NEWS RELEASE: Q3: PotashCorp Reports 2015 Third-Quarter Earnings of $0.34 per Share (October 29, 2015)

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Key Highlights

  • Third-quarter earnings of $0.34 per share1, including $0.03 per share related to notable non-cash charges, primarily in phosphate
  • Annual earnings guidance adjusted to $1.55 – $1.65 per share
  • Preparing for closure of Penobsquis mine and inventory shutdowns at Cory, Allan and Lanigan

CEO Commentary

“Broader emerging market concerns have weighed on customer sentiment, contributing to a weaker fertilizer environment in the second half of 2015,” said PotashCorp President and Chief Executive Officer Jochen Tilk. “In response, we are moving forward the permanent closure date of our Penobsquis, New Brunswick mine and planning inventory shutdowns in December at three of our Saskatchewan mines. While we anticipate production in the fourth quarter to be reduced by nearly 500,000 tonnes, we do not expect employee layoffs.”

“Despite challenges over recent months, we are seeing signs of a shift in focus by distributors and farmers to 2016,” Tilk said. “We believe the need for increased global agricultural production – coupled with supportive crop prices – provides a compelling opportunity for farmers.”

Saskatoon, Saskatchewan – Potash Corporation of Saskatchewan Inc. (PotashCorp) reported third-quarter earnings of $0.34 per share ($282 million), bringing the nine-month total to $1.28 per share ($1.1 billion). Earnings for both the quarter and the first nine months modestly trailed 2014’s comparable period amounts of $0.38 per share ($317 million) and $1.33 per share ($1.1 billion), respectively.

Gross margin for the quarter totaled $505 million, below the $589 million generated during the third quarter of 2014, primarily due to weaker nitrogen contributions. For the first nine months, improved potash and phosphate contributions largely offset weaker nitrogen performance, as gross margin totaled $1.9 billion, relatively flat compared to the same period in 2014.

Cash from operating activities of $358 million in the third quarter and $1.7 billion for the first nine months of 2015 were below last year’s comparable totals of $574 million and $1.9 billion, respectively. Earnings before finance costs, income taxes, and depreciation and amortization (EBITDA)2 of $593 million for the quarter and $2.1 billion for the first nine months were also below 2014’s comparative figures.

Investments in Arab Potash Company (APC) in Jordan, Israel Chemicals Ltd. (ICL) in Israel and Sociedad Quimica y Minera de Chile S.A. (SQM) in Chile contributed $37 million to our quarterly earnings, exceeding the $24 million earned in third-quarter 2014. Our nine-month total of $134 million, which included a dividend from Sinofert Holdings Limited (Sinofert) in China, was down from last year’s total of $179 million when we received a $69 million special dividend from ICL. The market value of our investments in these four publicly traded companies equated to approximately $4 billion, or $5 per PotashCorp share, at market close on October 28, 2015.

Market Conditions

Global potash demand remained strong during the quarter as higher volumes to Brazil, India and China helped offset slower purchasing in other markets. With many buyers moving cautiously amidst economic headwinds and significant currency volatility, prices declined in most key potash markets.

In nitrogen, prices for nearly all products were lower compared to third-quarter 2014 as market fundamentals weakened. Rising global supply due in part to lower energy prices – combined with weaker shipments to Latin America – largely overshadowed strong demand from India compared to 2014.

In phosphate, markets for solid fertilizer remained relatively stable. Increased Chinese exports and weaker demand in Latin America more than offset stronger Indian demand and resulted in relatively flat pricing. Other phosphate products were supported by strong demand in North America and India, driving prices for liquid fertilizers, feed and industrial products above those of 2014’s third quarter.

Potash

Potash gross margin of $294 million for 2015’s third quarter was relatively flat compared to the same period last year. This result raised our total for the first nine months to $1.1 billion, 15 percent higher than the comparable period of 2014, primarily due to slightly higher realized prices and lower costs.

Shipments for the quarter reached 2.2 million tonnes, increasing the total for the first nine months of 2015 to 7.0 million tonnes driven largely by offshore demand. Sales volumes for both the quarter and the full year surpassed the results for the comparable periods in 2014. Offshore shipments reached 1.5 million tonnes in the third quarter, with the majority of Canpotex’s3 volumes to Latin America (40 percent) and Other Asian markets (29 percent), while India and China accounted for 15 percent and 11 percent, respectively. North American sales totaled 0.7 million tonnes.

Our average realized potash price of $250 per tonne in the third quarter was down from $281 per tonne in the same period last year due to declining prices in North America and a higher percentage of sales volumes to lower-netback offshore markets.

Cost of goods sold of $113 per tonne in the third quarter was 14 percent lower than the same period last year due to the favorable impact of a weakened Canadian dollar and the deferral of annual maintenance at certain locations to the fourth quarter of 2015.

For the rest of this news release, click here: http://www.potashcorp.com/news/webcast/2076/

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