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PotashCorp First-Quarter Earnings Increase to $0.63 per Share



        PotashCorp First-Quarter Earnings Increase to $0.63 per Share

PR Newswire

SASKATOON, April 25, 2013

Listed: TSX, NYSE
Symbol: POT

Key Highlights

  * First-quarter earnings of $0.63 per share^1; gross margin of $0.9 billion
    second-highest for first quarter
  * Potash sales volumes increased 78 percent from first-quarter 2012 levels
  * Record first-quarter nitrogen gross margin of $271 million
  * Second-quarter earnings guidance estimated at $0.70-$0.85 per share
  * Full-year earnings guidance for 2013 maintained at $2.75-$3.25 per share

SASKATOON, April 25, 2013 /PRNewswire/ - Potash Corporation of Saskatchewan
Inc. (PotashCorp) today reported first-quarter earnings of $0.63 per share
($556 million), surpassing the $0.56 per share ($491 million) earned in the
same period of 2012.

Fueled by improved global potash demand and record first-quarter nitrogen
contributions, gross margin for the quarter totaled $0.9 billion, a 24 percent
improvement over the $0.7 billion generated in the first three months last
year. Earnings before finance costs, income taxes and depreciation and
amortization^2 (EBITDA) reached $1.0 billion and cash flow prior to working
capital changes^2 totaled $0.7 billion, with both amounts exceeding those in
the comparable period of 2012.

Our offshore investments in Arab Potash Company (APC) in Jordan and Sociedad
Quimica y Minera de Chile S.A. (SQM) in Chile contributed $77 million to
earnings in the first quarter of 2013. The market value of our investments in
these publicly traded companies, along with our positions in Israel Chemicals
Ltd. (ICL) in Israel and Sinofert Holdings Limited (Sinofert) in China,
equated to approximately $8.5 billion, or $10 per PotashCorp share at market
close on April 24, 2013.

"With farmers around the world motivated to capitalize on the link between
fertility and profitability, the first quarter gave us an opportunity to
demonstrate our ability to deliver," said PotashCorp President and Chief
Executive Officer Bill Doyle. "We had significant growth in our potash
performance as global buyers returned to the market in earnest after taking a
brief pause late in 2012. This environment enabled us to deliver earnings near
the top end of our guidance and laid the foundation for what we believe will
be a successful year."

Market Conditions

Potash shipments to all major markets accelerated during the first quarter. In
North America, dealers began positioning product to meet farmers' significant
spring requirements. First-quarter domestic shipments from North American
potash producers rose 56 percent above those of the same period last year and
dealers' need to secure additional product remained high as the quarter
closed. Buyers in key offshore markets also turned their attention to securing
new supply after limited activity in the final quarter of 2012. As a result,
offshore shipments from North American producers were 74 percent above last
year's first quarter. With China's early settlement of potash supply contracts
and strong demand in Brazil, shipments accelerated during the quarter,
culminating in a monthly export record in March. Indian customers returned to
the potash market, although movement was limited as new contracts with major
suppliers were not settled until mid-quarter. Following a weak market to close
2012, prices in all key regions reset late in the year, resulting in lower
realizations during the first quarter of 2013.

In nitrogen, the slow start to the spring season in North America delayed
demand during the quarter. While prices for nitrogen products - especially
ammonia - remained at historically high levels, a significant rise in urea
imports to the US ahead of the spring season led to weaker urea prices
relative to other nitrogen products.

Phosphate markets continued to face challenges due to uncertainty surrounding
the timing and extent of a return in demand from India, which in recent years
accounted for more than 30 percent of global trade in solid phosphate
fertilizers. While a rebound in North American demand and strong US producer
exports to Latin America partially offset the absence of significant Indian
demand, total US shipments trailed those of the previous year. This resulted
in lower prices for phosphate fertilizer products compared to the first
quarter of 2012.

Potash

Significantly higher sales volumes more than offset the impact of lower
realized prices and resulted in first-quarter potash gross margin of $504
million, 54 percent above the $327 million generated in the same period last
year.

Strong engagement in key markets pushed sales volumes to 2.2 million tonnes,
significantly above the 1.2 million tonnes sold in first-quarter 2012. With
limited dealer inventory carried into 2013 and strong agricultural
fundamentals, North American sales volumes of 0.8 million tonnes nearly
doubled the volumes sold in the same period last year. Offshore demand
accelerated during the quarter, with sales volumes increasing 69 percent to
1.4 million tonnes from 0.8 million tonnes in last year's opening quarter. Our
New Brunswick facility sold record first-quarter volumes and Canpotex^3
shipped 27 percent of its total sales volumes for the period to Latin America,
including, in March, its highest one-month total ever to this market. China,
which resumed seaborne deliveries in the quarter, represented 25 percent of
Canpotex's total volumes, with other Asian countries and India representing 39
percent and 3 percent, respectively.

Our average realized potash price of $363 per tonne trailed the $435 per tonne
of the first quarter of 2012, reflecting lower pricing that took hold late in
that year.

With increased demand, first-quarter production rose to 2 million tonnes from
1.6 million in the same quarter last year. The increase in operating rates and
the absence of higher-cost tonnes from Esterhazy were the primary contributors
to lower per-tonne cost of goods sold in the quarter.

Nitrogen

Higher prices and increased volumes helped elevate nitrogen gross margin to a
first-quarter record of $271 million, surpassing the $219 million earned in
the same period of 2012. Our Trinidad operation generated $144 million in
gross margin, and our US operations contributed $127 million.

Additional ammonia capacity at Geismar and Augusta, as well as reduced impact
from natural gas curtailments in Trinidad led to an increase in saleable
tonnes of downstream products. This resulted in first-quarter nitrogen sales
volumes of 1.4 million tonnes compared to 1.3 million tonnes in the same
period last year.

Our average realized nitrogen price reached $429 per tonne during the quarter,
exceeding the $383 per tonne realized in the first three months of 2012.
Ammonia accounted for the largest increase as a result of strong demand
coupled with supply challenges in key producing regions.

Our total average natural gas cost for the first quarter, including the impact
of our hedge position, was $6.10 per MMBtu, up from $4.75 per MMBtu in the
same period last year. The increase was the result of higher Trinidad gas
costs, which are indexed primarily to the price of Tampa ammonia, and a rise
in US gas prices.

Phosphate

First-quarter phosphate gross margin of $92 million trailed the $152 million
earned in the same period of 2012, primarily reflecting the impact of lower
realized prices. While contributions in all product categories declined from
previous-year levels, gross margins for our feed and industrial products ($44
million) proved more stable than those of solid and liquid fertilizers ($45
million).

Sales volumes of 0.9 million tonnes were relatively flat compared to the first
quarter of 2012, although we benefited from allocation of a larger percentage
of product to feed and industrial customers.

Our average realized phosphate price was $549 per tonne in the first quarter,
down from the $607 per tonne realized in the same period last year, with
fertilizer products experiencing the largest decline.

Per-tonne cost of goods sold remained relatively flat compared to the same
period last year, as higher ammonia and rock input costs were offset by a
decline in sulfur prices on a year-over-year basis.

Financial

Provincial mining and other taxes increased to $63 million from $28 million in
the first quarter of 2012, due primarily to the timing of annual potash
production tax accruals.

Higher earnings during the quarter contributed to income tax expense of $226
million, up from $160 million in the same quarter last year.

Capital-related cash expenditures for the quarter totaled $496 million, with
the majority related to our remaining expansion projects at Rocanville and New
Brunswick.

Potash Market Outlook

Global agricultural markets are providing the necessary economic incentive for
farmers to maximize yields and, ultimately, their financial returns. As they
focus on soil fertility and crop nutrition, farmers' demand for fertilizer is
increasing. We anticipate that this will continue in 2013 and the years ahead,
driven by the need to increase food production around the world.

Based on first-quarter shipments and the expectation of continuing strong
demand, 2013 is shaping up as a recovery year for potash. Even as solid
phosphate fertilizer and urea markets reflect uncertainty related to Chinese
exports and the absence of significant Indian demand, potash fundamentals have
shown improved strength. We expect the engagement and confidence we see in key
potash markets to continue, and maintain our previous estimate for 2013 global
demand in the range of 55-57 million tonnes.

In North America, customer engagement is expected to remain high as the
planting season progresses and dealers respond to the needs of farmers. We
anticipate that buyers will seek to limit inventories as they exit the spring
season and farmers' increased commitment to replenish nutrients in the soil
will result in historically strong sales through the second half. For the full
year, we forecast total shipments to this market of approximately 9.5 million
tonnes.

The Latin American market, particularly Brazil, started the year at a record
pace and we have a strong order book well into the second quarter. Buyers
remain optimistic about strong global demand for crops grown in this region
and are striving to spread large import volumes more evenly through the
calendar year to help alleviate pressure on port and distribution
infrastructure. For 2013, we forecast demand at or above record levels, with
total shipments to Latin America anticipated to exceed 10 million tonnes.

While many global commodities have been affected by concerns about slower
economic growth in China, food production is essential and demand for
agricultural products remains robust. First-quarter potash shipments to China
were strong and Canpotex's existing contract commitments to this market are
expected to be completed by the end of the second quarter. Discussions for the
second half of the year are expected to begin in May and we anticipate a
smooth transition to a new contract. China's demand is expected to grow to
approximately 11.5 million tonnes for the year, with total imports forecast
between 6.5 million and 7 million tonnes.

Although India's potash market continues to face uncertainty around subsidy
levels, new contracts settled during the quarter - including those by Canpotex
- are expected to provide an improved demand environment through the remaining
three quarters of the year, relative to the same period in 2012. We now
forecast 2013 shipments to this market of approximately 4 million tonnes.

In other Asian countries (outside of China and India), the first quarter
brought a re-emergence of demand and we anticipate increased shipments in the
coming quarters resulting from the strength of grower incentives and low
inventory positions. We continue to forecast demand for 2013 to outpace the
previous year and anticipate total shipments to this region could approach 8.5
million tonnes.

Financial Outlook

In this environment, we maintain our previous full-year 2013 estimates of
potash gross margin in the range of $1.9-$2.4 billion and shipments between
8.5 million and 9.2 million tonnes.

While additional market-related downtime will be likely during 2013, improved
operating rates and our ability to replace higher-cost tonnes from Esterhazy
with our own production are expected to reduce our cost of goods sold on a
per-tonne basis compared to 2012.

In nitrogen, sales volumes are expected to surpass 2012 levels as we increase
our production of downstream products following the restart of ammonia
capacity at our Geismar facility and expect fewer gas-related curtailments at
our Trinidad plants. A decline in prices for nitrogen-based products -
primarily urea - is expected to result in lower margins than previously
estimated, but the potential remains for record nitrogen gross margin in 2013.

In phosphate, global markets continue to be adversely impacted by uncertainty
related to the timing and extent of India's engagement. Improved demand in
North America and Latin America is expected to partially offset a weaker
Indian market, but we anticipate that pricing may lag that of 2012. Demand for
feed and industrial products is forecast to remain relatively strong and we
anticipate gross margins in these product categories to be near those of 2012.

Given these conditions, we now forecast full-year 2013 combined nitrogen and
phosphate gross margin of between $1.4 billion and $1.7 billion, but near-term
uncertainty could produce results toward the low end of our range.

With the exception of our guidance for income from offshore investments, which
we now expect to be in the range of $370-$400 million, all other previously
released guidance estimates for 2013 are unchanged: selling and administrative
expenses ($240-$260 million), finance costs ($100-$130 million), capital
expenditures ($1.5 billion), annual effective tax rate (25-27 percent) and
provincial mining and other taxes (11-13 percent of total potash gross
margin).

Based on these factors, PotashCorp maintains its full-year 2013 net income
guidance at $2.75-$3.25 per share, including second-quarter earnings in the
range of $0.70-$0.85 per share.

At PotashCorp, we always take a long-term approach to managing our business
and exercise patience in the execution of our strategy. This approach has led
to strong financial performance that enables us to build enduring value for
our shareholders, customers, employees, communities and business partners.
Over recent months, we have been exploring the possibility of expanding our
ownership interests in ICL. While we continue to believe that such a
transaction would be of tremendous benefit to stakeholders of both companies
and the State of Israel, there must be receptivity to foreign investment and
certainty in the rules that govern such investment. We have therefore
concluded that now is not the time to pursue this opportunity and will focus
our energies on other options to maximize shareholder value.

Conclusion

"All three nutrients are essential  for food production, but the  anticipation 
of growth in  potash demand represents  a unique opportunity  to showcase  the 
strength of our company," said Doyle. "We have nearly completed the investment
in our expansion projects and are ready to meet the increasing needs of potash
buyers around the world. We believe  this creates a tremendous opportunity  to 
generate stronger cash flows to enhance  returns for our shareholders and  add 
value for all those who depend upon us."

Notes

 1. All references to per-share amounts pertain to diluted net income per
    share.
 2. See reconciliation and description of non-IFRS measures in the attached
    section titled "Selected Non-IFRS Financial Measures and Reconciliations."
 3. Canpotex Limited (Canpotex), the offshore marketing company for
    Saskatchewan potash producers.

------------------------------------------------------------------------------

PotashCorp is the world's largest crop nutrient company and plays an integral
role in global food production. The company produces the three essential
nutrients required to help farmers grow healthier, more abundant crops. With
global population rising and diets improving in developing countries, these
nutrients offer a responsible and practical solution to meeting the long-term
demand for food. PotashCorp is the largest producer, by capacity, of potash
and third largest producer of nitrogen and phosphate. While agriculture is its
primary market, the company also produces products for animal nutrition and
industrial uses. Common shares of Potash Corporation of Saskatchewan Inc. are
listed on the Toronto Stock Exchange and the New York Stock Exchange.

This release contains forward-looking statements or forward-looking
information (forward-looking statements). These statements can be identified
by expressions of belief, expectation or intention, as well as those
statements that are not historical fact. These statements are based on certain
factors and assumptions including with respect to: foreign exchange rates,
expected growth, results of operations, performance, business prospects and
opportunities and effective tax rates. While the company considers these
factors and assumptions to be reasonable based on information currently
available, they may prove to be incorrect. Several factors could cause actual
results or events to differ materially from those expressed in the
forward-looking statements, including, but not limited to the following:
variations from our assumptions with respect to foreign exchange rates,
expected growth, results of operations, performance, business prospects and
opportunities, and effective tax rates; fluctuations in supply and demand in
the fertilizer, sulfur, transportation and petrochemical markets; costs and
availability of transportation and distribution for our raw materials and
products, including railcars and ocean freight; changes in competitive
pressures, including pricing pressures; adverse or uncertain economic
conditions and changes in credit and financial markets; the results of sales
contract negotiations within major markets; economic and political uncertainty
around the world; timing and impact of capital expenditures; risks associated
with natural gas and other hedging activities; changes in capital markets;
unexpected or adverse weather conditions; changes in currency and exchange
rates; unexpected geological or environmental conditions, including water
inflows; imprecision in reserve estimates; adverse developments in new and
pending legal proceedings or government investigations; acquisitions we may
undertake; strikes or other forms of work stoppage or slowdowns; rates of
return on and the risks associated with our investments; changes in, and the
effects of, government policies and regulations; security risks related to our
information technology systems; and earnings, exchange rates and the decisions
of taxing authorities, all of which could affect our effective tax rates.
Additional risks and uncertainties can be found in our Form 10-K for the
fiscal year ended December 31, 2012 under the captions "Forward-Looking
Statements" and "Item 1A - Risk Factors" and in our other filings with the US
Securities and Exchange Commission and the Canadian provincial securities
commissions. Forward-looking statements are given only as at the date of this
release and the company disclaims any obligation to update or revise the
forward-looking statements, whether as a result of new information, future
events or otherwise, except as required by law.

PotashCorp will host a Conference Call on Thursday, April 25, 2013 at 1:00 pm
                                Eastern Time.

                        
Telephone Conference:  Dial-in numbers:
                       From Canada and the US: 1-877-881-1303
                       From Elsewhere: 1-412-902-6510
                        
Live Webcast:          Visit www.potashcorp.com
                       Webcast participants can submit questions to management
                       online from their audio player pop-up window.
 

                   Potash Corporation of Saskatchewan Inc.
           Condensed Consolidated Statements of Financial Position
               (in millions of US dollars except share amounts)
                                 (unaudited)
                                                                              
                                                                   December
                                                   March 31,        31,       
As at                                                2013            2012     
                                                                              
       Assets                                                                 
           Current assets                                                     
               Cash and cash equivalents        $        585     $       562  
               Receivables                             1,120           1,089  
               Inventories                               715             762  
               Prepaid expenses and other
               current assets                             86              83  
                                                       2,506           2,496  
           Non-current assets                                                 
               Property, plant and equipment          11,692          11,505  
               Investments in
               equity-accounted investees              1,332           1,254  
               Available-for-sale investments          2,667           2,481  
               Other assets                              338             344  
               Intangible assets                         128             126  
       Total Assets                             $     18,663     $    18,206  
                                                                              
       Liabilities                                                            
           Current liabilities                                                
               Short-term debt and current
               portion of long-term debt
               (Note 2)                         $        581     $       615  
               Payables and accrued charges            1,104           1,188  
               Current portion of derivative
               instrument liabilities                     48              51  
                                                       1,733           1,854  
           Non-current liabilities                                            
               Long-term debt (Note 2)                 3,467           3,466  
               Derivative instrument
               liabilities                               157             167  
               Deferred income tax
               liabilities                             1,592           1,482  
               Pension and other
               post-retirement benefit
               liabilities                               538             569  
               Asset retirement obligations
               and accrued environmental
               costs                                     619             645  
               Other non-current liabilities
               and deferred credits                      115             111  
       Total Liabilities                               8,221           8,294  
                                                                              
       Shareholders' Equity                                                   
           Share capital                               1,550           1,543  
               Unlimited authorization of
               common shares without par
               value; issued and
               outstanding 865,135,124 and
               864,900,513 at March 31, 2013
               and
               December 31, 2012,
               respectively                                                   
           Contributed surplus                           311             299  
           Accumulated other comprehensive
           income                                      1,596           1,399  
           Retained earnings                           6,985           6,671  
       Total Shareholders' Equity                     10,442           9,912  
       Total Liabilities and Shareholders'
       Equity                                   $     18,663     $    18,206  
(See Notes to the Condensed Consolidated
Financial Statements)                                                         
                                                                              
 
 
 
 
 
                   Potash Corporation of Saskatchewan Inc.
                 Condensed Consolidated Statements of Income
             (in millions of US dollars except per-share amounts)
                                 (unaudited)
                                                                              
                                                      Three Months Ended      
                                                           March 31           
                                                     2013             2012    
                                                                              
Sales (Note 3)                                  $      2,100     $     1,746  
Freight, transportation and distribution               (149)           (104)  
Cost of goods sold                                   (1,084)           (944)  
Gross Margin                                             867             698  
Selling and administrative expenses                     (66)            (57)  
Provincial mining and other taxes                       (63)            (28)  
Share of earnings of equity-accounted
investees                                                 80              75  
Other expenses                                           (1)             (3)  
Operating Income                                         817             685  
Finance costs                                           (35)            (34)  
Income Before Income Taxes                               782             651  
Income taxes (Note 4)                                  (226)           (160)  
Net Income                                      $        556     $       491  
                                                                              
Net Income per Share (Note 5)                                                 
       Basic                                    $       0.64     $      0.57  
       Diluted                                  $       0.63     $      0.56  
                                                                              
Dividends Declared per Share                    $       0.28     $      0.14  
(See Notes to the Condensed Consolidated
Financial Statements)                                                         
                                                                              
 
 
 
 
 
                   Potash Corporation of Saskatchewan Inc.
          Condensed Consolidated Statements of Comprehensive Income
                         (in millions of US dollars)
                                 (unaudited)
 
                                                      Three Months Ended      
                                                           March 31           
(Net of related income taxes)                        2013            2012     
                                                                              
Net Income                                      $        556     $       491  
Other comprehensive income                                                    
       Items that will not be reclassified to
       net income:                                                            
           Net actuarial loss on defined
           benefit plans ^(1)                              -            (11)  
       Items that may be reclassified
       subsequently to net income:                                            
           Available-for-sale investments                                     
               Net fair value gain during the
               period ^(2)                               186             122  
           Cash flow hedges                                                   
               Net fair value loss during the
               period ^(3)                                 -            (13)  
               Reclassification to income of
               net loss ^(4)                              11              12  
Other Comprehensive Income                               197             110  
Comprehensive Income                            $        753    $        601  
^(1) Net of income taxes of $NIL (2012 - $4).
^(2) Available-for-sale investments are comprised of shares in Israel
Chemicals Ltd. and Sinofert Holdings Limited.
^(3) Cash flow hedges are comprised of natural gas derivative instruments and
are net of income taxes of $NIL (2012 - $8).
^(4) Net of income taxes of $(6) (2012 - $(8)).
(See Notes to the Condensed Consolidated Financial Statements)

                                                                                                                                         
                                                                                                                                         
                                                 Potash Corporation of Saskatchewan Inc.
                                          Condensed Consolidated Statement of Changes in Equity
                                                       (in millions of US dollars)
                                                               (unaudited)
                                                                                                                                         
                                                           Accumulated Other Comprehensive Income                                        
                                                Net
                                            unrealized          Net            Net                      Total                            
                                              gain on         loss on       actuarial                Accumulated                         
                                            available-      derivatives       loss                      Other                            
                                                            designated         on
                 Share      Contributed      for-sale           as           defined                Comprehensive     Retained     Total
                                                              cash flow       benefit
                Capital       Surplus       investments          hedges     plans^(1)     Other        Income         Earnings     Equity
                                                                                                                                         
Balance -
December 31,
2012          $   1,543   $         299   $       1,539   $       (138)   $         -   $   (2)   $         1,399   $    6,671   $  9,912
Net income            -               -               -               -             -         -                 -          556        556
Other
comprehensive
income                -               -             186              11             -         -               197            -        197
Dividends
declared              -               -               -               -             -         -                 -        (242)      (242)
Effect of
share-based
compensation
 including
issuance of
common shares         3              12               -               -             -         -                 -            -         15
Shares issued
for dividend
reinvestment
plan                  4               -               -               -             -         -                 -            -          4
Balance -
March 31,
2013          $   1,550   $         311   $       1,725   $       (127)   $         -   $   (2)   $         1,596   $    6,985   $ 10,442

^(1) Any amounts incurred during a period are closed out to retained earnings
at each period-end. Therefore, no balance exists at the beginning or end of
period.
(See Notes to the Condensed Consolidated Financial Statements)               
   

 

                   Potash Corporation of Saskatchewan Inc.
                Condensed Consolidated Statements of Cash Flow
                         (in millions of US dollars)
                                 (unaudited)
                                                                             
                                                           Three Months Ended
                                                                March 31
                                                            2013        2012
                                                                             
Operating Activities                                                         
Net income                                               $     556   $    491
                                                                             
Adjustments to reconcile net income to
cash provided by operating activities                                        
      Depreciation and amortization                            154        128
      Share-based compensation                                  16         16
      Provision for deferred income tax                        102         52
      Net undistributed earnings of
      equity-accounted investees                              (77)       (73)
      Pension and other post-retirement
      benefits                                                (31)          9
      Other long-term liabilities and
      miscellaneous                                             16          2
      Subtotal of adjustments                                  180        134
                                                                             
      Changes in non-cash operating
      working capital                                                        
      Receivables                                            (104)         49
      Inventories                                               47         26
      Prepaid expenses and other current
      assets                                                     1       (14)
      Payables and accrued charges                              58      (314)
      Subtotal of changes in non-cash
      operating working capital                                  2      (253)
Cash provided by operating activities                          738        372
                                                                             
Investing Activities                                                         
Additions to property, plant and equipment                   (496)      (476)
Other assets and intangible assets                             (5)       (20)
Cash used in investing activities                            (501)      (496)
                                                                             
Financing Activities                                                         
Repayment of long-term debt obligations                      (250)          -
Proceeds from short-term debt obligations                      211        168
Dividends                                                    (177)       (59)
Issuance of common shares                                        2          2
Cash (used in) provided by financing
activities                                                   (214)        111
Increase (Decrease) in Cash and Cash
Equivalents                                                     23       (13)
Cash and Cash Equivalents, Beginning of
Period                                                         562        430
Cash and Cash Equivalents, End of Period                 $     585   $    417
                                                                             
Cash and cash equivalents comprised of:                                      
      Cash                                               $     103   $     37
      Short-term investments                                   482        380
                                                         $     585   $    417
                                                                             
Supplemental cash flow disclosure                                            
      Interest paid                                      $       9   $     38
      Income taxes paid                                  $      55   $    316
(See Notes to the Condensed Consolidated
Financial Statements)                                                        
                                                                        
                                                                        

                   Potash Corporation of Saskatchewan Inc.
           Notes to the Condensed Consolidated Financial Statements
                  For the Three Months Ended March 31, 2013
            (in millions of US dollars except as otherwise noted) 
                                 (unaudited)

1. Significant Accounting Policies

With its subsidiaries, Potash Corporation of Saskatchewan Inc. ("PCS") —
together known as "PotashCorp" or "the company" except to the extent the
context otherwise requires — forms an integrated fertilizer and related
industrial and feed products company. The company's accounting policies are in
accordance with International Financial Reporting Standards, as issued by the
International Accounting Standards Board ("IFRS"). The accounting policies
used in preparing these unaudited interim condensed consolidated financial
statements are consistent with those used in the preparation of the company's
2012 annual consolidated financial statements, except as described below.

These unaudited interim condensed consolidated financial statements include
the accounts of PCS and its subsidiaries; however, they do not include all
disclosures normally provided in annual consolidated financial statements and
should be read in conjunction with the company's 2012 annual consolidated
financial statements. Further, while the financial figures included in this
preliminary interim results announcement have been computed in accordance with
IFRS applicable to interim periods, this announcement does not contain
sufficient information to constitute an interim financial report as that term
is defined in International Accounting Standard ("IAS") 34, "Interim Financial
Reporting". The company expects to publish an interim financial report that
complies with IAS 34 in its Quarterly Report on Form 10-Q in April 2013.

In management's opinion, the unaudited interim condensed consolidated
financial statements include all adjustments necessary to present fairly such
information. Interim results are not necessarily indicative of the results
expected for the fiscal year.

Pension and Other Post-Retirement Benefits

Effective January 1, 2013, the company applied "amendments to IAS 19, Employee
Benefits" on a prospective basis. The amendments resulted in changes in
accounting policy but did not result in any material adjustments to the
company's consolidated financial statements. Previously, the company
calculated interest costs on the defined benefit obligation and the expected
return on plan assets, and included such amounts within employee costs in cost
of goods sold and selling and administrative expenses, as applicable. The net
interest cost will now be calculated on the net funded status, and included in
finance costs. Previously, vested past service costs were recognized
immediately and unvested past service costs were amortized on a straight-line
basis over the average period until the benefits became vested. All past
service costs will now be recognized immediately. Actuarial gains and losses
will continue to be recognized in other comprehensive income, and closed out
to retained earnings each period. Required additional disclosures will be
included in the company's 2013 annual consolidated financial statements.

2. Long-Term Debt

On March 1, 2013, the company fully repaid $250 of 4.875 percent 10-year
senior notes at maturity.

3. Segment Information

The company has three reportable operating segments: potash, nitrogen and
phosphate. Inter-segment sales are made under terms that approximate market
value. The accounting policies of the segments are the same as those described
in Note 1.

                                  Three Months Ended March 31, 2013
                                                             All
                    Potash     Nitrogen     Phosphate     Others     Consolidated
                                                                                 
Sales             $    885   $      659   $       556   $      -   $        2,100
Freight,
transportation
and
distribution          (71)         (25)          (53)          -            (149)
Net sales -
third party            814          634           503          -                 
Cost of goods
sold                 (310)        (363)         (411)          -          (1,084)
Gross margin           504          271            92          -              867
Depreciation
and
amortization          (41)         (38)          (71)        (4)            (154)
Inter-segment
sales                    -           71            -           -                -
Cash flows for
additions to
property, plant
and equipment          349           45            65         37              496
                                                                                 
                                                                      
                                  Three Months Ended March 31, 2012
                                                             All
                    Potash     Nitrogen     Phosphate     Others     Consolidated
                                                                                 
Sales             $    583   $      550   $       613   $      -   $        1,746
Freight,
transportation
and
distribution          (34)         (29)          (41)          -            (104)
Net sales -
third party            549          521           572          -                 
Cost of goods
sold                 (222)        (302)         (420)          -            (944)
Gross margin           327          219           152          -              698
Depreciation
and
amortization          (30)         (35)          (60)        (3)            (128)
Inter-segment
sales                    -           42             -          -                -
Cash flows for
additions to
property, plant
and equipment          343           73            50         10              476
                                                                                 

4. Income Taxes

A separate estimated average annual effective tax rate is determined for each
taxing jurisdiction and applied individually to the interim period pre-tax
income of each jurisdiction.

                                                                  Three Months
                                                                     Ended
                                                                    March 31
                                                                  2013   2012
Income tax expense                                              $  226 $   160
Actual effective tax rate                                          27%     25%
on ordinary earnings                                             
Actual effective tax rate                                          29%     25%
including discrete items                                         
Discrete tax adjustments                                            19 $   (2)
that impacted the tax
rate                                                            $
                                                                              
                                                                              

Significant items to note include the following:

  * The actual effective tax rate on ordinary earnings for the first quarter
    of 2013 increased compared to the same period last year due to a different
    income weighting between jurisdictions.
  * In first-quarter 2013, a tax expense of $15 was recorded to adjust the
    2012 income tax provision.

5. Net Income Per Share

Net income per share was calculated on the following weighted average number
of shares:

                                                                                                                                  Three Months Ended
                                                                                                                                       March 31
                                                                                                                                2013              2012
Basic                                                                                                                        865,056,000       858,788,000
Diluted                                                                                                                      876,672,000       876,098,000
                                                                                                                                                          

Diluted net income per share was calculated based on the weighted average
number of shares issued and outstanding during the period, incorporating the
following adjustments.  The denominator was: (1) increased by the total of the
additional common shares that would have been issued assuming the exercise of
all stock options with exercise prices at or below the average market price
for the period; and (2) decreased by the number of shares that the company
could have repurchased if it had used the assumed proceeds from the exercise
of stock options to repurchase them on the open market at the average share
price for the period. For performance-based stock option plans, the number of
contingently issuable common shares included in the calculation was based on
the number of shares, if any, that would be issuable if the end of the
reporting period were the end of the performance period and the effect were
dilutive.

                   Potash Corporation of Saskatchewan Inc.
                           Selected Financial Data
                                 (unaudited)
                                                                              
                                                        Three Months Ended
                                                            March 31  
                                                      2013            2012
                                                                              
Potash Sales (tonnes - thousands)                                             
       Manufactured Product                                                   
            North America                                794               400
            Offshore                                   1,432               849
       Manufactured Product                            2,226             1,249
                                                                              
Potash Net Sales                                                              
       (US $ millions)                                                        
            Sales                                 $      885        $      583
            Freight, transportation
            and distribution                            (71)              (34)
            Net Sales                             $      814        $      549
                                                                              
                                                                 
       Manufactured Product                                                   
            North America                         $      331        $      199
            Offshore                                     477               344
       Other miscellaneous and
       purchased product                                   6                 6
       Net Sales                                  $      814        $      549
                                                                              
Manufactured Product                                                          
       Average Realized Sales Price
       per MT                                                                 
            North America                         $      417        $      497
            Offshore                              $      333        $      406
            Average                               $      363        $      435
       Cost of Goods Sold per MT                  $    (136)        $    (175)
       Gross Margin per MT                        $      227        $      260
                                                                       
 
 
 
 
                   Potash Corporation of Saskatchewan Inc.
                           Selected Financial Data
                                 (unaudited)
                                                                              
                                                        Three Months Ended
                                                             March 31
                                                      2013             2012
                                                                              
Average Natural Gas Cost in
Production per MMBtu                              $     6.10        $     4.75
Nitrogen Sales (tonnes - thousands)                                           
       Manufactured Product                                                   
            Ammonia                                      513               516
            Urea                                         305               334
            Solutions/Nitric
            acid/Ammonium nitrate                        622               440
       Manufactured Product                            1,440             1,290
                                                                              
       Fertilizer sales tonnes                           364               375
       Industrial/Feed sales tonnes                    1,076               915
       Manufactured Product                            1,440             1,290
                                                                              
Nitrogen Net Sales                                                            
       (US $ millions)                                                        
            Sales                                 $      659        $      550
            Freight, transportation
            and distribution                            (25)              (29)
            Net Sales                             $      634        $      521
                                                                              
       Manufactured Product                                                   
            Ammonia                               $      311        $      230
            Urea                                         145               154
            Solutions/Nitric
            acid/Ammonium nitrate                        161               110
       Other miscellaneous and
       purchased product                                  17                27
       Net Sales                                  $      634        $      521
                                                                              
       Fertilizer net sales                       $      154        $      155
       Industrial/Feed net sales                         463               339
       Other miscellaneous and
       purchased product                                  17                27
       Net Sales                                  $      634        $      521
                                                                              
Manufactured Product                                                          
       Average Realized Sales Price
       per MT                                                                 
            Ammonia                               $      606        $      447
            Urea                                  $      476        $      462
            Solutions/Nitric
            acid/Ammonium nitrate                 $      259        $      249
            Average                               $      429        $      383
            Fertilizer average price
            per MT                                $      423        $      413
            Industrial/Feed average
            price per MT                          $      430        $      371
            Average                               $      429        $      383
       Cost of Goods Sold per MT                  $    (242)        $    (223)
       Gross Margin per MT                        $      187        $      160
                                                                       
 
 
   
               Potash Corporation of Saskatchewan Inc.        
                       Selected Financial Data        
                             (unaudited)        
   
                                                          Three Months Ended
                                                             March 31
                                                      2013            2012
                                                                              
Phosphate Sales (tonnes - thousands)                                          
       Manufactured Product                                                   
            Fertilizer                                   590               637
            Feed and Industrial                          313               293
       Manufactured Product                              903               930
                                                                              
Phosphate Net Sales                                                           
       (US $ millions)                                                        
            Sales                                 $      556        $      613
            Freight, transportation
            and distribution                            (53)              (41)
            Net Sales                             $      503        $      572
                                                                              
       Manufactured Product                                                   
            Fertilizer                            $      297        $      363
            Feed and Industrial                          199               201
       Other miscellaneous and
       purchased product                                   7                 8
       Net Sales                                  $      503        $      572
                                                                              
Manufactured Product                                                          
       Average Realized Sales Price
       per MT                                                                 
            Fertilizer                            $      503        $      570
            Feed and Industrial                   $      635        $      686
            Average                               $      549        $      607
       Cost of Goods Sold per MT                  $    (451)        $    (447)
       Gross Margin per MT                        $       98        $      160
                                                                       
 
 
 
 
                   Potash Corporation of Saskatchewan Inc.
                           Selected Additional Data
                                 (unaudited)
                                                                              
Exchange Rate (Cdn$/US$)                                                      
                                                      2013             2012
                                                                              
December 31                                                             0.9949
March 31                                              1.0156            0.9991
First-quarter average conversion rate                 0.9972            1.0112
                                                                              
                                                        Three Months Ended
                                                             March 31
                                                      2013             2012
                                                                       
Production                                                                    
Potash production (KCl Tonnes -
thousands)                                             2,025             1,575
Potash shutdown weeks ^(1)                                16                29
Nitrogen production (N Tonnes -
thousands)                                               723               681
Phosphate production (P[2]O[5 ]Tonnes
- thousands)                                             499               486
Phosphate P[2]O[5] operating rate [ ]                    84%               82%
                                                                              
Shareholders                                                           
PotashCorp's shareholder return                          -3%               11%
                                                                              
Customers                                                                     
Product tonnes involved in customer
complaints (thousands)                                     8                15
                                                                              
Community                                                                
Taxes and royalties ($ millions) ^
(2)                                                      200                88
                                                                              
Employees                                                                
Annualized turnover rate (excluding
retirements)                                            4.5%              4.1%
                                                                         
Safety                                                                   
Total site recordable injury rate
(per 200,000 work hours) ^ (3)                          0.90              1.20
                                                                           
Environment                                                                   
Environmental incidents ^ (4)                              7                 7
                                                                              
                                                       March        December
                                                         31,      31,
As at                                                 2013             2012
                                                                              
Number of employees                                                           
       Potash                                          2,787             2,759
       Nitrogen                                          781               788
       Phosphate                                       1,773             1,792
       Other                                             435               440
       Total                                           5,776             5,779
                                                                              

^(1) Excludes planned routine annual maintenance shutdowns.
^(2) Taxes and royalties = current income tax expense - investment tax credits
- realized excess tax benefit related to share-based compensation + potash
production tax + resource surcharge + royalties + municipal taxes + other
miscellaneous taxes (calculated on an accrual basis).
^(3) As defined in our 2012 Annual Integrated Report. Total site includes
PotashCorp employees, contractors and others on site.
^(4) Total of reportable quantity releases, permit excursions and provincial
reportable spills (as defined in our 2012 Annual Integrated Report).
 

                   Potash Corporation of Saskatchewan Inc.
           Selected Non-IFRS Financial Measures and Reconciliations
            (in millions of US dollars except percentage amounts)
                                 (unaudited)

The following  information  is included  for  convenience only.  Generally,  a 
non-IFRS financial measure is a numerical measure of a company's  performance, 
financial position or cash flows that either excludes or includes amounts that
are not normally excluded or included in the most directly comparable  measure 
calculated and presented in accordance with IFRS. EBITDA, EBITDA margin,  cash 
flow prior to working capital changes and  free cash flow are not measures  of 
financial performance (nor do they have standardized meanings) under IFRS.  In 
evaluating these  measures, investors  should  consider that  the  methodology 
applied in calculating such measures may differ among companies and analysts.

The  company  uses  both  IFRS   and  certain  non-IFRS  measures  to   assess 
performance.  Management  believes  these  non-IFRS  measures  provide  useful 
supplemental  information  to  investors  in  order  that  they  may  evaluate 
PotashCorp's financial  performance using  the  same measures  as  management. 
Management believes  that,  as a  result,  the investor  is  afforded  greater 
transparency in  assessing the  financial performance  of the  company.  These 
non-IFRS financial measures should not be considered as a substitute for,  nor 
superior to, measures  of financial  performance prepared  in accordance  with 
IFRS.

A. EBITDA AND EBITDA MARGIN

Set forth below  is a  reconciliation of "EBITDA"  to net  income and  "EBITDA 
margin" to net income as a  percentage of sales, the most directly  comparable 
financial measures calculated and presented in accordance with IFRS.

                                                                                                      
                                                                                        Three Months
                                                                                            Ended
                                                                                          March 31
                                                                                       2013       2012
Net income                                                                           $  556     $  491
Finance costs                                                                            35         34
Income taxes                                                                            226        160
Depreciation and
amortization                                                                            154        128
EBITDA                                                                               $  971     $  813

EBITDA is calculated as earnings before finance costs, income taxes and
depreciation and amortization. PotashCorp uses EBITDA as a supplemental
financial measure of its operational performance. Management believes EBITDA
to be an important measure as it excludes the effects of items which primarily
reflect the impact of long-term investment and financing decisions, rather
than the performance of the company's day-to-day operations. As compared to
net income according to IFRS, this measure is limited in that it does not
reflect the periodic costs of certain capitalized tangible and intangible
assets used in generating revenues. Management evaluates such items through
other financial measures such as capital expenditures and cash flow provided
by operating activities. The company believes that these measurements are
useful to measure a company's ability to service debt and to meet other
payment obligations or as a valuation measurement.

                                                                    Three Months
                                                                           Ended
                                                                   March 31
                                                               2013        2012
Sales                                                        $ 2,100     $ 1,746
Freight, transportation and distribution                       (149)       (104)
Net sales                                                    $ 1,951     $ 1,642
                                                                                
Net income as a percentage of
sales                                                            26%         28%
EBITDA margin                                                    50%         50%

EBITDA margin is calculated as EBITDA divided by net sales (sales less
freight, transportation and distribution). Management believes comparing the
company's operations (excluding the impact of long-term investment decisions)
to net sales earned (net of costs to deliver product) is an important
indicator of efficiency. In addition to the limitations given above in using
EBITDA as compared to net income, EBITDA margin as compared to net income as a
percentage of sales is also limited in that freight, transportation and
distribution costs are incurred and valued independently of sales; EBITDA also
includes earnings from equity investees whose sales are not included in
consolidated sales. Management evaluates these expenses individually on the
consolidated statements of income.

                   Potash Corporation of Saskatchewan Inc.
           Selected Non-IFRS Financial Measures and Reconciliations
                         (in millions of US dollars)
                                 (unaudited)

B. CASH FLOW

Set forth below is a reconciliation of "cash flow prior to working capital
changes" and "free cash flow" to cash provided by operating activities, the
most directly comparable financial measure calculated and presented in
accordance with IFRS.

                                                            Three Months Ended
                                                                 March 31
                                                             2013        2012
Cash flow prior to working
capital changes ^                                         $    736     $   625
Changes in non-cash operating
working capital                                                               
   Receivables                                               (104)          49
   Inventories                                                  47          26
   Prepaid expenses and other
   current assets                                                1        (14)
   Payables and accrued charges                                 58       (314)
Changes in non-cash operating
working capital                                                  2       (253)
Cash provided by operating
activities                                                $    738     $   372
Additions to property, plant
and equipment                                                (496)       (476)
Other assets and intangible
assets                                                         (5)        (20)
Changes in non-cash operating
working capital                                                (2)         253
Free cash flow                                            $    235     $   129

 

The company uses cash flow prior to working capital changes as a supplemental
financial measure in its evaluation of liquidity. Management believes that
adjusting principally for the swings in non-cash working capital items due to
seasonality or other timing issues assists management in making long-term
liquidity assessments. The company also believes that this measurement is
useful as a measure of liquidity or as a valuation measurement.

The company uses free cash flow as a supplemental financial measure in its
evaluation of liquidity and financial strength.  Management believes that
adjusting principally for the swings in non-cash operating working capital
items due to seasonality or other timing issues, additions to property, plant
and equipment, and changes to other assets assists management in the long-term
assessment of liquidity and financial strength.  The company also believes
that this measurement is useful as an indicator of its ability to service its
debt, meet other payment obligations and make strategic investments.  Readers
should be aware that free cash flow does not represent residual cash flow
available for discretionary expenditures.

 

 

 

 

SOURCE Potash Corporation of Saskatchewan Inc.

Contact:

Investors
Denita Stann
Vice President, Investor and Public Relations
Phone: (306) 933-8521
Fax: (306) 933-8844
Email: ir@potashcorp.com 

Media 
Bill Johnson
Senior Director, Public Affairs
Phone: (306) 933-8849
Fax: (306) 933-8844
Email: pr@potashcorp.com

Web Site: www.potashcorp.com
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