Potash Corp. of Saskatchewan Inc. reported second-quarter net income of $417 million ($0.50 per diluted share) on sales of $1.73 billion, down from the year-ago $472 million ($0.56 per share) and $1.89 billion, respectively.
“Our earnings for the quarter hit the midpoint of our guidance range but trailed last year’s total, primarily due to weaker nitrogen prices,” said PotashCorp President and CEO Jochen Tilk. “While we have faced some near-term market headwinds, we are encouraged by the strength of global potash demand, especially in offshore markets. During the first six months of this year, our offshore shipments reached a record total, and we believe these conditions will continue to support further growth of our potash business in the years ahead.”
The company has revised its full-year 2015 earnings guidance to $1.75-$1.95 per share from $1.75-$2.05 per share. It estimates third-quarter EPS at $0.35-$0.45.
PotashCorp noted that its Offshore investments brought in $64 million for the quarter, up from the year-ago $55 million. It has increased expectations for this investment for the year to $190-$200 million from the earlier $180-$200 million due to increased dividends from Israel Chemicals Ltd. in the first half.
While PotashCorp is keeping full-year phosphate/nitrogen combined gross margin guidance at $1.0-1.2 billion, it has raised its full-year expectations for the potash business and narrowed its projected sales volume to 9.3-9.6 million mt from the previous 9.2-9.7 million mt. And due to the decline in certain spot market prices through the second quarter, it has lowered the upper end of its potash gross margin range to $1.5-$1.7 billion from $1.5-$1.8 million.
PotashCorp expects global potash shipments to be about 60 million mt in 2015, with China and India the bright spots and the U.S. and Brazil the laggards, both off about 20 percent so far this year. The company believes both will recover in the second half.
Second-quarter North American potash sales volumes were off 31 percent, to 648,000 mt with an average price of $349/mt compared to the year-ago 943,000 st ($321/mt). Offshore shipments made up the difference at 1.86 million mt ($247/mt), up from the year-ago 1.58 million mt ($229/mt). Total volumes were 2.51 million mt ($273/mt), level with the year-ago 2.52 million mt ($263/mt). Gross margin per mt was $168/mt, up from $161/mt.
Second-quarter potash margins were $417 million on sales of $748 million, up from the year-ago $395 million and $747 million, respectively.
Second-quarter phosphate margins were $72 million on sales of $424 million, up from $48 million and $489 million, respectively. Phosphate volumes were 679,000 mt ($553/mt), down from 849,000 mt ($509/mt). Volumes were down due to the 2014 closure of the Suwanee River plant in Florida. Gross margins per mt were $103/mt, up from $52/mt.
Second-quarter nitrogen margins were down at $222 million on sales of $559 million, compared to the year-ago $304 million and $656 millon. Sales volumes were down slightly, to 1.63 million mt with an average price of $334/mt from the year-ago 1.66 million mt ($393/mt). Gross margin per mt was $133/mt, down from $180/mt.
PotashCorp six-month net income was $787 million ($0.94 per share) on sales of $3.4 billion, down from $812 million ($0.95 per share) and $3.57 billion.
Six-month potash margins were $845 million on sales of $1.49 billion, up from the year-ago $695 million and $1.42 billion, respectively. Six-month potash sales volumes were 4.86 million mt ($278/mt) up from the year-ago 4.84 million mt ($257/mt). North American volumes were down at 1.45 million mt ($349/mt) from the year-ago 1.93 million mt ($307/mt), while Offshore volumes were up at 3.41 million mt ($249/mt) from 2.9 million mt ($223/mt). Gross margin per mt was $175/mt, up from $146/mt.