Potash sales rebounding after historic lows in 2009, says PotashCorp

Company potash sales volumes in North America for the first three weeks of 2010 were better than the North American sales for all of January-August of 2009, PotashCorp President and CEO William Doyle told analysts last week. 2010 potash sales volumes were the lowest since the company was first publicly traded in 1989.

While the company saw improved potash sales volumes in the fourth quarter ending Dec. 31, 2009, it wasn’t enough to keep PotashCorp from a 69 percent drop in net income, to $243.6 million ($.80 per diluted share) on sales of $1.1 billion, compared to the year-ago $788 million ($2.56 per share) and $1.87 billion, respectively.

Full-year earnings were $987.8 million ($3.25 per share) on sales of $3.98 billion, down from the prior year’s $3.49 billion ($11.01 per share) and $9.45 billion, respectively.

Potash is the company’s core nutrient, contributing 74 percent of the $279.6 million gross margin generated in the fourth quarter and 71 percent of the $1 billion for the full year. Fourth-quarter potash gross margin was $206.2 million on sales of $412.5 million, versus the year-ago $744.8 million and $932.2 million, respectively. Full-year gross margin was $730.4 million on sales of $1.3 billion, compared to the year-ago $3.06 billion and $4.07 billion, respectively.

Nitrogen gross margins were up in the fourth quarter at $43.1 million on sales of $324.2 million, compared to the year-ago $17.9 million and $433.1 million. While realized nitrogen prices were down 34 percent from the year-ago quarter sales, volumes were up 7 percent. Full-year margins were down, however, at $191.8 million on sales of $1.29 billion, versus the year-ago $737.4 million and $2.5 billion. Full-year volumes were flat versus 2008.

PotashCorp’s Trinidad nitrogen operations generated $27.1 million in fourth-quarter gross margin, and $105.3 million for all of 2009.

PotashCorp reported that gas costs, including hedges, were $4.55/mmBtu for the fourth quarter and $3.86/mmBtu for the year, some 26 percent and 49 percent lower than the year-ago periods.

Fourth-quarter phosphate margins were $30.3 million on sales of $362.4 million, compared to the year-ago $110.4 million and $505.3 million. Full-year margins were $103.8 million on sales of $1.37 billion, versus the year-ago $1.11 million and $2.88 billion.

PotashCorp is projecting the 2010 potash gross margin to be in the range of $1.4-$1.8 billion and total shipments of 7-8 million mt. It expects increased demand and higher prices to push combined nitrogen and phosphate gross margins to $400-$500 million. The company projects 2010 net income per share of $4.00-$5.00, including $.70-$1.00 in the first quarter.

* Totals are manufactured product.