PotashCorp Reports First Quarter 2015 Earnings of $0.44 per Share

Potash Corporation of Saskatchewan (TSX:POT,NYSE:POT) announced its first quarter 2015 earnings, which were C$370 million or $0.44 per share, up from $340 million in Q1 2014. The company also provided its financial outlook for this year.

As quoted in the press release:

Gross margin for the quarter of $667 million surpassed the $565 million total for the same period in 2014. Higher prices and lower per-tonne cost of goods sold in potash were the primary contributors, more than offsetting changes to Saskatchewan potash taxes and weaker nitrogen sales volumes.

Earnings before finance costs, income taxes, depreciation and amortization (EBITDA) of $731 million exceeded the total for 2014’s first quarter of $707 million, while cash from operating activities of $521 million during the first quarter was similar to the same period last year.

Income from our offshore investments contributed $33 million to our first-quarter earnings, well below the $100 million for the same period in 2014. This year’s total was comprised of equity earnings from Arab Potash Company (APC) and Sociedad Quimica y Minera de Chile S.A. (SQM), while 2014’s total included contributions from these two companies as well as a $69 million special dividend from Israel Chemicals Ltd. (ICL).

Financial outlook 2015:

We have maintained our annual estimate for potash gross margin of $1.5-$1.8 billion and sales volumes of 9.2-9.7 million tonnes. While global demand could push our sales volumes to the upper end of our guidance range, weaker pricing and a higher proportion of offshore sales tonnes are likely to result in lower average realizations compared to previous expectations. High operating rates, along with lower costs and a weaker Canadian dollar are expected to result in lower per-tonne operating costs relative to 2014. As a result of recent changes to potash taxes in Saskatchewan, we now forecast provincial mining and other taxes for 2015 to total 20-22 percent of potash gross margin.

In nitrogen, lower global energy costs and increased supply are anticipated to keep markets subdued relative to 2014. Our production run rate is expected to improve from first-quarter levels, but challenges experienced early in the year are likely to result in annual sales volumes slightly below 2014’s total.

In phosphate, we expect market conditions to support a stronger pricing environment relative to 2014. Although we anticipate improved production levels will reduce our per-tonne cost of goods sold through the balance of the year, first-quarter production challenges, the closure of our Suwannee River facility and a greater proportion of our sales volume being directed to higher phosphate content products are expected to keep sales volumes below 2014 levels and our initial expectations for 2015.

Jochen Tilk, president and CEO of PotashCorp, commented:

We delivered stronger earnings compared to last year’s first quarter on improved potash and phosphate contributions. We adjust our full-year guidance largely on higher Saskatchewan potash taxes and first-quarter performance that trailed our initial expectations. Looking ahead, we are encouraged by the strength in global potash demand and see momentum accelerating through the second quarter, especially in offshore markets.

Click here to read the full Potash Corporation of Saskatchewan (TSX:POT,NYSE:POT) press release.