Potash Corp. of Saskatchewan Inc. reported its second-highest fourth-quarter earnings for the quarter ending Dec. 31, 2010, more than doubling those for the year-ago period. Net income was $482.3 million ($1.61 per diluted share) on sales of $1.81 billion, compared to the year-ago $239.2 million ($.79 per share) on sales of $1.1 billion.
For the year, net income was $1.81 billion ($5.95 per share) on sales of $6.54 billion, up from the prior year’s $980.7 million ($3.23 per share) on sales of $4 billion.
Results were driven by significantly improved demand and strong price momentum for all three major nutrients.
“Our industry moved past an important inflection point in the third quarter and, as farmers around the world became more active in addressing the critical issue of soil fertility, we demonstrated our ability to deliver in a strengthening market environment,” said Bill Doyle, PotashCorp president and CEO. “With global food demand as the powerful engine, we believe we have moved into the next stage of growth for our business. Our company stands poised to capitalize on that growth and we believe our fourth quarter results provide a glimpse of the capabilities and earning potential of our expanding world-class operations.”
PotashCorp would have made even more, but fourth-quarter and full-year expenses to stave off the BHP Billiton takeover attempt cost the company $.16 per share and $.18 per share, respectively.
Fourth-quarter potash gross margins were $519.5 million on sales of $830.2 million, more than doubling the year-ago results of $206.2 million on sales of $412.5 million. Full-year results did the same, with gross margins of $1.8 billion on sales of $3 billion, up from $730.4 million and $1.3 billion.
Fourth-quarter potash volumes were 2.38 million mt with an average price of $323.14/mt, versus the year-ago 1.1 million mt and $335.83/mt. Full-year volumes were 8.64 million mt ($315.57/mt), versus the prior year’s 2.99 million mt ($403.56/mt).
Fourth-quarter phosphate margins were $91.6 million on sales of $520.8 million, more than tripling the year-ago gross margin of $23.4 million. Year-ago sales were $362.4 million. Full-year margins were $319.2 million on sales of $1.82 billion, up from the prior year $92.4 million on sales of $1.37 billion.
Fourth-quarter phosphate volumes were 965,000 mt ($495.37/mt), compared to the year-ago 854,000 mt ($386.23/mt). Full-year volumes were 3.63 million ($454.98/mt), versus the year-ago 3.05 million mt ($404.60/mt).
Fourth-quarter nitrogen margins were $151.9 million on sales of $461.2 million, with margins tripling the year-ago $43.1 million. Year-ago sales were $324.2 million. Full-year margins were $509.8 million on sales of $1.72 billion, up from the prior year’s $191.8 million on sales of $1.29 billion.
Fourth-quarter nitrogen sales volumes were 1.28 million mt ($325.28/mt), compared to the year-ago 1.13 million mt ($242.14/mt). Full-year volumes were 5.2 million mt ($290.20/mt), versus the year-ago 4.97 million mt ($226.73/mt).
Moving forward, PotashCorp said first-quarter potash volumes are already fully committed. It expects a 2011 potash gross margin of $2.5-$2.8 billion and record potash shipments ?Çô within 9.5-10 million mt. It expects phosphate and nitrogen to generate a combined gross margin of $1-$1.2 billion.
After giving effect to the planned three-for-one stock split, it expects first-quarter 2011 EPS of $.70-$.90, and full-year EPS of $2.80-$3.20.
PotashCorp announced Jan. 26 that its board of directors has approved the split of the company’s outstanding common shares, which will be payable in the form of a stock dividend. Subject to final regulatory approval, all shareholders will receive two additional shares for each share owned on the record date of Feb. 16, 2011. Additionally, the board approved an increase of the company’s quarterly cash dividend (from $0.10 per share to $0.21 per share on a pre-split basis), and declared a quarterly cash dividend of US$0.07 per common share (on a post-split basis) payable May 5, 2011, to shareholders of record on April 14, 2011.
“Our shareholders have provided the important capital that has helped prepare our company for the next stage of growth,” said Doyle. “The doubling of our dividend reflects the confidence we have in the long-term drivers of our business and further commitment to using our strong cash flow to create value for our shareholders. Additionally, the increased number of shares resulting from the split should enhance trading liquidity in our stock.”
Shareholders who have PotashCorp stock certificates should retain them. The transfer agent, CIBC Mellon Trust Co., will mail new certificates on Feb. 24, 2011. Upon completion of the stock dividend, the number of shares outstanding will approximate 853 million. PotashCorp’s common shares are expected to commence trading on a split basis on Feb. 14, 2011 on the Toronto Stock Exchange and Feb. 25, 2011 on the New York Stock Exchange. The stock split will have no unfavorable tax consequences in Canada or the U.S.