All Posts from May 15, 2014

Pan American confirms trade suspension

Pan American Fertilizer Corp. confirms that, effective May 8, 2014, the TSX Venture Exchange has suspended trading in the Company as a result of a Cease Trade Order (CTO) issued by the British Columbia Securities Commission.

This suspension of trading by the Exchange is a direct result of the company’s delayed filing of its Year End 2014 financials announced in its April 30, 2014 press release.

Reinstatement to trading can only occur when the CTO is revoked and the Exchange has concluded its reinstatement review to ensure that the company has satisfactorily complied with Exchange requirements.

The company anticipates that reinstatement will occur once the Company has completed its 2013 financial filings which are anticipated to be completed before the end of May, 2014.

Pan American is a Canadian company dedicated to providing fertilizer to growing global markets specifically in South and Central America. The company is focused on the extraction of a specific type of fertilizer called calcium sulphate, also referred to as agricultural gypsum, in Argentina.

Ravensdown exits Australia

Ravensdown’s exit of the Australian fertilizer market is complete after a May 15 announcement that its operation in Queensland will cease trading. The move comes five months after the completion of the sale of Ravensdown’s operations in Western Australia and South Australia and within a financial year that has seen the farmer-owned co-operative meeting its turnaround expectations in New Zealand.

“We told shareholders at the last AGM that it was a make or break year for the Queensland business and the hard reality is that it’s the latter,” said Greg Campbell, Ravensdown CEO. “So we need to take action now and put the Australian experience behind us.”

“When the next financial year starts from June 1 2014, there will be no Australian fertilizer trading losses affecting our New Zealand result.”

Ravensdown Fertiliser Australia was set up in 2009 after cane growers invited the co-operative to start supplying soil nutrients. The original business plan based its viability on a 100,000 mt a year target. But cyclones, flooding and depressed world prices for sugar meant fertilizer tonnages reached only 70,000 mt last year.

“Here in New Zealand, we’re investing in advanced nutrient management training, in infrastructure such as new loaders in stores and in technology such as Smart Maps which provides a visual audit trail for a farm’s nutrient status. We’re seeing strong demand from a buoyant New Zealand sector and have good availability of products like superphosphate, DAP and urea in our stores.”

ICL profits down 57 percent

Israel Chemicals Ltd. reported a sharp drop in net profits and a slight drop in revenues for the first quarter of 2014. Net profits were down by 57 percent to $131 million versus $305 million in the corresponding quarter in 2013. Revenues fell by 1 percent to $1.613 billion from $1.64 billion in the first quarter of last year.

ICL said that it reported record sales of potash and phosphates during the first quarter on a volume basis but this was offset by lower prices. In addition, there was continued growth in specialty fertilizer sales. ICL Fertilizers reported revenues of $933 million in the first quarter of 2014 versus $1 billion last year. The company said the drop in revenues was a result of a decline in product prices.

Operating revenue for ICL Fertilizers fell by 38.6 percent for the quarter to $180 million from $293 million last year. The company attributed the decline to lower potash prices, increase in the cost of sales and an increase in operating expenses. ICL cited that this was partially offset by a drop in energy prices due to the greater use of natural gas at several of its Israeli facilities. Operating margins at ICL Fertilizers fell to 19.3 percent from 29 percent in the first quarter of 2013. In addition, ICL said that the labor dispute at Rotem Amfert which included a three week strike had a $7 million impact on ICL Fertilizer’s first quarter operating profit and would have an additional $11 million impact in 2014.

ICL sold a record 1.47 million mt of potash in the first quarter compared to 1.31 million mt in the corresponding quarter last year. This was attributed to higher volume sales to China, Brazil and Europe. The company said that despite the strike at Rotem Amfert it sold a record 525,000 mt of phosphate fertilizers in the first quarter. Revenues were $465 million versus $460 million. The increased quantities sold were offset by reduced prices.

ICL noted that in January and February it signed contracts for the sale of potash in the first half of 2014 in China at a price of $305/mt, representing a $95 reduction compared to agreements signed in 2013. Referring to the Indian market ICL said that it agreed to supply approximately 700,000 mt including options for additional quantities at prices similar to those of other supplies to the Indian market. The company noted that these prices were approximately $105 per ton lower than 2013 levels. ICL also noted increased potash sales to the Brazilian market where demand remains strong.

Excellence Nessuah analyst Gilad Alper noted that ICL’s operating margins on its potash business in the first quarter were 32.7 percent. “The last time the margins were so low was in the second quarter of 2007 and the price of potash at the time was $203 a ton.” He added that this underscores the rise in the cost of production for ICL due to regulation, royalties, labor costs and the strong shekel.

He noted that phosphate business was better than expected due to higher volumes and had an operating margin of around 9 percent. Alper said volumes for potash and phosphates remain strong. He believes that potash prices have reached their bottom and have increased slightly in recent months. But the chemical industry analyst stressed that for ICL to return to much higher profitability potash prices will have to rise significantly over current levels.