Nurien Strategy Memo

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Pennsylvania State University *

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Apr 3, 2024

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Strategy Recommendation Full memo Nutrien Ltd (NTR) Date: 4/3 Author: BACKGROUND & MARKET POSITION Nutrien Ltd (NTR) is a chemical manufacturing and fertilizer company using potash, nitrogen, and phosphate products for agricultural, industrial and feed customers. The Nutrien brand was founded recently, in 2018, after a merger between the biggest Potash producing company “PotashCorp '' and “Agrium ''. Although the brand is new, the operations of the company, through the Agrium side, have been in business since 1859 when they were branded Crop Production Services. The business was founded and currently headquartered in Saskatoon, Canada and has generated about $27.7 Bn in revenue. Ken Sietz is the current President and CEO of Nutrien since 1/4/22 after serving as the interim position for around a year. Nutrien’s mission is “Growing the world, from the ground up” which is reinforced by the executive governance and values of: Integrity, Accountability, Respect. Nutrien operates in 4 reported business segments which are Ag Solutions (Retail), Potash, Nitrogen, and Phosphate. Retail segment is their largest division which contributes to about 64% of their sales followed by Potash, then Nitrogen and finally Phosphate which generated about 15%, 14%, and 7% of sales respectively. Products vary per segment but remain relatively similar, some popular products examples are: PotashCorp Products: Feed - Ammonium Polyphosphate (POLY11), Defluorinated Phosphoric Acid Amber — Feed Grade 54% P205. Fertilizer : Ammonium Nitrate Solution 19-0-0, Ammonium Polyphosphate 11-37-0 (POLY 11). Industrial : Aqua Ammonia — Commercial Grade 19%. Metal Finishing : DAB85X (extra fume suppressant) . Purified Acid: Phosphoric Acid - Food Grade (50%). Recent acquisitions have been made to improve Nutrien’s international business and expanding retail locations, like: Ruralco Holdings in exchange for A$3.56 in cash for each Potash Corp Share (2019). Brazilian Agri-retailers Tec Agro and Agrosoema Comercial Agricola (2020). 14 retail acquisitions in 2021 INTERNAL ANALYSIS STRENGTHS ● Largest Potash Market Share. Nutrien has the largest market share of Potash production with 20% control over the market. Since their mines are located in Canada, and Canadian mines sit lower on the cost curve it gives them lower average cost per unit than other competitors giving them more protection against aggressive price-cutting by

industry peers with higher production costs per unit. Also, having lower production costs grants higher margins for the company to generate more profits. ● Digital Retail Investments. Nutrien has made investment in digital retail offering and applications that allows farmers to plan their crop productions. These applications included features like: field planning, digital agronomy, carbon credit management, and the ability to purchase supplies. Expanding business to digital platforms gives consumers another vehicle to purchase their products, ultimately will increase the likelihood farmers continue to purchase Nutrien products, especially when the tendicadies to use other apps is low. WEAKNESSES ● Leadership Change. Transitioning leadership after a new business forms is problematic in instilling strong core competencies and values among the business. The resignation of the former CEO, may be concerning for the rest of the business, and the new leadership may come with new strategic changes for the company which may hurt employee engagement. ● Natural Gas Price Dependence. Nutrien’s fertilizer production is heavily reliant on the price of natural gasses. It is evident, especially in recent years, how prone natural gas prices are to fluctuation, mostly when supply and demand don’t align. EXTERNAL ANALYSIS OPPORTUNITIES ● Increase Global Crop Yields. Global crop yields are expected to grow 50% by 2050 to satisfy the increase of global meat demand. Nutrien has the opportunity to capitalize on the global market now by adopting new technologies such as genetically modified seeds and chemical fertilizers, that will increase production. ● Expand Retail Store Base. Although Nutrien is the largest agricultural retailer in North America and Australia there is always opportunities to expand more. Nutrien has the opportunity to utilize an acquisition strategy that will grow the store base and ultimately grant them more bargaining power with suppliers. THREATS ● Natural Gas Prices amid Russia/Ukraine War. In recent news, amid the Russia and Ukraine War, the energy market is in jeopardy due to sanctions on Russia and COVID-19 restrictions that have made natural gas prices higher than ever. These prices are hurting the fertilizer production within Nutrien because it closes the average cost per unit, ultimately hurting their overall profits in this respected division. ● Labor Strikes. Mining operations could be stopped at any moment because of ESG risks of the company's carbon and other emissions, effluents, and waste. If strikes occur

again it will hurt the company's production of products, and pause profits for as long as the strike occurs. SWOT KEY ISSUES AND IMPLICATIONS One of the biggest problems facing Nutrien is their dependence on the price of natural gas and how it affects their profit margins. We have seen some decline ever since the increase of natural gasses, so Nutrien must strive in other divisions to ensure its safety within the market, which they have done. Their retail business contributes to 64% of their profits and their potash division has the highest market share in the industry. To ensure their safety even more they must take the opportunity to acquire new companies and expand internationally. SUSTAINABLE COMPETITIVE ADVANTAGE (SCA) Nutiren’s competitive advantage in the marketplace is their cost advantage over their industry peers. They have obtained this advantage by strategically positioning their mining operations in Canada, which sit on the low end of the global cost curve due to favorable geological conditions. To sustain this competitive advantage they must continue to invest in low-cost potash mines and asset optimization analyses. PROPOSED SMART GOALS ● Global Yield Expansion. Nutrien needs to engage in genetically modified seed production by 2030, as global crop yields will need to increase 50% to keep up with global demand. An increase of demand from emerging-market farmers will create consistent volume growth, and as Asian government starts to approve the planting of these seeds it would be ideal for them to enter the emerging-market early, so they can be properly positioned. ● Acquire Digital Company. As field management is becoming a new practice among many farmers, it would be smart for Nutrien to acquire a digital company that can produce an application granting farmers a highly complex field management ability while also creating an avenue for them to purchase Nutrien products. By 2025 the app should include features like: field planning, digital agronomy, carbon credit management, and the ability to purchase supplies. PROPOSED CORPORATE LEVEL STRATEGIES To maintain a growth strategy Nutrien needs to improve in (3) categories. (1) Product Development. Improving products will keep customer satisfaction and improve brand equity and recognition. (2) Acquisition Strategy. Recent acquisition of a Brazilian Agro-retail company is strategic in expanding internationally and increasing overall yields. (3) Digital Investment. As the digital era begins, being ahead of the curve puts Nutrien above its competitors in this category. Proposed - Global Yield Expansion. Gaining more operations in forgein countries while also getting into emerging-markets to increase yields will contribute to the growth strategy mentioned above.

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Proposed - Acquire Digital Companies. Exploring acquisitions of digital companies will help create a new business segment that will also help expand other categories, this is a part of an acquisition strategy that the company has been utilizing. PROPOSED BUSINESS LEVEL COMPETITIVE & FUNCTIONAL STRATEGIES NTR utilizes a cost leadership strategy to sustain its competitive advantage among their industry peers. This strategy is successful because of the geological advantage their mines are positioned in, giving them lower cost per unit and an overall cost leadership. Nutrien can use extra margin profits from their cost leaderships to take the opportunities to increase product development and invest in new companies. RECOMMENDED MILESTONES AND MEASURES OF IMPACT From proposed initiatives Global Yield Expansion. Can be measured by overall yield production in the new emerging-market, and can be compared to already developed markets. - Is it keeping up with a 50% demand increase for global consumers? Acquire Digital Company. Can be measured by the amount of farmers utilized in the new applications and how many products are sold from those alternative options. KEY MESSAGES ● Acquiring the digital companies is a smart decision when considering the next steps in farming technology. So investing and/or acquiring a digital company would help ensure its competitive advantage and long-term success. KEY SOURCES "Nutrien". Nutrien , 2022, https://www.nutrien.com/ . "Nurien Ltd". Www-Mergentonline-Com.Ezaccess.Libraries.Psu.Edu , 2022, https://www-mergentonline-com.ezaccess.libraries.psu.edu/companydetail.php?pagetype=synopsis &compnumber=144981 . "Nutrien Ltd". Ar-Morningstar-Com.Ezaccess.Libraries.Psu.Edu , 2022, https://ar-morningstar-com.ezaccess.libraries.psu.edu/mirc/equity/sal.aspx?s=200200F07D#Morning star_Report.

Nurien Strategy Memo

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