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Potash Corp. of Saskatchewan Inc. has slashed its dividend for the first time in the company’s history, highlighting the tension between generous shareholder payouts and dismal commodity prices across the resource sector.
Jochen Tilk, chief executive of the Saskatoon-based company, said in an interview that the board carefully researched alternatives before deciding on the cut, the first since the company’s initial public offering in 1989.
He said the goal was to arrive at a sustainable payout that would also protect the business’s strong balance sheet. The board ultimately decided to chop the annual dividend by 34 per cent, to $1 (U.S.) a year from $1.52.
“We took a cautious and conservative approach in the current market environment … and balanced that with our confidence in the business,” he said.
The cut marks a major shift in Potash Corp.’s attitude. Back in 2013, former chief executive Bill Doyle famously declared that the company’s dividend was “sacrosanct” after slashing hundreds of jobs in the miner’s home province. His defence of the dividend drew a withering response from Saskatchewan Premier Brad Wall.
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