Agribusiness · Fertilisers
Mid-Cycle Earnings for Fertilisers
Why LTM EBITDA fails at spot extremes, Nutrien's $7.0-7.5bn mid-cycle scenario, and how to rebuild fertiliser EBITDA at mid-cycle nutrient prices and gas.
Selborne Research · Fertilisers coverage: 7 guides, 6 company profiles, a primer and Excel model
Educational analysis for professional use. This guide is not investment advice or a recommendation to buy or sell any security, and it is not personalised.
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Last Year’s EBITDA Is the Wrong Base
Value a fertiliser producer on what it earns at normal prices. Its revenue follows three world prices: urea (nitrogen), potash, and DAP (diammonium phosphate, the main phosphate fertiliser). A nitrogen producer’s costs also follow gas. Last-twelve-months (LTM) EBITDA records where those prices stood. Rebuild EBITDA at long-run nutrient and gas prices instead, which gives mid-cycle EBITDA, and apply EV/EBITDA to that.
After a price spike, LTM EBITDA is inflated and the multiple on it looks low. After the price falls of 2023-2024 the multiple on LTM EBITDA looked high. Neither shows what the business earns across a cycle.
Long-Run Price Assumptions
The Excel model that comes with the primer, and the worked examples in these guides, use four long-run prices set in June 2026. They are teaching assumptions, not forecasts.
| Input | Benchmark | Long-run assumption |
|---|---|---|
| Urea | Middle East, at the export port (FOB) | $480/t |
| Potash (muriate of potash, MOP) | Landed in Brazil (CFR Brazil) | $340/t |
| DAP | US Gulf, at the export port (FOB) | $580/t |
| Natural gas | Henry Hub, the US benchmark | $3.00/MMBtu |
A long-run price should rest on neither a spike nor one year’s average. Against the 2025 averages (World Bank: urea $422.7/t, MOP $347.5/t, DAP $685.2/t), the urea assumption is higher and the DAP assumption lower. In January and February 2026 urea sat below its assumption, at $415-472/t, while potash and DAP ran 7-10% above theirs. Then disruption in the Strait of Hormuz pushed urea to $726/t in March and $857/t in April.
Nutrien’s Published Mid-Cycle Scenario
Nutrien, which makes all three nutrients, published its own mid-cycle scenario at its 2024 Investor Day. At these prices it put 2026 adjusted EBITDA at $7.0-7.5bn, about $1.0-1.5bn more than it earned in FY2025:
| Input | Nutrien’s scenario price |
|---|---|
| Potash | $400/t |
| Urea, New Orleans (NOLA) | $400 per short ton |
| Ammonia, Tampa | $500/t |
| DAP, New Orleans | $515 per short ton |
| Resulting adjusted EBITDA | $7.0-7.5bn |
FY2025 adjusted EBITDA was $6,046M: the segments earned $6,519M (Potash $2,254M, Nitrogen $2,147M, Phosphate $382M, Retail $1,736M), less $473M of corporate and other costs. Nutrien names no place for its $400/t potash price, only a global benchmark, so it cannot be compared directly with the $347.5/t 2025 average landed in Brazil. That matters because potash is Nutrien’s largest segment: its 40-F puts each $25/t change in its potash net selling price at $280M of adjusted EBITDA.
A short ton is 2,000 lb, so Nutrien’s urea and DAP prices are about $441/t and $568/t, below the model’s $480/t and $580/t. The places differ too: New Orleans against the Middle East and US Gulf export ports. Use one set of prices in a model.
Building Mid-Cycle EBITDA
- Set nutrient prices to the long-run assumptions above.
- Set gas to Henry Hub at $3.00/MMBtu for US and Canadian nitrogen plants. For European plants, choose a long-run European gas price and state it. For scale, Yara, the Norwegian nitrogen producer, paid $13.2/MMBtu at its European plants in FY2025, one year’s realised cost.
- Apply volumes from the latest filing and note the unit: CF Industries, the US nitrogen producer, reports in short tons; Nutrien and Mosaic in tonnes.
- Subtract a unit cost taken at the same place as the price (cost curve guide). A cost at the mine set against a price in Brazil overstates the margin by the freight.
- Add non-producing segments separately. Nutrien’s Retail arm sold $7.3bn of crop nutrients in FY2025, so its sales move with nutrient prices, but it earns only a distributor’s margin.
Two worked examples from the model follow, both fictional. The nitrogen one takes a shortcut: the model prices both its nitrogen producers off Middle East export urea, the world benchmark. A US plant usually sells at US Gulf (New Orleans) prices, which sit above that by roughly the freight, so the shortcut understates a US producer’s price.
| Example | Build | Mid-cycle margin and EBITDA |
|---|---|---|
| Nitrogen producer on US gas | 5.0M t of urea capacity run at 90%; cash cost $285/t (gas at 20 MMBtu a tonne × $3.00 = $60, conversion $35, other cash costs $190); urea $480/t | $195/t; 4.5M t × $195 = $878M |
| Potash producer | 3.0M t of MOP capacity run at 90%; delivered cost $200/t (mine $75, royalties and resource taxes $35, freight to Brazil $90); MOP $340/t CFR Brazil | $140/t; 2.7M t × $140 = $378M |
EV/EBITDA on Mid-Cycle EBITDA
No authoritative source publishes a standard fertiliser multiple, so any multiple applied to mid-cycle EBITDA is the analyst’s assumption and should be stated as one. The model’s four fictional producers use exit multiples of 5.5x to 6.5x: the EV/EBITDA the DCF applies to mid-cycle EBITDA in its final year, to value everything after it. Each reports a DCF value, with the multiple as a check.
The base year matters as much as the multiple. At 6.5x, every $1bn between peak and mid-cycle EBITDA moves enterprise value by $6.5bn.
Leverage on Mid-Cycle EBITDA
Divide net debt by mid-cycle EBITDA. At a price peak the ratio looks safer than it is; at a trough it looks worse. The model calls its fictional producers conservative below 1.0x net debt to mid-cycle EBITDA and stretched above 2.5x; both limits can be edited.
The ratios on the company profiles, such as Mosaic and Nutrien, divide by FY2025 EBITDA on each company’s own definition of net debt. None is a mid-cycle ratio, and they cannot be compared directly.
Where Spot Still Matters
Spot prices still drive the next few quarters’ earnings and covenant headroom, so track them quarterly and value on long-run prices.
Four hypothetical producers, in US nitrogen, European nitrogen, phosphate and potash, valued year by year as nutrient prices recover to mid-cycle, set beside the through-cycle multiple.
- 15 sections, from how a nutrient producer earns to a year-by-year DCF and leverage on mid-cycle EBITDA
- 43 pages
- a US nitrogen producer on Henry Hub gas, a European nitrogen producer, a phosphate producer and a potash miner
- 4 producer engines
- listed nitrogen, phosphate and potash producers on filed FY2025 figures
- 6-company screen
The Excel model is the primer's mid-cycle valuation live across 13 sheets: four producer tabs (US nitrogen on Henry Hub gas, European nitrogen, phosphate and potash), each walking nutrient prices from the starting point back to mid-cycle through a ten-year free-cash-flow schedule with working capital and sustaining capex; a valuation summary setting each DCF beside the multiple cross-check and splitting the gap between them; cycle scenarios, a cost curve with a gas cost curve, a leverage screen on mid-cycle EBITDA and two live sensitivity grids, urea price against the exit multiple and against the gas price. Change the nutrient price, the gas price or the WACC and the value moves.
See what's in the Fertilisers Sector Primer →£25 PDF · £59 with the Excel model · £159 for all three Agribusiness industries
Frequently Asked Questions
- Why is LTM EBITDA misleading for fertiliser stocks?
- Nutrient prices are cyclical. When they sit well above or below long-run levels, last-twelve-months EBITDA overstates or understates what the business earns across a cycle. Rebuild EBITDA at long-run nutrient and gas prices first, then apply EV/EBITDA to that base.
- What is Nutrien's mid-cycle EBITDA scenario?
- Nutrien's 2024 Investor Day set out a 2026 scenario at potash $400/t, New Orleans urea $400 per short ton, Tampa ammonia $500/t and New Orleans DAP $515 per short ton, giving adjusted EBITDA of $7.0-7.5bn. FY2025 adjusted EBITDA was $6,046M. Nutrien names no place for the potash price, only a global benchmark, so it cannot be compared directly with potash's 2025 average of $347.5/t landed in Brazil.
- What EV/EBITDA multiple is applied to mid-cycle EBITDA?
- No authoritative source publishes a standard fertiliser multiple, so the multiple is the analyst's stated assumption. The four fictional producers in the Excel model that comes with the primer use exit multiples of 5.5x to 6.5x (the EV/EBITDA that values the years after the forecast) and report a DCF value, with the multiple as a check. An LTM multiple misleads at both ends of the cycle: at a price peak the EBITDA is too high, at a trough too low.
- How should net debt be read for a fertiliser producer?
- Divide net debt by mid-cycle EBITDA so the ratio does not swing with the cycle. Any threshold is the analyst's own choice. The model calls its fictional producers conservative below 1.0x and stretched above 2.5x, and both limits can be edited.
Read next
Reading the Crop-Nutrient Cycle
How corn and soy margins drive fertiliser application, what the 2026 Hormuz supply shock did to urea, and the lags between grain economics, nutrient prices and producer earnings.
Fertiliser Cost Curves Explained
How nitrogen, phosphate, and potash cost curves are set by gas access, rock integration, and ore grade, with FY2025 disclosed unit costs from Nutrien, Mosaic, and Intrepid Potash.
Mid-Cycle EBITDA for Commodity Chemicals
Why LTM fails at cycle extremes; company frameworks from Dow, Olin, MEOH, LYB; ~6-9x EV/EBITDA on normalised earnings; leverage on mid-cycle EBITDA.
Fertiliser EBITDA per Tonne by Nutrient
FY2025 EBITDA per tonne sold for each nutrient business at Nutrien, CF Industries, Mosaic and ICL, why the tonne and the price basis belong on every figure, and how to rebuild it from price and cost.
See it applied
These company profiles apply the concepts from this guide to real public companies.