PotashCorp profit falls 45% to $230M
Potash Corporation of Saskatchewan says its fourth-quarter profit dropped to US$230 million — down 45 per cent from a year earlier as it took hits from lower fertilizer prices and downsizing.
The profit amounted to 26 cents per share, including a US$60 million charge or about five cents per share, for severance-related costs for a labour force reduction announced in December.
The Saskatoon-based company — which is one of the world's largest producers of potash — announced in December that it would cut its workforce by about 18 per cent, affecting 1,045 people.
PotashCorp said it still expects to book millions of dollars in non-cash expenses during 2014 related to the downsizing announced last year.
Sales up, prices down
The company said Thursday that sales volumes were higher in the fourth quarter than in comparable periods but competitive pressures resulted in lower prices for the potash, nitrogen and phosphate it sold.
Overall sales revenue fell to US$1.54 billion, down from $1.64 billion in the fourth quarter of 2012, but above the consensus estimate of $1.4 billion.
The company's earnings were below analyst estimates of 31 cents per share, according to Thomson Reuters data.
The company's profit estimate for the first quarter of 2014, between 30 and 35 cents US per share, was also well below estimates.
"This past quarter was a difficult one," said PotashCorp CEO Bill Doyle said in a statement Thursday.
"Pricing headwinds — most notably in potash — weighed on our performance, although there were signs as the quarter came to a close that the uncertainty in global markets was beginning to abate."
"Our focus remained on those things we can influence and we took important steps to enhance our competitive position across all three nutrients and prepare the company to deliver better performance."
PotashCorp said in December it would cut 440 job cuts in Saskatchewan, 130 jobs in New Brunswick, and more than 435 in the United States, particularly in Florida, to reduce costs.
It said in Thursday that the company is positioned to reduce its potash production costs by $15-20 per tonne from 2013 levels.
But it anticipates a $16-million increase in non-cash costs due to depreciation of its Penobsquis mine in New Brunswick and $54 million related to ramping up its Picadilly and Rocanville operations.
It's outlook also foresees lower nitrogen profit margins while the phosphate business will likely keep margins at about 2013 levels.
"While the closure of one of our chemical plants at White Springs (in Florida) during the second half of 2014 will lower production slightly, the timing of the curtailment is unlikely to result in significant lost sales volumes for the year."
"Our non-cash costs will be elevated in 2014 (estimated at $43 million) as we accelerate depreciation on assets impacted by our previously announced operational changes.
Last week, Canpotex, the export partnership including PotashCorp, Agrium and Mosiac, announced a deal for the supply of 700,000 metric tonnes of potash to Chinese company Sinochem Fertilizer Macao Commerical Offshore Ltd.
Financial terms of the sale were not immediately available.