PotashCorp Q1 net profit up 46% as market demand recovers

29 April 2010 12:45  [Source: ICIS news]

LONDON (ICIS news)--Potash Corporation of Saskatchewan (PotashCorp) has recorded a 46% increase in first-quarter net income as fertilizer demand recovered from last year’s unprecedented decline and buyers returned to the market, the Canadian company said on Thursday.

PotashCorp said first-quarter earnings rose to $449.2m (€341.4m) - the second highest first-quarter result in its history – from $307.4m earned in the same period last year.

Potash, the company's core nutrient, generated 72% of a first-quarter gross margin of $715.1m, more than triple the $228.1m recorded in last year’s first quarter, it said.

Earnings before interest, taxes, depreciation and amortisation (EBITDA) more than doubled to $763.2m from $290.9m in the same quarter last year, the company added.

“With soil nutrient shortfalls created by nearly 18 months of substantially reduced fertilizer consumption, farmers began to resume the … fertilization practices essential to sustain crop production,” the company’s president and CEO, Bill Doyle, said.

During the first quarter, North American potash producers shipped more than four times the total volumes shipped to domestic customers in the same period last year, PotashCorp said.

Offshore shipments from North American producers also improved significantly as buyers purchased nearly triple the total of last year’s first quarter, it added.

The company said rising demand would require more of all three nutrients it supplied, and potash held the greatest potential in the years to come.

“We estimate our 2010 potash segment gross margin will be within the range of $1.5-1.8bn and total sales between $7.4-8.0m tonnes,” PotashCorp said.

“With operational capability of 11.2m tonnes in 2010, we will continue to follow our strategy of matching supply to market demand, and expect to initiate production curtailments for inventory control purposes over the course of the year,” it added.

In phosphate and nitrogen, the company now expects to generate a combined gross margin of $500-700m in 2010.

Overall, PotashCorp now sees 2010 net income per share in the range of $4.50-5.25 per diluted share, including $1.00-1.30 in the second quarter, it said.

“We believe the higher demand we are seeing today is a precursor to a longer-term rebound as farmers strive to catch up on applications missed in 2009 and work to meet the increasing need for food production in the years ahead,” said Doyle.

($1 = €0.76)

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By: Elaine Mills
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