Potash Corp. of Saskatchewan Inc. reported a 38 percent drop in second-quarter net income, to $522 million ($0.60 per diluted share) on sales of $2.4 billion, down from the year-ago $840 million ($0.96 per share) on sales of $2.32 billion. The company said it had record second-quarter earnings before a $341 million ($0.39 per share) non-cash impairment charge relating to its investment in Sinofert Holdings Ltd. It also had a $29 million impairment related to its phosphate segment, included in cost of goods sold.
“Although certain notable items reduced our reported earnings, the second quarter highlighted the underlying strength of our business,” said PotashCorp President and CEO Bill Doyle. “The acceleration in potash demand that took hold at the end of the first quarter allowed us to deploy our capacity, delivering strong results and creating value for our shareholders.”
Offshore potash volumes set a quarterly record of 1.95 million mt, up from the year-ago 1.69 million mt. Offshore prices were up, at $411/mt from $379/mt. Total potash shipments were up slightly, to 2.61 million mt ($433/mt) from 2.52 million mt ($416/mt), while North American shipments were off 22 percent, at 651,000 mt ($502/mt) from 831,000 mt ($492/mt).
Second-quarter potash margins were up, at $801 million on sales of $1.18 billion from the year-ago $793 million on sales of $1.12 billion.
Nitrogen gross margins were up 44 percent, to $302 million on sales of $642 million versus the year-ago $209 million and $571 million, respectively. Nitrogen volumes were about level at 1.3 million mt ($436/mt) from the year-ago 1.299 million ($400/mt). Urea saw a run up in volumes and price during the quarter (see table below). The average natural gas price for the quarter was $5.31/mmBtu – lower than the year-ago $6.21/mmBtu, but higher than that paid by the company’s North American competitors.
Phosphate margins were off 42 percent, to $96 million on sales of $569 million from the year-ago $166 million on sales of $633 million. While phosphate sales volumes were down at 936,000 mt ($552/mt) from 1.01 million ($578/mt), it came from the fertilizer side of the business, where volumes dropped to 619,000 mt ($498/mt) from 696,000 mt ($562/mt), while feed/industrial were level at 317,000 mt. Prices in feed/industrial were up at $656/mt from $611/mt.
Six-month net income was off 36 percent, to $1 billion ($1.16 per share) on sales of $4.14 billion from the year-ago $1.57 billion ($1.79 per share) on sales of $4.53 billion.
Six-month potash margins were off 27 percent, to $1.13 billion on sales of $1.77 billion from the year-ago $1.54 billion on sales of $2.23 billion. Six-month volumes were down across the board at 3.85 million mt ($434/mt) from 5.31 million mt ($390/mt), with the biggest drop in North America, to 1.05 million ($500/mt) from 1.92 million mt ($455/mt). Offshore were down, at 2.8 million mt ($409/mt) from 3.39 million mt ($353/mt).
Six-month nitrogen margins were up, at $521 million on sales of $1.19 billion from the year-ago $412 million and $1.12 billion. The average gas cost was $5.03/mmBtu, down from $6.02/mmBtu. Nitrogen volumes were down slightly, to 2.59 million mt ($410/mt) from the year-ago 2.64 million ($384/mt).
Six-month phosphate margins were down to $248 million on sales of $1.18 billion from the year-ago $316 million on sales of $1.18 billion. Six-month volumes were more in balance with the total at 1.87 million mt ($579/mt), down from 1.91 million mt ($569/mt). Fertilizer volumes were down slightly at 1.26 million ($534/mt) from 1.3 million ($553/mt), while feed/industrial was up slightly at 610,000 mt ($670/mt) from 606,000 mt ($603/mt).
The cost estimate is now C$2.2 billion, up from the earlier C$1.7 billion. The company said this project, which includes developing a new ore body, more closely re