Canadian fertilizer producer Nutrien is seeing strong interest from prospective buyers in its retail assets in Argentina, Chile and Uruguay, CEO Ken Seitz said in an interview on Thursday.
The company prefers to sell the assets, which supply fertilizer and other products to farmers, as a package, he said.
WHY IT’S IMPORTANT
Nutrien wants to improve its earnings’ stability and Argentina’s currency controls make operating in the country complicated.
Since 2019, Argentina’s peso has been kept artificially strong by strict capital controls that create a wide gap between the official exchange rate and parallel rates.
KEY QUOTES
“It’s a challenging environment because of the currency controls for foreign investors. But if you’re domestic and are interested in agricultural retail, it’s a different story because you can keep the pesos in (Argentina),” Seitz said.
“If we want to repatriate those dollars, there is a significant haircut. (Argentina) is not a big enough component of our overall earnings stream to have that kind of headache and all of that also consumes a lot of management time. We have better opportunities to focus on in our core geographies.”
CONTEXT
Nutrien’s decision to sell the assets comes as its nearby Brazil operations struggle with management turnover.
Fertilizer companies have faced volatility since Russia’s invasion of Ukraine sent prices skyrocketing in 2022 only to collapse the following year as farmers held off on purchases and supplies stabilized.
BY THE NUMBERS
Argentina, Chile and Uruguay account for 3% of Nutrien’s global retail sales, Chief Financial Officer Pedro Farah said on a quarterly call.
WHAT’S NEXT
The company is running a typical sales process, Seitz said, with a data room for prospective buyers that sign non-disclosure agreements. He declined to say what price Nutrien is seeking.
Nutrien has no timeline for completing the sale, Farah said.
(Editing by Aurora Ellis)