PotashCorp’s Q4 net income down 45% to $230m

30 January 2014 13:30 Source:ICIS News

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LONDON (ICIS)--Canada’s Potash Corporation of Saskatchewan (PotashCorp) on Thursday reported Q4 net income of $230m, or 26 cents per share, down 45% year on year because of challenging fertilizer market conditions.

Net income was also hit by a $60m charge for severance-related costs associated with workforce reductions announced in December 2013.

Sales for the fourth quarter slipped to $1.54bn from $1.64bn.

"This past quarter [Q4 2013] was a difficult one. Pricing headwinds - most notably in potash - weighed on our performance, although there were signs as the quarter came to a close that the uncertainty in global markets was beginning to abate," said PotashCorp president and CEO Bill Doyle.

“Our focus remained on those things we can influence and we took important steps to enhance our competitive position across all three nutrients and prepare the company to deliver better performance," he concluded.

The company said in the fourth quarter of 2013, following a period of limited purchasing activity, potash demand improved, although increased supply capability combined with relatively constrained demand resulted in continued price erosion through the quarter.

The Saskatoon, Saskatchewan-based company said challenging fertilizer market conditions had impacted its performance in 2013 on the back of lower prices in all three nutrients (potash, nitrogen and phosphate), despite higher sales volumes and improved costs, said PotashCorp.

Net income in 2013 stood at $1.8bn, down 14% from 2012 on the back of challenging market conditions for fertilizers and severance-related payments.#

Sales in 2013 totalled $7.3bn, down 8% compared to 2012.

Diluted earnings per share in 2013 stood at $2.04, compared to $2.37 a year earlier.

Earnings before interest, tax, depreciation and amortisation (EBITDA) stood at $3.3bn, down 9% compared to 2012.

Net sales for all three nutrients the company commercialises fell. Potash suffered the largest fall with net sales in 2013 of $2.71bn, down 12%, while nitrogen net sales fell from $2.25bn in 2012 to $2.17bn in 2013 and phosphate net sales decreased from $2.10 in 2012 to $1.85bn in 2013.

PotashCorp said it expects market to stabilise in 2014, although its earning per share expectations for the full year are below this year's range at $1.40-$1.80.

"While unexpected events and market uncertainty undermined confidence in recent months, we are encouraged by the current trends in global fertilizer markets," said Doyle.

By Jonathan Lopez