Sulfate of potash (SOP) volumes at Compass Minerals soared during the fourth quarter ending Dec. 31, 2010, to 107,000 st compared to the year-ago 41,000 st. The company said the greatest growth came from North American customers.
The increased demand helped the average SOP selling price move to $530/st for the quarter, up from the third quarter’s $506/st average. In addition, the company launched three price increases in November and December totaling $80/st. By comparison, the average selling price for fourth quarter 2009 was $640/st.
Operating income from the company’s specialty fertilizer segment was up $5 million to $17.9 million on sales of $56.6 million for the quarter, versus the year-ago $12.6 million on sales of $26.3 million. The increased sales volumes were partially offset by lower prices and delays in new equipment installation associated with the Phase I expansion of the company’s SOP plant.
Full-year SOP volumes more than doubled at 362,000 st from the year-ago 153,000 st. Average prices were off over $300/st, to $518/st from $828/st.
Full-year SOP operating earnings were down to $61.4 million on sales of $187.5 million from the year-ago $76 million on sales of $126.8 million.
Despite the improving SOP market, overall Compass results for the fourth quarter were pulled down by its salt sector, which has suffered from production problems and higher per-unit costs as well as carryover inventories from the prior year. Compass-wide net income for the fourth quarter was $61.1 million ($1.83 per diluted share) on sales of $356.3 million, compared to the year-ago $62.5 million ($1.88 per diluted share) on sales of $312.2 million. Full-year net income was $150.6 million ($4.51 per share) on sales of $1.07 billion, versus the prior year’s $163.9 million ($4.92 per share) on sales of $963.1 million.
Going forward, Compass expects SOP pricing to improve and remain attractive in 2011, with demand close to pre-recession levels. It said the recent acquisition of Big Quill’s SOP assets will broaden and strengthen the business. Compass said operating margins will be pressured through the first quarter of 2011 as a result of the per-unit cost increases from carryover inventory caused by 2010 delays of Phase I at the Ogden, Utah, facility.
Compass expects improvement in its salt business as the year progresses as the company returns to more normal production levels. First-quarter salt prices are expected to be even with those of a year ago. Despite the number of snowfall events this year, Compass noted that it does not have a significant presence in East Coast salt markets, where the winter weather has been particularly severe.