25 July 2013 12:28 [Source: ICIS news]
LONDON (ICIS)--Potash Corporation of Saskatchewan’s (PotashCorp’s) net income for the second quarter of the year increased by 23% year on year to $643m (€489m), despite a dip in sales compared to the same period in 2012, the Canada-based fertilizer producer said on Thursday.
Sales for the period fell 12% during the period to $2.1bn despite robust demand, as a result of weakening pricing for some products due to strong global competition.
Adjusted earnings before interest, taxes, depreciation and amortisation (EBITDA) were also down at $1.1bn for the quarter compared to $1.4bn during the same period in 2012.
“Global fertilizer demand was strong during the quarter, but highly competitive markets around the world had an impact on our results. Despite some weakening of prices in each of our nutrients, the continued engagement of buyers in our key markets was a positive sign,” said PotashCorp CEO Bill Doyle.
The increase in net income despite falling sales and EBITDA was due in part to a $341m impairment charge recorded in the second quarter of 2012 relating to an investment in China’s Sinofert, and a fall in the company’s income tax bill to $245m in the second quarter of 2013, PotashCorp said.
North American sales remained strong despite erratic weather conditions during the spring planting period, as late-stage demand from farmers helped to buoy numbers for the quarter, but pricing was impacted by weaker demand from the crucial end market of India.
“Global phosphate markets continued to be impacted by the lack of substantive engagement from buyers in India, the world’s largest phosphate importer,” the company noted.
“Although fertilizer dealers managed their supply requirements cautiously in the absence of clear market direction, demand in North America stayed relatively strong and shipments from US producers to Latin American countries were robust,” PotashCorp concluded.
The unpredictable weather and pricing conditions in the first year have led the company to cut its full-year earnings guidance to $2.45-2.70 per share, up from $2.36 per share in 2012, but below earlier forecasts of $2.75-3.25.
“As we have seen throughout our history, the timing of increases in demand and prices is not perfectly predictable, but we are confident that a commitment to running our business responsibly and with patience will be rewarded,” said Doyle.
($1 = €0.76)
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