The Canadian Press
SASKATOON - Potash Corporation of Saskatchewan Inc. (TSX:POT) says it had US$340 million of net income in the first quarter, down from the same time last year but better than the company had expected at the beginning of 2014.
It reported first quarter earnings of 40 cents per share, or US$340 million, compared to 63 cents per share, or US$556 million, in the same period last year. The company's guidance issued on Jan. 30 was for between 30 and 35 cents per share of net income per share in the first quarter.
The company, which reports in U.S. currency, says the total includes a $69 million special dividend from its investment in Israel Chemicals Ltd. and a $38 million non-cash impairment charge related to an investment in Sinofert Holdings Ltd. (Sinofert).
PotashCorp also announced it has increased its annual estimate for potash profit margins and sales volumes due to slightly better pricing and demand. As a result, it expects between 40 and 45 cents per share of earnings in the second quarter ending June 30 and between $1.50 and $1.80 per share for the full year, up 10 cents at the lower end.
Analysts had estimated 43 cents per share of net profit under standard accounting and 36 cents per share of adjusted earnings, according to data compiled by Thomson Reuters.
"After an especially challenging environment in the second half of 2013, greater demand and stability emerged early in the year," said PotashCorp president and CEO Bill Doyle, who has announced his retirement.
"Despite weather-related issues that impacted our results, especially in phosphate, we were able to deliver earnings above our quarterly guidance range."
PotashCorp announced on April 6 that Jochen Tilk, a former CEO of Inmet Mining, will succeed Doyle on July 1 — which marks the beginning of the company's third quarter. Doyle will stay on as an advisor until next year.
The company said Thursday that potash prices trended upward in key markets as the quarter progressed, but a sharp decline during the second half of 2013 weighed on realizations. As a result, the first-quarter average potash price of $250 per tonne was well below the $363 per tonne of the same period last year.
Potash production reached 2.4 million tonnes, exceeding the 2.0 million tonnes produced in 2013's first quarter.
The company says North American demand for potash was robust as fertilizer distributors worked to position product ahead of spring planting. But even as shipments from domestic producers climbed 48 per cent over the same period last year, ongoing rail constraints worsened by a hard winter and a record grain harvest, kept dealer supplies tight.
The company says while it is beginning to rail deliveries improve, which helps address a backlog of orders, demand for its products is expected to keep pressure on North American carriers. PotashCorp says it will continue to work closely with its transportation partners to minimize disruptions.
Note to readers: This is a corrected story. It clarifies that the company's previous quarterly estimate was for the first quarter, not the second quarter.