PotashCorp reported net income of $472 million ($1.55 per diluted share) on sales of $1.44 billion for the second quarter ending June 30, compared to the year-ago $186.2 million ($.61 per diluted share) on sales of $856 million. PotashCorp said these earnings were the second-highest second-quarter sales in company history.
PotashCorp said the results reflected a continuing recovery in fertilizer demand, particularly for potash, as well as a $69.6 million special dividend ($.17 per share) from its investment in Israel Chemicals Ltd.
PotashCorp President and CEO Bill Doyle said after visiting with various customers in San Antonio earlier in the week that everyone is looking at $4.00 as the floor for corn, and moving to $5.00 in the not-too-distant-future. Doyle cited adverse weather problems across the world, including in Russia and Canada, as well as in grain-hungry China, which is importing 1 million tons of soybeans per week. Doyle said not so long ago China was a 15-million-tons exporter of corn, and that some reliable forecasts are for it to import that much corn by 2015. In addition to corn, he expects the country to use more potash – 11 million mt in 2011, versus an estimated 8.5 million in 2010. “When China re-engages, look out,” he said.
In the near term, Doyle said the North American market will begin to restock with granular potash at the same time that demand will pick up in Brazil.
Second-quarter potash gross margins soared, to $396.6 million on sales of $641 million, from the year-ago $106.2 million on sales of $210.7 million. Tons sold during the quarter were a whopping 1.9 million mt, versus the year-ago 394,000 mt. Most of the increase came from offshore, at 1.33 million mt versus 194,000 mt, whereas North America was also up, at 575,000 mt from 200,000 mt. The average price was $308.64/mt, down from the year-ago $473.05/mt. The average offshore was $282.20/mt versus the year-ago $366.70/mt, while North America was $369.82/mt, down from $576.29/mt.
Phosphate margins moved up to $62 million on sales of $363.5 million, compared to the year-ago $19 million on sales of $324.7 million. Total tons sold (all phosphate products) were 719,000 mt with an average price of $458/mt, versus the year-ago 723,000 mt at an average price of $403.96/mt.
Nitrogen margins more than tripled, to $125 million on sales of $433.3 million, versus the year-ago $43.9 million on sales of $320.6 million. Total tons sold for all nitrogen were 1.32 million mt at an average price of $287.22/mt, versus the year-ago 1.2 million mt at an average price of $238.67/mt.
Six-month net income was $921.2 million ($3.02 per share) on sales of $3.15 billion, up from the year-ago $493.6 million ($1.63 per share) on sales of $1.78 billion.
Six-month potash margins were $913 million on sales of $1.53 billion, versus the year-ago $272.8 million on sales of $479.9 million. Tons sold were 4.37 million mt with an average price of $315.80/mt, versus the year-ago 868,000.