Nutrien Ltd., the world’s largest producer of potassium fertilizers, is considering divestment in South America, replace senior management officials and stop a wave of acquisitions in Brazil after registering heavy losses in the region, according to sources with direct knowledge of the matter.
Nutrien separated Brazil from the rest of its Latin American operations this year as it considers sale of assets in Argentina, Chile and Uruguaymaintained two sources.
From April 2023, at least eight senior executives or managers were fired or resigned from the company, including the entire Brazil supply management team, and the former CEO and CFO of Latin Americaaccording to three sources, who spoke on condition of anonymity because details of the changes have not been publicly announced.
Don’t get lost in Pulse
Nutrien’s problems in South America come as fertilizer companies face volatile prices globally since the Russian invasion of Ukraine in 2022 caused them to skyrocket before collapsing the following year.
The situation also shows the challenges of entering the agricultural retail market in Brazil, the world’s leading exporter of many agricultural products, where Nutrien introduced a unique business model.
Last year, Nutrien recognized a impairment of US$465 million related to its acquisitions in South America. This, according to Morningstar analyst Seth Goldstein, was due to the lower value of its fertilizer inventory.
“As a new business, structural and leadership changes are part of the growth path,” Nutrien said in a statement to Reuters, although the company declined to comment on the details of its plans, including possible divestitures or personnel changes.
Nutrien began expanding in Brazil shortly after its formation in 2018 through the merger of Potash Corp of Saskatchewan and Agrium Inc, who had a small fertilizer manufacturer in the state of Sao Paulo.
Nutrien planned increase agricultural retail sales by up to 30% in central and southern Brazil, mainly through the purchase of existing distributors. Rivals such as Mosaic and Yara had avoided direct sales to farmers in Brazil, a hugely fragmented market.
Andre Dias, who joined in 2019 as CEO of Brazil and was later promoted to CEO of Latam, announced about eight acquisitions in about three years, according to company disclosures.
Under his leadership, Nutrien sold fertilizers and other agricultural inputs in what it called experience centers, often in urban areas. He also decided to centralize stocks to reduce working capital requirements.
But Nutrien retailers could not deliver orders on time due to software integration issues and difficulties managing supplies of agricultural inputs, two sources said.
That alienated the farmers. The departure of employees from the retailers that Nutrien bought also caused the loss of relationships with local farmers, according to one of the sources and Marcelo Mello, director of fertilizers at Stonex.
As of 2022, Nutrien operated in 13 Brazilian states.
At the same time as the company was absorbing purchases from Brazil, Nutrien and other importers in the country bought fertilizers because they feared a supply shortage following the threat of Western sanctions on Russia and Belarus in 2022, three sources said.
Chinese restrictions on exports to secure nutrients for its own crops compounded supply fears.
In 2023, Nutrien’s gross margins suffered from selling high-cost inventories at a loss in South America. Last year, global sales of Nutrien fell 23% to US$29 billionwhile net profits They sank 83% to US$1.28 billion.
Dias, the CEO of Latin America, left the company in April 2023 and the region’s CFO, Luis Cerresi, departed in December, according to their LinkedIn profiles. Nutrien had named new global CEO, Ken Seitz, in 2022.
Nutrien appointed German Glineur in charge of operations in Argentina, Chile and Uruguay, reporting to general manager for Latin America, Carlos Brito, who also oversees Brazil, the company reported.
Nutrien immediately suspended all acquisitions in Brazil and stopped construction of new fertilizer plants after Dias’ departure, two sources said.
Dias denied that the company was growing too quickly in a statement emailed to Reuters. He said his work should not be judged by the volume of acquisitions, adding that local competitors had made similar moves.
