The world's largest potash producer, Potash Corporation of Saskatchewan, reported yesterday third-quarter earnings of $403 million, the second-highest third-quarter total in company history, for a diluted net income of $1.32 per share. The results far surpass analysts' forecasts of $1.16 per share.
Revenues for the quarter reached about $1.6 billion, a 43% jump over the relatively weak sales in the same quarter last year.
During the quarter the company produced 1.26 million tons of potash, up 102% over the third quarter of 2009. Sales were 1.9 million tons, 87% greater than in the same period last year. Revenues from potash sales, one of the three mainstays of the fertilizer company - the others being phosphates and nitrogen - were 46% higher than in last year's third quarter, climbing to $582 million. The average sales price, $306 per ton, was a considerable 21.5% drop in price from that achieved last year.
According to CEO William Doyle, the price drop was an adjustment made in the fourth quarter of 2009 due to the global economic crisis. The average selling price to destinations outside North America dropped even more precipitously, 27% less than in the same quarter last year, to $277 per ton. Doyle reports, however, that since last month prices have been rising.
Doyle also pointed out that that Cantopex, the jointly-owned export arm of the three major Canadian potash producers - PCS, Agrium and Mosaic - has begun talks with the Chinese fertilizer importer Sinofert on supply conditions in 2011, within the framework of the existing three-year supply contract between the two sides for the years 2011 to 2013. That agreement calls for a total shipment of 3.15 million tons.
Doyle added that potash imports to India in 2010 will break all previous records, and the level will be maintained in 2011 as part of the effort by Indian authorities to control inflation in food prices. A $50 price hike announced in September for Brazil and Southeast Asia will take effect in January 2011.
