Potash Corp earnings top $1.1 B in 2007; 4Q net income the highest in company history

Potash Corp. of Saskatchewan Inc. reported net income of $1.1 billion ($3.40 per diluted share) for the year ending Dec. 31, 2007, up from 2006’s $631.8 million ($1.98 per share). It was the company’s fourth consecutive year of record earnings. Sales for 2007 were $5.234 billion, versus 2006’s $3.766 billion.

Fourth-quarter earnings were the highest in company history, with a 100 percent increase over the year-ago period. They were $376.8 million ($1.16 per share) on sales of $1.431 billion, up from 2006’s $186.0 ($.58 per share) and $1.022 billion, respectively.

PotashCorp expects the first quarter to see net income in the range of $1.30-$1.60 per share, and full year at $6.25-$7.25 per share.

“Our record performance for the quarter and the full year reflect the increasing potential of our company,” said President and CEO Bill Doyle. “For nearly two decades we have carefully assembled and managed our world-class assets with a long-term view. With growing demand and strong market conditions, we have reached new heights in each of the past four years. More important, we are looking ahead and preparing ourselves for expected future growth that we believe will continue to deliver greater value for our customers and investors.”

Doyle told analysts that the company is standing on the threshold of unprecedented growth.

PotashCorp results surged for all three major nutrients, and the company noted that strong demand reduced 2007 year-end inventories for all three. Compared to the previous five-year averages, North American producer inventories were down 26 percent for potash, 17 percent for urea, and 21 percent for DAP. Potash is on allocation in North America through the first half of the year, and prices for both it and phosphates are up considerably.

Doyle is not deterred by the delay in inking a new potash export deal with China, which he now says may come in late March/early April. He said China will likely run out of potash by then and need to buy, adding that demand is so strong that other buyers are glad to get the potash that would normally go to China during the first quarter. “We will not miss a beat,” said Doyle. As a result, any potash to China in 2008 will be prorated depending on when they buy; they will not receive a full year’s amount within a shorter span. He pointed out that fertilizer economics are far different today than in 2006, when China delayed the negotiations well into the year. Worldwide fertilizer demand is up, as are fertilizer and grain prices, and the Russians are no longer railing potash to China. He said other buyers are not going to wait to see what China does – they are going to buy because they need it. Likewise, he says the current potash supply pipeline remains empty, while it was not in 2006.

While noting that other fertilizer companies have been doing well, Doyle told analysts that PotashCorp has assets second to none. He said no company is as profitable as PotashCorp, and added that any one of the competitors would trade for PotashCorp’s assets if given the chance.