PotashCorp anticipates steady demand #potash
24 Oct 2014
SCOTT LARSON THE STARPHOENIX — With files from The Canadian Press
Potash -Corp anticipates steady demand
Consumption picks up in China, India
Despite weaker crop prices, global demand for potash in 2015 should be much like this year’s number of 58 to 60 million tonnes, says Potash Corporation of Saskatchewan president and CEO Jochen Tilk.
“The trend in 2015 may look, in terms of production and consumption, similar to what 2014 should look like,” said Tilk, adding he expects potash consumption in the U.S. and Brazil to be static or drop slightly in 2015, but to be offset by greater demand in China and India.
Potash-Corp reported its third quarter earnings with $317 million in net income, or 38 cents per share.
The Saskatoon-based fertilizer company had $1.6 billion in sales dur ing the three mon ths ended Sept. 30, which was above estimates and up from $1.52 billion a year earlier. However, the company’s profit was five cents per share below estimates and down from $356 million, or 41 cents per share, in the third quarter of 2013.
The average price received for a tonne of potash was down compared with last year, though potash sales volume was 29 per cent higher than a year earlier.
While crop prices are lower this year, the need for nutrients is still there, and lower potash prices mean it is still affordable to farmers, Tilk said.
“The fundamental question is whether the pair of price and nutrient affordability is still there, and we think it is.”
After slashing about 1,000 workers (18 per cent of its workforce) in late 2013 when prices for potash tumbled, Tilk said he sees greater stability in the coming year.
“When we looked at the second half of 2014 and what we experienced, we realized nutrients were actually rather strong, particularly ammonia and potash,” he said. “We’ve called people back and brought some capacity back on line.
“No company likes to go through fluctuations,” he said. “We are trying to be responsive to markets, but at the same time we also recognize the impact it has on operations and on people, and we are trying to really minimize that and bring stability and consistency to our operations.”
Tilk said the company also hopes there isn’t a repeat of the past year’s rail transportation logjam, which affected farmers and potash producers alike.
“This year was a huge problem,” he said, adding the company is working with the railways to find solutions to bottlenecks and other answers to mitigate future problems.
Potash-Corp narrowed its full-year earnings guidance for 2014 to between $1.75 and $1.85 per share, compared to the previous range of $1.70 to $1.90 per share.
It said that potash and nitrogen performance during the third quarter improved over last year’s third quarter, but higher tax expenses and weaker contributions from offshore equity investments weighed on the results.
The average realized potash price for the quarter was $281 per tonne, down from $307 per tonne in last year’s third quarter.
25th anniversary celebrations
On Nov. 2, Potash-Corp will celebrate its 25th anniversary as a publicly traded company.
Part of the celebration will be ringing the closing bell at the New York Stock Exchange on Oct. 31.
“We’ve been invited to The New York Stock Exchange to ring the bell, to commemorate the ringing of the bell at the beginning when we were listed,” Tilk said.
The company encouraged employees to apply to go to New York, and five employees will be randomly chosen to attend the event and collectively ring the bell.
“I think it was a fantastic idea to recognize employees,” Tilk said.
The company was worth $289 million when it went public in 1989, and now has a market cap of around $30.4 billion. That doesn’t include all of the dividends that have been distributed throughout the last 25 years.