Enhancing Quality of Earnings
Q: How are you enhancing earnings quality, and is selling non-core assets part of this?
A: Management focuses on sustainable earnings by improving reliability in nitrogen operations and investing in potash mine automation to reduce costs, achieving a competitive cash cost of production at $56 per tonne in the first quarter [3]. The sale of non-core assets in Argentina, representing 3% of retail sales and 2% of retail EBITDA, aligns with enhancing earnings quality and improving cash conversion amid macroeconomic challenges [3].

Potash Demand in China
Q: What's driving potash demand growth in China?
A: The primary driver is China's focus on food security [1]. Increased demand for potash is due to its benefits for yields, plant health, and disease resistance. There's been a 7% growth in Chinese urea consumption in 2023 and strong demand across all nutrients to boost crop production, moving back towards the historical trend of nutrient demand growth [1].

Global Potash Volume Growth
Q: Will potash volume growth continue, and how are FSU competitors affecting this?
A: Management expects balanced global potash markets in 2024, with shipments unchanged at 68–71 million tonnes [2]. Supply growth of 2 million tonnes is anticipated, with about 50% coming from the FSU [2]. While FSU volumes are returning, they face higher costs to serve, such as an additional $40 per tonne due to delayed ports, leading to a higher global cost structure [2].

Potash Shipments and Inventories
Q: How will potash shipments progress, and will inventories end low?
A: The company maintains guidance with a midpoint of 13.4 million tonnes, including some strike risk [3]. Management expects a balanced first and second half, with North American inventories likely to end very low, setting up healthy second-half demand [3].

Nitrogen Market Dynamics
Q: How is the nitrogen market shaping up amid price movements and import reductions?
A: Early strong spring ammonia applications and production outages led to tight ammonia supply and stable prices [7]. Urea prices have seen normal seasonality, with inland pricing holding at premium levels due to tighter supply-demand balances in regions where the company operates [7].

Operational Improvements and Costs
Q: What progress on operational improvements and impact on potash and nitrogen costs?
A: Reliability enhancements in nitrogen assets, particularly at Borger and Trinidad, have led to a 10% increase in gas utilization at Trinidad [6]. Debottlenecks completed in late 2023 are adding over 1 million tonnes in capacity over the next years [6]. In potash, mine automation increased ore cut by automation by 40% last year, improving costs and productivity [6].

Retail EBITDA Growth Drivers
Q: What are the key levers for retail EBITDA growth?
A: The focus is on organic growth by increasing customer share of wallet and expanding proprietary products like Loveland, which saw margins up 8% globally and over 14% in the U.S. [5]. There's also opportunity in growing the seed portfolio and rationalizing the network for efficiency [5].

Crop Protection Pricing Outlook
Q: What are your assumptions for crop protection volumes and pricing?
A: Crop protection margins are recovering, globally up about 300 basis points quarter over quarter, despite revenues down 4% due to lower-priced glyphosate and glufosinate [9]. A recovery in margins is expected as industry inventory levels normalize, with stable potash pricing anticipated [9].

Regional Retail Performance
Q: How are regional retail performances and any concerns on U.S. farmer profitability?
A: North America performed strongly, with EBITDA up $100 million year over year, despite minimal activity in Canada [8]. Australia was consistent, while recovery in Brazil is slower, expected towards the second half of the year or early 2025 [8]. U.S. farmers have strong balance sheets, with recent strengthening in corn and soybean prices [8].

Export Logistics Reliability
Q: How resilient are your export logistics amidst potential strikes?
A: The company is confident in its extensive and competitive network, with access to multiple terminals, including Neptune in Vancouver, Thunder Bay, and an outlet in St. John, New Brunswick [10]. They maintain guidance, including potential disruptions, due to their network's resilience [10].

Potash Contracts with China and India
Q: Will lower contract prices with China and India be disappointing?
A: While reliance on these contracts has reduced, they remain indicators for standard grade markets [11]. Management expects India to conclude contracts first, with potential price reductions stimulating demand through lower retail prices [11]. Strong shipments to China continue, indicating a step change in consumption and demand [11].