Symbol: POT
Listed: TSX, NYSE
Key Highlights
- Earnings of $0.38 per
share1for third-quarter 2014; nine-month total of
$1.33 per share
- Third-quarter cash provided by operating activities of
$574 million
- Higher potash sales volumes for both the quarter and first nine
months
- Improved potash realizations (up $18 per tonne from second-quarter 2014)
- Record nine-month nitrogen gross margin of $776 million
- Full-year guidance now $1.75-$1.85 per share; previous range
$1.70-$1.90 per share
SASKATOON, Oct. 23, 2014 /CNW/ - Potash Corporation of
Saskatchewan Inc. (PotashCorp) reported third-quarter earnings of
$0.38 per share ($317 million), bringing our total for the first
nine months of 2014 to $1.33 per
share ($1.1 billion). Although potash
and nitrogen performance improved over last year's third quarter,
higher tax expenses and weaker contributions from offshore equity
investments weighed on results. On a comparative basis, both the
quarterly and nine-month amounts trailed last year's totals of
$0.41 per share ($356 million) and $1.77 per share ($1.6
billion), respectively.
Gross margin increased to $589 million, significantly exceeding the
$484 million generated during
third-quarter 2013. For the first nine months, gross margin of
$1.9 billion trailed the $2.3 billion earned in the same period last year
- largely the result of lower potash prices and weaker phosphate
performance.
Cash from operating activities for both the
quarter ($574 million) and first nine
months ($1.9 billion) were below last
year's comparative period amounts ($616
million and $2.6 billion).
With declining capital expenditures, free cash flow2 for
both periods surpassed 2013 totals.
Lower contributions from our offshore
investments were the result of reduced potash earnings at these
companies. Our investments in Arab Potash Company (APC) in
Jordan, Israel Chemicals Ltd.
(ICL) in Israel and Sociedad
Quimica y Minera de Chile S.A. (SQM) in Chile contributed $24
million to our third-quarter earnings and brought the
nine-month total to $179 million.
These amounts were well below the 2013 comparative period totals of
$85 million and $251 million, respectively - with the nine-month
total including a dividend from Sinofert Holdings Limited
(Sinofert) in China. The market
value of our investments in all four of these publicly traded
companies equated to approximately $4
billion, or $5 per PotashCorp
share, at market close on October 22,
2014.
"We continue to see encouraging signs in each of
our major potash markets with a renewal of demand translating into
higher sales volumes," said PotashCorp President and Chief
Executive Officer Jochen Tilk.
"Furthermore, we experienced another quarter of improved potash
pricing trends, which strengthened our earnings. Combined with
internal efforts to optimize our operations, these positive
developments mark important steps toward a stronger performance for
our company."
Market Conditions
Unlike 2013, when global potash demand stalled
due to market uncertainty, this year's third quarter saw all key
markets engaged. This shift was most significant offshore, with
greater demand in Asian and Latin American markets leading to
higher shipments from North American producers. Purchasing activity
in North America remained healthy
as dealers worked to position product in advance of anticipated
fall requirements.
Global potash shipments through the first nine
months of 2014 were at all-time highs. During the third quarter,
typical maintenance downtime further tightened market fundamentals
and resulted in prices moving higher in all major spot markets.
In nitrogen, strong global demand and supply
constraints in key exporting countries led to higher prices for
ammonia. Improved fundamentals contributed to higher prices for
urea and UAN products compared to the prior year, although greater
supply availability in urea caused prices to show signs of seasonal
softness as the quarter came to a close. Similarly, phosphate
prices for third-quarter 2014 were stronger relative to the
previous year, given healthier demand and the influence of higher
input and production costs.
Potash
Increased sales volumes raised our third-quarter
potash gross margin to $295 million,
above the $228 million earned in
2013's same period. Given that realized prices were higher through
the first six months of 2013, our nine-month gross margin total of
$990 million trailed the $1.3 billion earned during the comparative period
last year.
Our sales volumes continued to outpace
prior-year levels, with total shipments of 2.0 million tonnes for
the quarter and 6.8 million tonnes for the first nine months
exceeding the comparative periods by 29 percent and 8 percent,
respectively. For the quarter, the rebound was most pronounced
offshore where sales volumes were up 45 percent as the comparative
period in 2013 saw significantly more volatility and uncertainty
there than in the North American market. The majority of
Canpotex3 shipments were to Other Asian countries (38
percent) and Latin America (32
percent), while India and
China accounted for 14 percent and
9 percent respectively. In North
America, sales volumes increased 9 percent from last year's
comparative period as customers took deliveries in anticipation of
strong farmer demand to replenish crop nutrients following an
expected record harvest.
Our average realized potash price for the
quarter was $281 per tonne, trailing
the $307 per tonne realized in last
year's third quarter. This decrease was the result of lower
offshore prices as the sharp decline through the final half of 2013
had yet to be fully reflected in prior-period results. A greater
proportion of sales to lower-priced offshore markets also had a
negative impact.
Improved operational efficiencies from our
workforce realignment, as well as higher production levels and a
weaker Canadian dollar, contributed to lower per-tonne cost of
goods sold. While costs reflected the usual seasonal increase due
to our maintenance turnarounds, they improved by $28 per tonne relative to the comparative period
in 2013 and $16 per tonne through the
first nine months of 2014.
Nitrogen
In nitrogen, higher sales volumes and strong
price realizations raised gross margin for the quarter to
$233 million. This surpassed the
$178 million generated during the
same period last year, raising our total for the first nine months
of 2014 to $776 million - the highest
in our history.
Improved production levels across all nitrogen
facilities more than offset losses from gas curtailments in
Trinidad and raised third-quarter
sales volumes to 1.5 million tonnes, 8 percent above third-quarter
2013. Nine-month totals reached 4.8 million tonnes, exceeding the
comparable period last year by 10 percent.
With key benchmark pricing at higher levels, our
average realized price for this year's third quarter ($356 per tonne) increased 6 percent relative to
the same period in 2013.
Cost of goods sold for the quarter was
$209 per tonne, relatively flat
compared to the same period last year, as efficiencies from
increased production more than offset higher natural gas costs.
Phosphate
In phosphate, third-quarter and nine-month gross
margin totals of $61 million and
$135 million trailed the $78 million and $260
million earned during the respective periods in 2013.
Reduced production and increased costs (including approximately
$20 million in notable charges during
this year's third quarter) weighed on our results in this
nutrient.
The closure in July of our Suwannee River chemical plant, combined with
mechanical challenges at our White Springs facility, constrained
the number of tonnes available for sale. Our total third-quarter
sales volumes were 0.7 million tonnes, 21 percent below the
comparative period total in 2013, with production largely shifting
away from certain lower-margin fertilizer products. For the first
nine months, sales volumes of 2.3 million tonnes were below the 2.7
million tonnes sold in 2013.
Our average realized phosphate price for
third-quarter 2014 was $517 per
tonne, exceeding the $467 per tonne
in last year's same period. This increase was largely due to a
greater proportion of our production being allocated to
higher-netback feed and industrial products, in addition to
improved prices for our fertilizer products because of better
market fundamentals.
Third-quarter cost of goods sold of $437 per tonne was higher than the $384 per tonne during 2013's same period. Lower
production levels coupled with unfavorable adjustments to asset
retirement obligations ($4 million),
higher water treatment costs due to excessive rainfall
($8 million) and accelerated
depreciation charges related to the closure of Suwannee River ($5
million) were the primary factors.
Financial
Provincial mining and other taxes for the
quarter totaled $52 million, well
above the $10 million recorded in
third-quarter 2013, which reflected significant adjustments to
forecasted annual potash production tax accruals given the rapidly
changing market environment.
With a higher effective tax rate related to
different income weightings between jurisdictions and certain
discrete tax adjustments, the $156
million income tax expense for the quarter significantly
exceeded the $116 million recognized
in 2013's comparable period.
Market Outlook
As we move into the fourth quarter, we continue
to see strong customer engagement in all key potash markets. We
anticipate global shipments will surpass the upper end of our
previous guidance, and now forecast totals for 2014 to be in the
range of 58-60 million tonnes. While recent weakness in crop prices
is expected to result in some reduction to global crop acreage, we
believe potash remains an affordable and necessary investment for
growers as they look to offset lower prices by enhancing
yields.
In North
America, the fall application season is underway and product
demand remains strong. Given what we believe are especially low
potash inventories throughout the North American supply chain,
distributors are actively positioning product in advance of
anticipated needs. Even though dealers are taking these steps, we
forecast that sales volumes will slow through the fourth quarter,
with the majority of PotashCorp's shipments fulfilling previously
committed summer-fill tonnes.
In Latin
America, product for the key planting season is now largely
in place and we believe buyers have shifted their focus to Safrinha
crop requirements. Although customers continue to secure potash
tonnage, we expect shipments to this region will begin to reflect
the typical seasonal slowdown as the end of the year approaches.
Even with this expected slowdown, we believe annual Latin American
demand will again establish a record.
In both China
and India we have seen encouraging
potash consumption trends, including increased demand for compound
fertilizers with higher potassium content. Canpotex continues to
deliver product to both markets under previous commitments and we
anticipate shipments will remain strong during the final quarter of
2014.
Potash demand in Other Asian countries (outside
of China and India) remains healthy. Stronger demand for
standard product through the second half of 2014 has translated
into higher transacted prices in recent tenders and is expected to
be reflected in our realized prices in early 2015.
Financial Outlook
As a result of these market conditions, we have
increased our estimate for potash annual sales volumes to 9.0-9.2
million tonnes. Fourth-quarter shipments are expected to be heavily
weighted towards offshore contract markets and to result in lower
average realizations. We now anticipate potash gross margin will
approximate $1.3-$1.4 billion.
We expect robust nitrogen fundamentals,
especially for ammonia, will continue through the balance of the
year. While gas supply restrictions at our Trinidad facility are now anticipated to
exceed our previous estimates, sales volumes are expected to
outpace previous-year levels and result in record nitrogen gross
margin in 2014. In phosphate, we anticipate relatively stable
markets through the balance of the year. Our sales volumes are
expected to remain below those of fourth-quarter 2013 with the
closure of our Suwannee River
chemical plant. Given these considerations, we now forecast our
2014 combined nitrogen and phosphate gross margin will be in the
range of $1.2-$1.3 billion.
We have revised our annual estimate for income
from offshore investments to a range of $205-$215 million to better align with projected
earnings and associated tax changes in Chile and Israel. The Chilean tax change is also
expected to impact our annual effective tax rate, which is now
anticipated to be in the range of 27-29 percent.
Based on these factors, we now expect our annual
earnings range to be $1.75-$1.85 per
share. Other guidance numbers remain unchanged and are outlined in
the table below along with those noted above.
2014 Annual
Guidance |
Potash sales volumes |
9.0-9.2 million tonnes |
Potash gross margin |
$1.3-$1.4 billion |
Nitrogen and phosphate gross margin |
$1.2-$1.3 billion |
Capital expenditures |
~$1.1 billion |
Effective tax rate |
27-29 percent |
Provincial mining and other taxes* |
16-18 percent |
Selling and administrative expenses |
$235-$245 million |
Finance costs |
$175-$185 million |
Income from offshore investments** |
$205-$215 million |
Earnings per share |
$1.75-$1.85 |
* As a percentage of potash gross margin
** Includes income from dividends and share of equity earnings
Conclusion
"The potash market has exhibited strong growth this year,
challenging global supply and logistics," said Tilk. "We are
working to ensure we have the flexibility to respond to potash
demand in 2015 - which we expect to be another strong year. As we
look ahead, our management team is focused on enhancing the
position and potential of PotashCorp for the many stakeholders
depending on our ongoing success."
Notes
- All references to per-share amounts pertain to diluted net
income per share.
- See reconciliation and description of non-IFRS measures in
the attached section titled "Selected Non-IFRS Financial Measures
and Reconciliations."
- 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 the 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 one of the largest producers 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.
Website: www.potashcorp.com
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 often contain words such
as "should", "could", "expect", "may", "anticipate", "believe",
"intend", "estimates", "plans" and similar expressions. 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. Forward-looking
statements are subject to risks and uncertainties that are
difficult to predict. The results or events set forth in
forward-looking statements may differ materially from actual
results or events. 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; risks and uncertainties related to operating and workforce
changes made in response to our industry and the markets we serve;
changes in competitive pressures, including pricing pressures;
risks and uncertainties related to our international operations and
assets; 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;
adverse or uncertain economic conditions and changes in credit and
financial markets; the results of sales contract negotiations
within major markets; unexpected geological or environmental
conditions, including water inflows; economic and political
uncertainty around the world; risks associated with natural gas and
other hedging activities; changes in capital markets;
unexpected or adverse weather conditions; changes in currency and
exchange rates; imprecision in reserve estimates; adverse
developments in new and pending legal proceedings or government
investigations; acquisitions we may undertake; increases in the
price or reduced availability of the raw materials that we use;
strikes or other forms of work stoppage or slowdowns; timing and
impact of capital expenditures; rates of return on, and the risks
associated with, our investments and capital expenditures; changes
in, and the effects of, government policies and regulations;
security risks related to our information technology systems; risks
related to reputational loss; and earnings and the decisions of
taxing authorities 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,
2013 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 October 23, 2014 at
1:00 pm Eastern Time.
|
|
Telephone Conference: |
Dial-in numbers: |
|
- From Canada and the US: 1-877-881-1303
- From Elsewhere: 1-412-902-6719
|
|
|
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) |
|
|
|
|
|
|
|
|
|
|
|
September 30, |
|
|
|
December 31, |
As at |
|
|
2014 |
|
|
|
2013 |
|
|
|
|
|
|
|
|
Assets |
|
|
|
|
|
|
|
|
Current assets |
|
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
152 |
|
|
$ |
628 |
|
|
Receivables |
|
|
820 |
|
|
|
752 |
|
|
Inventories |
|
|
690 |
|
|
|
728 |
|
|
Prepaid expenses and other current assets |
|
|
58 |
|
|
|
81 |
|
|
|
1,720 |
|
|
|
2,189 |
|
Non-current assets |
|
|
|
|
|
|
|
|
|
Property, plant and equipment |
|
|
12,428 |
|
|
|
12,233 |
|
|
Investments in equity-accounted investees |
|
|
1,230 |
|
|
|
1,276 |
|
|
Available-for-sale investments (Note 2) |
|
|
1,490 |
|
|
|
1,722 |
|
|
Other assets |
|
|
351 |
|
|
|
401 |
|
|
Intangible assets |
|
|
142 |
|
|
|
137 |
Total Assets |
|
$ |
17,361 |
|
|
$ |
17,958 |
|
|
|
|
|
|
|
|
Liabilities |
|
|
|
|
|
|
|
|
Current liabilities |
|
|
|
|
|
|
|
|
|
Short-term debt and current portion of long-term
debt (Note 3) |
|
$ |
980 |
|
|
$ |
967 |
|
|
Payables and accrued charges |
|
|
948 |
|
|
|
1,104 |
|
|
Current portion of derivative instrument
liabilities |
|
|
49 |
|
|
|
42 |
|
|
|
1,977 |
|
|
|
2,113 |
|
Non-current liabilities |
|
|
|
|
|
|
|
|
|
Long-term debt (Note 3) |
|
|
3,212 |
|
|
|
2,970 |
|
|
Derivative instrument liabilities |
|
|
107 |
|
|
|
129 |
|
|
Deferred income tax liabilities |
|
|
2,150 |
|
|
|
2,013 |
|
|
Pension and other post-retirement benefit
liabilities |
|
|
422 |
|
|
|
410 |
|
|
Asset retirement obligations and accrued
environmental costs |
|
|
608 |
|
|
|
557 |
|
|
Other non-current liabilities and deferred
credits |
|
|
125 |
|
|
|
138 |
Total Liabilities |
|
|
8,601 |
|
|
|
8,330 |
|
|
|
|
|
|
|
|
Shareholders' Equity |
|
|
|
|
|
|
|
|
Share capital |
|
|
1,620 |
|
|
|
1,600 |
|
|
Unlimited authorization of common shares
without par value; issued and
outstanding 829,695,745 and 856,116,325 at September 30, 2014
and
December 31, 2013, respectively |
|
|
|
|
|
|
|
|
Contributed surplus |
|
|
229 |
|
|
|
219 |
|
Accumulated other comprehensive
income |
|
|
495 |
|
|
|
673 |
|
Retained earnings |
|
|
6,416 |
|
|
|
7,136 |
Total Shareholders' Equity |
|
|
8,760 |
|
|
|
9,628 |
Total Liabilities and Shareholders'
Equity |
|
$ |
17,361 |
|
|
$ |
17,958 |
(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 and share amounts) |
(unaudited) |
|
|
|
Three
Months Ended |
|
Nine Months
Ended |
|
|
September
30 |
|
September
30 |
|
|
|
2014 |
|
|
2013 |
|
|
2014 |
|
|
2013 |
|
|
|
Sales (Note 4) |
|
$ |
1,641 |
|
$ |
1,520 |
|
$ |
5,213 |
|
$ |
5,764 |
Freight, transportation and
distribution |
|
|
(141) |
|
|
(139) |
|
|
(465) |
|
|
(435) |
Cost of goods sold |
|
|
(911) |
|
|
(897) |
|
|
(2,847) |
|
|
(2,999) |
Gross Margin |
|
|
589 |
|
|
484 |
|
|
1,901 |
|
|
2,330 |
Selling and administrative
expenses |
|
|
(49) |
|
|
(48) |
|
|
(172) |
|
|
(165) |
Provincial mining and other taxes |
|
|
(52) |
|
|
(10) |
|
|
(175) |
|
|
(154) |
Share of earnings of equity-accounted
investees |
|
|
20 |
|
|
57 |
|
|
85 |
|
|
174 |
Dividend income |
|
|
7 |
|
|
31 |
|
|
100 |
|
|
85 |
Impairment of available-for-sale
investment (Note 2) |
|
|
- |
|
|
- |
|
|
(38) |
|
|
- |
Other income (expenses) |
|
|
5 |
|
|
(9) |
|
|
36 |
|
|
(21) |
Operating Income |
|
|
520 |
|
|
505 |
|
|
1,737 |
|
|
2,249 |
Finance costs |
|
|
(47) |
|
|
(33) |
|
|
(142) |
|
|
(107) |
Income Before Income Taxes |
|
|
473 |
|
|
472 |
|
|
1,595 |
|
|
2,142 |
Income taxes (Note 5) |
|
|
(156) |
|
|
(116) |
|
|
(466) |
|
|
(587) |
Net Income |
|
$ |
317 |
|
$ |
356 |
|
$ |
1,129 |
|
$ |
1,555 |
|
Net Income per Share |
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
$ |
0.38 |
|
$ |
0.41 |
|
$ |
1.34 |
|
$ |
1.80 |
|
Diluted |
|
$ |
0.38 |
|
$ |
0.41 |
|
$ |
1.33 |
|
$ |
1.77 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends Declared per
Share |
|
$ |
0.35 |
|
$ |
0.35 |
|
$ |
1.05 |
|
$ |
0.98 |
|
Weighted Average Shares
Outstanding |
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
|
829,506,000 |
|
|
866,108,000 |
|
|
840,837,000 |
|
|
865,707,000 |
|
Diluted |
|
|
835,835,000 |
|
|
874,339,000 |
|
|
847,429,000 |
|
|
876,027,000 |
(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 |
|
|
Nine Months
Ended |
|
|
|
September 30 |
|
|
September
30 |
(Net of related income taxes)
|
|
|
|
2014 |
|
2013 |
|
|
|
2014 |
|
|
2013 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income |
|
|
$ |
317 |
$ |
356 |
|
|
$ |
1,129 |
|
$ |
1,555 |
Other comprehensive loss |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Items that will not be reclassified to
net income: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net actuarial gain on defined benefit
plans (1) |
|
|
|
- |
|
- |
|
|
|
- |
|
|
150 |
|
Items that have been or may be
subsequently reclassified to net income: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Available-for-sale investments
(2) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net fair value loss during the period
|
|
|
|
(229) |
|
(267) |
|
|
|
(194) |
|
|
(737) |
|
|
Cash flow hedges |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net fair value loss during the period
(3) |
|
|
|
(6) |
|
- |
|
|
|
(7) |
|
|
- |
|
|
|
Reclassification to income of net loss
(4) |
|
|
|
7 |
|
6 |
|
|
|
20 |
|
|
25 |
|
|
Other |
|
|
|
(1) |
|
3 |
|
|
|
3 |
|
|
1 |
Other Comprehensive Loss
|
|
|
|
(229) |
|
(258) |
|
|
|
(178) |
|
|
(561) |
Comprehensive Income
|
|
|
$ |
88 |
$ |
98 |
|
|
$ |
951 |
|
$ |
994 |
(1) Net of income taxes of
$NIL (2013 - $NIL) for the three months ended September 30, 2014
and $NIL (2013 - $(87)) for the nine months ended September 30,
2014. |
(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 were net of
income taxes of $3 (2013 - $NIL) for the three months ended
September 30, 2014 and $4 (2013 - $NIL) for the nine months ended
September 30, 2014. |
(4) Net of income taxes of
$(3) (2013 - $(4)) for the three months ended September 30, 2014
and $(11) (2013 - $(14)) for the nine months ended September 30,
2014. |
(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 |
|
|
|
Total |
|
|
|
|
|
|
|
|
gain on |
|
loss on |
|
|
|
Accumulated |
|
|
|
|
|
|
|
|
available- |
|
derivatives |
|
|
|
Other |
|
|
|
|
|
Share |
|
Contributed |
|
for-sale |
|
designated as |
|
|
|
Comprehensive |
|
Retained |
|
Total |
|
Capital |
|
Surplus |
|
investments |
|
cash flow
hedges |
|
Other |
|
Income |
|
Earnings |
|
Equity |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance - December 31, 2013 |
$ |
1,600 |
|
$ |
219 |
|
$ |
780 |
|
$ |
(105) |
|
$ |
(2) |
|
$ |
673 |
|
$ |
7,136 |
|
$ |
9,628 |
Net income |
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
1,129 |
|
|
1,129 |
Other comprehensive (loss) income |
|
- |
|
|
- |
|
|
(194) |
|
|
13 |
|
|
3 |
|
|
(178) |
|
|
- |
|
|
(178) |
Share repurchase |
|
(53) |
|
|
(2) |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
(976) |
|
|
(1,031) |
Dividends declared |
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
(873) |
|
|
(873) |
Effect of share-based
compensation
including issuance of common
shares |
|
43 |
|
|
12 |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
55 |
Shares issued for
dividend
reinvestment plan |
|
30 |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
30 |
Balance - September 30, 2014 |
$ |
1,620 |
|
$ |
229 |
|
$ |
586 |
|
$ |
(92) |
|
$ |
1 |
|
$ |
495 |
|
$ |
6,416 |
|
$ |
8,760 |
(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 |
|
Nine Months Ended |
|
September 30 |
|
September 30 |
|
|
2014 |
|
2013 |
|
|
2014 |
|
|
2013 |
|
|
|
|
|
|
|
|
|
|
|
Operating Activities |
|
|
|
|
|
|
|
|
|
|
Net income |
$ |
317 |
$ |
356 |
|
$ |
1,129 |
|
$ |
1,555 |
|
|
|
|
|
|
|
|
|
|
|
Adjustments to reconcile net income to
cash provided by operating activities |
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
161 |
|
149 |
|
|
519 |
|
|
489 |
|
Share-based compensation |
|
3 |
|
4 |
|
|
22 |
|
|
25 |
|
Net distributed (undistributed) earnings of equity-accounted
investees
|
|
54
|
|
(55)
|
|
|
51
|
|
|
(62) |
|
Impairment of available-for-sale investment (Note
2) |
|
- |
|
- |
|
|
38 |
|
|
- |
|
Provision for deferred income tax |
|
32 |
|
58 |
|
|
142 |
|
|
311 |
|
Pension and other post-retirement benefits |
|
2 |
|
12 |
|
|
23 |
|
|
(10) |
|
Asset retirement obligations and accrued
environmental costs |
|
7 |
|
(12) |
|
|
16 |
|
|
(16) |
|
Other long-term liabilities and miscellaneous |
|
7 |
|
6 |
|
|
10 |
|
|
69 |
|
Subtotal of adjustments |
|
266 |
|
162 |
|
|
821 |
|
|
806 |
|
|
|
|
|
|
|
|
|
|
|
|
Changes in non-cash operating working
capital |
|
|
|
|
|
|
|
|
|
|
|
Receivables |
|
24 |
|
96 |
|
|
(80) |
|
|
162 |
|
Inventories |
|
7 |
|
(12) |
|
|
24 |
|
|
29 |
|
Prepaid expenses and other current assets |
|
(6) |
|
(17) |
|
|
21 |
|
|
(4) |
|
Payables and accrued charges |
|
(34) |
|
31 |
|
|
(14) |
|
|
8 |
|
Subtotal of changes in non-cash operating working
capital |
|
(9) |
|
98 |
|
|
(49) |
|
|
195 |
Cash provided by operating
activities |
|
574 |
|
616 |
|
|
1,901 |
|
|
2,556 |
|
|
|
|
|
|
|
|
|
|
|
Investing Activities |
|
|
|
|
|
|
|
|
|
|
Additions to property, plant and
equipment |
|
(303) |
|
(360) |
|
|
(726) |
|
|
(1,210) |
Other assets and intangible
assets |
|
(2) |
|
2 |
|
|
(12) |
|
|
(8) |
Cash used in investing
activities |
|
(305) |
|
(358) |
|
|
(738) |
|
|
(1,218) |
|
|
|
|
|
|
|
|
|
|
|
Financing Activities |
|
|
|
|
|
|
|
|
|
|
Proceeds from long-term debt
obligations |
|
- |
|
- |
|
|
737 |
|
|
- |
Repayment of and finance costs on
long-term debt obligations |
|
- |
|
- |
|
|
(500) |
|
|
(254) |
Proceeds from (repayment of)
short-term debt obligations |
|
55 |
|
113 |
|
|
14 |
|
|
(256) |
Dividends |
|
(281) |
|
(290) |
|
|
(857) |
|
|
(700) |
Repurchase of common shares |
|
- |
|
(166) |
|
|
(1,065) |
|
|
(166) |
Issuance of common shares |
|
2 |
|
10 |
|
|
32 |
|
|
31 |
Cash used in financing
activities |
|
(224) |
|
(333) |
|
|
(1,639) |
|
|
(1,345) |
Increase (Decrease) in Cash and
Cash Equivalents |
|
45 |
|
(75) |
|
|
(476) |
|
|
(7) |
Cash and Cash Equivalents,
Beginning of Period |
|
107 |
|
630 |
|
|
628 |
|
|
562 |
Cash and Cash Equivalents, End of
Period |
$ |
152 |
$ |
555 |
|
$ |
152 |
|
$ |
555 |
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents comprised
of: |
|
|
|
|
|
|
|
|
|
|
|
Cash |
$ |
63 |
$ |
59 |
|
$ |
63 |
|
$ |
59 |
|
Short-term investments |
|
89 |
|
496 |
|
|
89 |
|
|
496 |
|
$ |
152 |
$ |
555 |
|
$ |
152 |
|
$ |
555 |
|
|
|
|
|
|
|
|
|
|
|
Supplemental cash flow disclosure |
|
|
|
|
|
|
|
|
|
|
|
Interest paid |
$ |
40 |
$ |
23 |
|
$ |
132 |
|
$ |
123 |
|
Income taxes paid |
$ |
122 |
$ |
6 |
|
$ |
292 |
|
$ |
113 |
(See Notes to the Condensed
Consolidated Financial Statements) |
Potash Corporation of Saskatchewan Inc.
Notes to the Condensed Consolidated Financial Statements
For the Three and Nine Months Ended September 30, 2014
(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 and
methods of computation used in preparing these unaudited interim
condensed consolidated financial statements are consistent with
those used in the preparation of the company's 2013 annual
consolidated financial statements.
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 2013 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 October
2014.
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.
2. Available-for-Sale Investments
The company assesses at the end of each reporting period whether
there is objective evidence of impairment. A significant or
prolonged decline in the fair value of the investment below its
cost would be evidence that the asset is impaired. If objective
evidence of impairment exists, the impaired amount (i.e., the
unrealized loss) is recognized in net income; any subsequent
reversals would be recognized in other comprehensive income ("OCI")
and would not flow back into net income. Any subsequent decline in
fair value below the carrying amount at the impairment date would
represent a further impairment to be recognized in net income.
During 2012, the company concluded its investment in Sinofert
Holdings Limited ("Sinofert") was impaired due to the significance
by which fair value was below cost. As a result, an impairment loss
of $341 was recognized in net income
during 2012. At March 31, 2014, the
company concluded its investment in Sinofert was further impaired
due to the fair value declining below the carrying amount of
$238 at the previous impairment date.
As a result, an impairment loss of $38 was recognized in net income during the three
months ended March 31, 2014. The fair
value was determined through the market value of Sinofert shares on
the Hong Kong Stock Exchange.
Changes in fair value, and related accounting, for the company's
investment in Sinofert since December 31,
2013 were as follows:
|
|
|
|
|
|
|
|
|
|
Impact of Unrealized Loss on: |
|
|
|
Fair
Value |
|
|
Unrealized Loss |
|
|
OCI and
AOCI |
|
Net Income
and Retained
Earnings |
Balance - December 31,
2013 |
|
$ |
254 |
|
|
$ |
(325) |
|
|
$ |
16 |
|
$ |
(341) |
Decrease in fair value
and recognition of impairment |
|
|
(54) |
|
|
|
(54) |
|
|
|
(16) |
|
|
(38) |
Balance - March 31,
2014 |
|
$ |
200 |
|
|
$ |
(379) |
|
|
$ |
- |
|
$ |
(379) |
Increase in fair value
subsequent to recognition of impairment |
|
|
10 |
|
|
|
10 |
|
|
|
10 |
|
|
- |
Balance - June 30,
2014 |
|
$ |
210 |
|
|
$ |
(369) |
|
|
$ |
10 |
|
$ |
(379) |
Increase in fair value subsequent to
recognition of impairment |
|
|
11 |
|
|
|
11 |
|
|
|
11 |
|
|
- |
Balance - September
30, 2014 |
|
$ |
221 |
|
|
$ |
(358) |
|
|
$ |
21 |
|
$ |
(379) |
3. Long-Term Debt
On March 7, 2014, the company
closed the issuance of $750 of 3.625
percent senior notes due March 15,
2024. The senior notes were issued under a US shelf
registration statement.
On March 7, 2014, the company issued
a notice of redemption for all of its outstanding $500 of 5.250 percent senior notes due
May 15, 2014. On April 7, 2014, the company completed the
redemption of all $500 of the senior
notes at a redemption price of 100.497 percent of the principal
amount of the notes redeemed plus accrued interest.
During the third quarter of 2014, the company classified as current
the $500 aggregate principal amount
of 3.750 percent senior notes due September
30, 2015.
4. 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 September 30, 2014 |
|
|
|
Potash |
|
|
Nitrogen |
|
|
Phosphate |
|
|
All
Others |
|
|
Consolidated |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales - third party |
|
$ |
633 |
|
$ |
562 |
|
$ |
446 |
|
$ |
- |
|
$ |
1,641 |
Freight, transportation and
distribution - third party |
|
|
(64) |
|
|
(30) |
|
|
(47) |
|
|
- |
|
|
(141) |
Net sales - third party |
|
|
569 |
|
|
532 |
|
|
399 |
|
|
- |
|
|
|
Cost of goods sold - third party |
|
|
(274) |
|
|
(314) |
|
|
(323) |
|
|
- |
|
|
(911) |
Margin (cost) on inter-segment sales
(1) |
|
|
- |
|
|
15 |
|
|
(15) |
|
|
- |
|
|
- |
Gross margin |
|
|
295 |
|
|
233 |
|
|
61 |
|
|
- |
|
|
589 |
Depreciation and amortization in cost
of goods sold |
|
|
(48) |
|
|
(42) |
|
|
(66) |
|
|
- |
|
|
(156) |
Cash flows for additions to property,
plant and equipment |
|
|
138 |
|
|
94 |
|
|
65 |
|
|
6 |
|
|
303 |
(1) Inter-segment net sales
were $25. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30, 2013 |
|
|
|
Potash |
|
|
Nitrogen |
|
|
Phosphate |
|
|
All
Others |
|
|
Consolidated |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales - third party |
|
$ |
539 |
|
$ |
493 |
|
$ |
488 |
|
$ |
- |
|
$ |
1,520 |
Freight, transportation and
distribution - third party |
|
|
(57) |
|
|
(26) |
|
|
(56) |
|
|
- |
|
|
(139) |
Net sales - third party |
|
|
482 |
|
|
467 |
|
|
432 |
|
|
- |
|
|
|
Cost of goods sold - third party |
|
|
(254) |
|
|
(304) |
|
|
(339) |
|
|
- |
|
|
(897) |
Margin (cost) on inter-segment sales
(1) |
|
|
- |
|
|
15 |
|
|
(15) |
|
|
- |
|
|
- |
Gross margin |
|
|
228 |
|
|
178 |
|
|
78 |
|
|
- |
|
|
484 |
Depreciation and amortization in cost
of goods sold |
|
|
(36) |
|
|
(41) |
|
|
(69) |
|
|
- |
|
|
(146) |
Cash flows for additions to property,
plant and equipment |
|
|
259 |
|
|
40 |
|
|
56 |
|
|
5 |
|
|
360 |
(1)
Inter-segment net sales were $31. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended September 30, 2014 |
|
|
|
Potash |
|
|
Nitrogen |
|
|
Phosphate |
|
|
All
Others |
|
|
Consolidated |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales - third party |
|
$ |
2,051 |
|
$ |
1,799 |
|
$ |
1,363 |
|
$ |
- |
|
$ |
5,213 |
Freight, transportation and
distribution - third party |
|
|
(229) |
|
|
(89) |
|
|
(147) |
|
|
- |
|
|
(465) |
Net sales - third party |
|
|
1,822 |
|
|
1,710 |
|
|
1,216 |
|
|
- |
|
|
|
Cost of goods sold - third party |
|
|
(832) |
|
|
(979) |
|
|
(1,036) |
|
|
- |
|
|
(2,847) |
Margin (cost) on inter-segment sales
(1) |
|
|
- |
|
|
45 |
|
|
(45) |
|
|
- |
|
|
- |
Gross margin |
|
|
990 |
|
|
776 |
|
|
135 |
|
|
- |
|
|
1,901 |
Depreciation and amortization in cost
of goods sold |
|
|
(165) |
|
|
(128) |
|
|
(234) |
|
|
- |
|
|
(527) |
Cash flows for additions to property,
plant and equipment |
|
|
365 |
|
|
209 |
|
|
141 |
|
|
11 |
|
|
726 |
(1)
Inter-segment net sales were $83. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended September 30, 2013 |
|
|
|
Potash |
|
|
Nitrogen |
|
|
Phosphate |
|
|
All
Others |
|
|
Consolidated |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales - third party |
|
$ |
2,399 |
|
$ |
1,781 |
|
$ |
1,584 |
|
$ |
- |
|
$ |
5,764 |
Freight, transportation and
distribution - third party |
|
|
(196) |
|
|
(78) |
|
|
(161) |
|
|
- |
|
|
(435) |
Net sales - third party |
|
|
2,203 |
|
|
1,703 |
|
|
1,423 |
|
|
- |
|
|
|
Cost of goods sold - third party |
|
|
(858) |
|
|
(1,018) |
|
|
(1,123) |
|
|
- |
|
|
(2,999) |
Margin (cost) on inter-segment sales
(1) |
|
|
- |
|
|
40 |
|
|
(40) |
|
|
- |
|
|
- |
Gross margin |
|
|
1,345 |
|
|
725 |
|
|
260 |
|
|
- |
|
|
2,330 |
Depreciation and amortization in cost
of goods sold |
|
|
(137) |
|
|
(121) |
|
|
(214) |
|
|
- |
|
|
(472) |
Cash flows for additions to property,
plant and equipment |
|
|
872 |
|
|
112 |
|
|
178 |
|
|
48 |
|
|
1,210 |
(1)
Inter-segment net sales were $111. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5. Income Taxes
A separate estimated average annual effective tax rate was
determined for each taxing jurisdiction and applied individually to
the interim period pre-tax income of each jurisdiction.
|
|
|
Three Months
Ended |
|
|
|
|
Nine Months
Ended |
|
|
|
September
30 |
|
|
|
|
September
30 |
|
|
|
|
|
2014 |
|
|
|
|
2013 |
|
|
|
|
2014 |
|
|
|
|
2013 |
Income tax expense |
|
|
$ |
|
156 |
|
|
$ |
|
116 |
|
|
$ |
|
466 |
|
|
$ |
|
587 |
Actual effective tax rate on ordinary
earnings |
|
|
|
|
28% |
|
|
|
|
25% |
|
|
|
|
27% |
|
|
|
|
26% |
Actual effective tax rate including discrete
items |
|
|
|
|
33% |
|
|
|
|
25% |
|
|
|
|
29% |
|
|
|
|
27% |
Discrete tax adjustments that impacted the tax
rate |
|
|
$ |
|
25 |
|
|
$ |
|
- |
|
|
$ |
|
21 |
|
|
$ |
|
37 |
Significant items to note include the following:
- The actual effective tax rate on ordinary earnings for the
three and nine months ended September 30,
2014 increased compared to the same periods last year due to
different income weightings between jurisdictions.
- In third-quarter 2014, a deferred tax expense of $11 was recorded as a result of a Chilean income
tax rate increase.
- In first-quarter 2014, a non-tax deductible impairment of the
company's available-for-sale investment in Sinofert was recorded.
This increased the actual effective tax rate including discrete
items for the nine months ended September
30, 2014 by 1 percent.
- In the first nine months of 2013, a tax expense of $9 (recovery of $7
in the third quarter) was recorded to adjust the 2012 income tax
provision.
- In second-quarter 2013, a deferred tax expense of $11 was recorded as a result of a Canadian income
tax rate increase.
|
|
|
|
|
Potash
Corporation of Saskatchewan Inc. |
Selected
Financial Data |
(unaudited) |
|
|
|
|
|
|
|
|
Three Months Ended |
|
Nine Months Ended |
|
|
September 30 |
|
September 30 |
|
|
|
2014 |
|
|
2013 |
|
|
2014 |
|
|
2013 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Potash Sales (tonnes -
thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Manufactured Product |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
North America |
|
|
789 |
|
|
721 |
|
|
2,720 |
|
|
2,349 |
|
|
Offshore |
|
|
1,221 |
|
|
843 |
|
|
4,126 |
|
|
3,986 |
|
Manufactured Product |
|
|
2,010 |
|
|
1,564 |
|
|
6,846 |
|
|
6,335 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Potash Net Sales |
|
|
|
|
|
|
|
|
|
|
|
|
|
(US $ millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales |
|
$ |
633 |
|
$ |
539 |
|
$ |
2,051 |
|
$ |
2,399 |
|
|
Freight, transportation and
distribution |
|
|
(64) |
|
|
(57) |
|
|
(229) |
|
|
(196) |
|
|
Net Sales |
|
$ |
569 |
|
$ |
482 |
|
$ |
1,822 |
|
$ |
2,203 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Manufactured Product |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
North America |
|
$ |
272 |
|
$ |
240 |
|
$ |
866 |
|
$ |
923 |
|
|
Offshore |
|
|
293 |
|
|
240 |
|
|
942 |
|
|
1,271 |
|
Other miscellaneous and
purchased product |
|
|
4 |
|
|
2 |
|
|
14 |
|
|
9 |
|
Net Sales |
|
$ |
569 |
|
$ |
482 |
|
$ |
1,822 |
|
$ |
2,203 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Manufactured Product |
|
|
|
|
|
|
|
|
|
|
|
|
|
Average Realized Sales
Price per MT |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
North America |
|
$ |
344 |
|
$ |
333 |
|
$ |
318 |
|
$ |
393 |
|
|
Offshore |
|
$ |
240 |
|
$ |
285 |
|
$ |
228 |
|
$ |
319 |
|
|
Average |
|
$ |
281 |
|
$ |
307 |
|
$ |
264 |
|
$ |
346 |
|
Cost of Goods Sold per
MT |
|
$ |
(131) |
|
$ |
(159) |
|
$ |
(117) |
|
$ |
(133) |
|
Gross Margin per
MT |
|
$ |
150 |
|
$ |
148 |
|
$ |
147 |
|
$ |
213 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Potash
Corporation of Saskatchewan Inc. |
Selected
Financial Data |
(unaudited) |
|
|
|
|
|
|
Three Months Ended |
|
Nine Months Ended |
|
|
September 30 |
|
September 30 |
|
|
|
2014 |
|
|
2013 |
|
|
2014 |
|
|
2013 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Average Natural Gas Cost in Production
per MMBtu |
|
$ |
5.49 |
|
$ |
4.96 |
|
$ |
5.61 |
|
$ |
5.58 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Nitrogen Sales (tonnes -
thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Manufactured Product |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ammonia (1) |
|
|
528 |
|
|
512 |
|
|
1,776 |
|
|
1,620 |
|
|
Urea |
|
|
248 |
|
|
218 |
|
|
854 |
|
|
800 |
|
|
Solutions/Nitric acid/Ammonium
nitrate |
|
|
773 |
|
|
700 |
|
|
2,211 |
|
|
1,978 |
|
Manufactured Product |
|
|
1,549 |
|
|
1,430 |
|
|
4,841 |
|
|
4,398 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fertilizer sales tonnes
(1) |
|
|
571 |
|
|
463 |
|
|
1,699 |
|
|
1,361 |
|
Industrial/Feed sales
tonnes |
|
|
978 |
|
|
967 |
|
|
3,142 |
|
|
3,037 |
|
Manufactured Product |
|
|
1,549 |
|
|
1,430 |
|
|
4,841 |
|
|
4,398 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Nitrogen Net Sales |
|
|
|
|
|
|
|
|
|
|
|
|
|
(US $ millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales - third party |
|
$ |
562 |
|
$ |
493 |
|
$ |
1,799 |
|
$ |
1,781 |
|
|
Freight, transportation and
distribution - third party |
|
|
(30) |
|
|
(26) |
|
|
(89) |
|
|
(78) |
|
|
Net sales - third party |
|
|
532 |
|
|
467 |
|
|
1,710 |
|
|
1,703 |
|
|
Inter-segment net sales |
|
|
25 |
|
|
31 |
|
|
83 |
|
|
111 |
|
|
Net Sales |
|
$ |
557 |
|
$ |
498 |
|
$ |
1,793 |
|
$ |
1,814 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Manufactured Product |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ammonia (2) |
|
$ |
269 |
|
$ |
239 |
|
$ |
875 |
|
$ |
899 |
|
|
Urea |
|
|
100 |
|
|
82 |
|
|
364 |
|
|
347 |
|
|
Solutions/Nitric acid/Ammonium
nitrate |
|
|
182 |
|
|
158 |
|
|
526 |
|
|
489 |
|
Other miscellaneous and
purchased product (3) |
|
|
6 |
|
|
19 |
|
|
28 |
|
|
79 |
|
Net Sales |
|
$ |
557 |
|
$ |
498 |
|
$ |
1,793 |
|
$ |
1,814 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fertilizer net sales
(2) |
|
$ |
193 |
|
$ |
155 |
|
$ |
640 |
|
$ |
566 |
|
Industrial/Feed net
sales |
|
|
357 |
|
|
324 |
|
|
1,125 |
|
|
1,169 |
|
Other miscellaneous and
purchased product (3) |
|
|
7 |
|
|
19 |
|
|
28 |
|
|
79 |
|
Net Sales |
|
$ |
557 |
|
$ |
498 |
|
$ |
1,793 |
|
$ |
1,814 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Manufactured Product |
|
|
|
|
|
|
|
|
|
|
|
|
|
Average Realized Sales
Price per MT |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ammonia |
|
$ |
509 |
|
$ |
468 |
|
$ |
493 |
|
$ |
555 |
|
|
Urea |
|
$ |
402 |
|
$ |
376 |
|
$ |
426 |
|
$ |
433 |
|
|
Solutions/Nitric acid/Ammonium
nitrate |
|
$ |
236 |
|
$ |
226 |
|
$ |
238 |
|
$ |
247 |
|
|
Average |
|
$ |
356 |
|
$ |
335 |
|
$ |
365 |
|
$ |
395 |
|
|
Fertilizer average price per MT |
|
$ |
339 |
|
$ |
335 |
|
$ |
377 |
|
$ |
416 |
|
|
Industrial/Feed average price per
MT |
|
$ |
365 |
|
$ |
335 |
|
$ |
358 |
|
$ |
385 |
|
|
Average |
|
$ |
356 |
|
$ |
335 |
|
$ |
365 |
|
$ |
395 |
|
Cost of Goods Sold per
MT |
|
$ |
(209) |
|
$ |
(212) |
|
$ |
(207) |
|
$ |
(232) |
|
Gross Margin per
MT |
|
$ |
147 |
|
$ |
123 |
|
$ |
158 |
|
$ |
163 |
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Includes inter-segment
ammonia sales (tonnes - thousands) |
|
|
41 |
|
|
57 |
|
|
141 |
|
|
136 |
(2) Includes inter-segment
ammonia net sales |
|
$ |
25 |
|
$ |
29 |
|
$ |
81 |
|
$ |
79 |
(3) Includes inter-segment
other miscellaneous and purchased product net sales |
|
$ |
- |
|
$ |
2 |
|
$ |
2 |
|
$ |
32 |
|
Potash
Corporation of Saskatchewan Inc. |
Selected
Financial Data |
(unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended |
|
|
|
|
Nine Months
Ended |
|
|
|
|
|
September
30 |
|
|
|
|
September
30 |
|
|
|
|
|
2014 |
|
|
|
|
2013 |
|
|
|
|
2014 |
|
|
|
|
2013 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Phosphate Sales (tonnes -
thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Manufactured Product |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fertilizer |
|
|
|
|
445 |
|
|
|
|
634 |
|
|
|
|
1,486 |
|
|
|
|
1,859 |
|
|
Feed and Industrial |
|
|
|
|
280 |
|
|
|
|
279 |
|
|
|
|
862 |
|
|
|
|
887 |
|
Manufactured Product |
|
|
|
|
725 |
|
|
|
|
913 |
|
|
|
|
2,348 |
|
|
|
|
2,746 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Phosphate Net Sales |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(US $ millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales |
|
|
$ |
|
446 |
|
|
$ |
|
488 |
|
|
$ |
|
1,363 |
|
|
$ |
|
1,584 |
|
|
Freight, transportation and distribution |
|
|
|
|
(47) |
|
|
|
|
(56) |
|
|
|
|
(147) |
|
|
|
|
(161) |
|
|
Net Sales |
|
|
$ |
|
399 |
|
|
$ |
|
432 |
|
|
$ |
|
1,216 |
|
|
$ |
|
1,423 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Manufactured Product |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fertilizer |
|
|
$ |
|
201 |
|
|
$ |
|
250 |
|
|
$ |
|
656 |
|
|
$ |
|
835 |
|
|
Feed and Industrial |
|
|
|
|
174 |
|
|
|
|
176 |
|
|
|
|
526 |
|
|
|
|
568 |
|
Other miscellaneous and purchased
product |
|
|
|
|
24 |
|
|
|
|
6 |
|
|
|
|
34 |
|
|
|
|
20 |
|
Net Sales |
|
|
$ |
|
399 |
|
|
$ |
|
432 |
|
|
$ |
|
1,216 |
|
|
$ |
|
1,423 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Manufactured Product |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average Realized Sales Price per
MT |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fertilizer |
|
|
$ |
|
452 |
|
|
$ |
|
395 |
|
|
$ |
|
441 |
|
|
$ |
|
449 |
|
|
Feed and Industrial |
|
|
$ |
|
621 |
|
|
$ |
|
631 |
|
|
$ |
|
610 |
|
|
$ |
|
640 |
|
|
Average |
|
|
$ |
|
517 |
|
|
$ |
|
467 |
|
|
$ |
|
503 |
|
|
$ |
|
511 |
|
Cost of Goods Sold per MT |
|
|
$ |
|
(437) |
|
|
$ |
|
(384) |
|
|
$ |
|
(449) |
|
|
$ |
|
(420) |
|
Gross Margin per MT |
|
|
$ |
|
80 |
|
|
$ |
|
83 |
|
|
$ |
|
54 |
|
|
$ |
|
91 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Potash Corporation of
Saskatchewan Inc. |
Selected Additional
Data |
(unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Exchange Rate (Cdn$/US$) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2014 |
|
|
2013 |
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31 |
|
|
|
|
|
|
|
|
|
|
|
1.0636 |
September 30 |
|
|
|
|
|
|
|
|
1.1208 |
|
|
1.0285 |
Third-quarter average conversion
rate |
|
|
|
|
|
|
|
|
1.0832 |
|
|
1.0376 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
|
|
September 30 |
|
|
September 30 |
|
|
|
2014 |
|
|
2013 |
|
|
2014 |
|
|
2013 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Production |
|
|
|
|
|
|
|
|
|
|
|
|
Potash production (KCl Tonnes -
thousands) |
|
|
1,453 |
|
|
1,150 |
|
|
6,169 |
|
|
5,852 |
Potash shutdown weeks
(1) |
|
|
9 |
|
|
12 |
|
|
14 |
|
|
32 |
Nitrogen production (N Tonnes -
thousands) |
|
|
787 |
|
|
705 |
|
|
2,450 |
|
|
2,155 |
Phosphate production
(P2O5 Tonnes - thousands) |
|
|
431 |
|
|
533 |
|
|
1,259 |
|
|
1,553 |
Phosphate P2O5
operating rate |
|
|
83% |
|
|
90% |
|
|
74% |
|
|
87% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Shareholders |
|
|
|
|
|
|
|
|
|
|
|
|
PotashCorp's total shareholder
return |
|
|
-8% |
|
|
-17% |
|
|
8% |
|
|
-21% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Customers |
|
|
|
|
|
|
|
|
|
|
|
|
Product tonnes involved in customer
complaints (thousands) |
|
|
9 |
|
|
4 |
|
|
24 |
|
|
16 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Community |
|
|
|
|
|
|
|
|
|
|
|
|
Taxes and royalties ($ millions)
(2) |
|
|
190 |
|
|
83 |
|
|
559 |
|
|
484 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Employees |
|
|
|
|
|
|
|
|
|
|
|
|
Annualized turnover rate (excluding
retirements) (3) |
|
|
7% |
|
|
5% |
|
|
12% |
|
|
5% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Safety |
|
|
|
|
|
|
|
|
|
|
|
|
Total site recordable injury rate (per
200,000 work hours) (4) |
|
|
1.32 |
|
|
1.35 |
|
|
1.20 |
|
|
1.12 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Environment |
|
|
|
|
|
|
|
|
|
|
|
|
Environmental incidents
(5) |
|
|
8 |
|
|
3 |
|
|
19 |
|
|
13 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September
30, |
|
|
December
31, |
As at |
|
|
|
|
|
|
|
|
2014 |
|
|
2013 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of employees
(6) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Potash |
|
|
|
|
|
|
|
|
2,488 |
|
|
2,912 |
|
Nitrogen |
|
|
|
|
|
|
|
|
796 |
|
|
789 |
|
Phosphate |
|
|
|
|
|
|
|
|
1,361 |
|
|
1,637 |
|
Other |
|
|
|
|
|
|
|
|
417 |
|
|
449 |
|
Total |
|
|
|
|
|
|
|
|
5,062 |
|
|
5,787 |
(1) Represents weeks of
full production shutdown; excludes the impact of any periods of
reduced operating rates and 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) Results in 2014
include a portion of the impact of our workforce reduction
announced in 2013. |
(4) Total site includes
PotashCorp employees, contractors and others on site (as defined in
our 2013 Annual Integrated Report). |
(5) Total of reportable
quantity releases, permit excursions and provincial reportable
spills (as defined in our 2013 Annual Integrated Report). |
(6) Totals as at
December 31, 2013 do not fully reflect workforce changes announced
in December 2013. |
|
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,
adjusted EBITDA, adjusted 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, ADJUSTED EBITDA AND ADJUSTED EBITDA MARGIN
Set forth below is a reconciliation of "EBITDA" and "adjusted
EBITDA" to net income and "adjusted 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 |
|
|
|
|
Nine Months Ended |
|
|
|
|
September
30 |
|
|
|
|
September
30 |
|
|
|
|
2014 |
|
|
|
|
2013 |
|
|
|
|
2014 |
|
|
|
|
2013 |
Net income |
|
$ |
|
317 |
|
|
$ |
|
356 |
|
|
$ |
|
1,129 |
|
|
$ |
|
1,555 |
Finance costs |
|
|
|
47 |
|
|
|
|
33 |
|
|
|
|
142 |
|
|
|
|
107 |
Income taxes |
|
|
|
156 |
|
|
|
|
116 |
|
|
|
|
466 |
|
|
|
|
587 |
Depreciation and amortization |
|
|
|
161 |
|
|
|
|
149 |
|
|
|
|
519 |
|
|
|
|
489 |
EBITDA |
|
$ |
|
681 |
|
|
$ |
|
654 |
|
|
$ |
|
2,256 |
|
|
$ |
|
2,738 |
Impairment of available-for-sale investment |
|
|
|
- |
|
|
|
|
- |
|
|
|
|
38 |
|
|
|
|
- |
Adjusted EBITDA |
|
$ |
|
681 |
|
|
$ |
|
654 |
|
|
$ |
|
2,294 |
|
|
$ |
|
2,738 |
EBITDA is calculated as net income before finance costs, income
taxes and depreciation and amortization. Adjusted EBITDA is
calculated as net income before finance costs, income taxes,
depreciation and amortization and certain impairment charges.
PotashCorp uses EBITDA and adjusted EBITDA as supplemental
financial measures of its operational performance. Management
believes EBITDA and adjusted EBITDA to be important measures as
they exclude 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, these measures are limited in that
they do not reflect the periodic costs of certain capitalized
tangible and intangible assets used in generating revenues in the
company's business, or the charges associated with impairments.
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 |
|
|
|
|
Nine Months Ended |
|
|
|
|
|
September
30 |
|
|
|
|
September
30 |
|
|
|
|
|
2014 |
|
|
|
|
2013 |
|
|
|
|
2014 |
|
|
|
|
2013 |
Sales |
|
|
$ |
|
1,641 |
|
|
$ |
|
1,520 |
|
|
$ |
|
5,213 |
|
|
$ |
|
5,764 |
Freight, transportation and distribution |
|
|
|
|
(141) |
|
|
|
|
(139) |
|
|
|
|
(465) |
|
|
|
|
(435) |
Net sales |
|
|
$ |
|
1,500 |
|
|
$ |
|
1,381 |
|
|
$ |
|
4,748 |
|
|
$ |
|
5,329 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income as a percentage of sales |
|
|
|
|
19% |
|
|
|
|
23% |
|
|
|
|
22% |
|
|
|
|
27% |
Adjusted EBITDA margin |
|
|
|
|
45% |
|
|
|
|
47% |
|
|
|
|
48% |
|
|
|
|
51% |
Adjusted EBITDA margin is calculated as adjusted EBITDA divided by
net sales (sales less freight, transportation and distribution).
Management believes comparing EBITDA 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 adjusted EBITDA
as compared to net income, adjusted 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; adjusted EBITDA also includes share
of earnings of equity-accounted investees whose sales are not
included in consolidated sales. Management evaluates these items
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 |
|
|
|
|
Nine Months Ended |
|
|
|
|
|
September 30 |
|
|
|
|
September 30 |
|
|
|
|
|
2014 |
|
|
|
|
2013 |
|
|
|
|
2014 |
|
|
|
|
2013 |
Cash flow prior to working capital
changes |
|
|
$ |
|
583 |
|
|
$ |
|
518 |
|
|
$ |
|
1,950 |
|
|
$ |
|
2,361 |
Changes in non-cash operating working
capital |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Receivables |
|
|
|
|
24 |
|
|
|
|
96 |
|
|
|
|
(80) |
|
|
|
|
162 |
|
Inventories |
|
|
|
|
7 |
|
|
|
|
(12) |
|
|
|
|
24 |
|
|
|
|
29 |
|
Prepaid expenses and other current assets |
|
|
|
|
(6) |
|
|
|
|
(17) |
|
|
|
|
21 |
|
|
|
|
(4) |
|
Payables and accrued charges |
|
|
|
|
(34) |
|
|
|
|
31 |
|
|
|
|
(14) |
|
|
|
|
8 |
Changes in non-cash operating
working capital |
|
|
|
|
(9) |
|
|
|
|
98 |
|
|
|
|
(49) |
|
|
|
|
195 |
Cash provided by operating
activities |
|
|
$ |
|
574 |
|
|
$ |
|
616 |
|
|
$ |
|
1,901 |
|
|
$ |
|
2,556 |
Additions to property, plant and
equipment |
|
|
|
|
(303) |
|
|
|
|
(360) |
|
|
|
|
(726) |
|
|
|
|
(1,210) |
Other assets and intangible
assets |
|
|
|
|
(2) |
|
|
|
|
2 |
|
|
|
|
(12) |
|
|
|
|
(8) |
Changes in non-cash operating working
capital |
|
|
|
|
9 |
|
|
|
|
(98) |
|
|
|
|
49 |
|
|
|
|
(195) |
Free cash flow |
|
|
$ |
|
278 |
|
|
$ |
|
160 |
|
|
$ |
|
1,212 |
|
|
$ |
|
1,143 |
Management 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. Management
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.