Symbol: POT
Listed: TSX, NYSE
Key Highlights
- Fourth-quarter earnings of $0.49
per share1; full-year total of $1.82 per share
- Annual cash flow prior to working capital changes2
of $2.7 billion
- Record fourth-quarter potash sales volumes of 2.5 million
tonnes
- Full-year 2015 guidance of $1.90-$2.20 per share; $0.45-$0.55 for the first quarter
CEO Commentary
"Record potash sales volumes, combined with higher realizations
across all three nutrients, raised our quarterly earnings near the
upper end of our guidance range," said PotashCorp President and
Chief Executive Officer Jochen Tilk.
"As we look ahead, we see a supportive market environment – most
notably in potash. We are ready to respond should demand for this
nutrient prove stronger than expected and, as we balance
operational flexibility with efficiencies, we believe PotashCorp is
well positioned should conditions be more challenging."
SASKATOON, Jan. 29, 2015 CNW - Potash Corporation of
Saskatchewan Inc. (PotashCorp) reported fourth-quarter earnings of
$0.49 per share ($407 million), well ahead of the $0.26 per share ($230
million) generated in 2013's fourth quarter, a total that
included $60 million in
severance-related charges. Although the most recent quarter marked
the continuation of a robust potash environment following a sharp
reset of prices in late 2013, the $1.82 per share ($1.5
billion) earned during 2014 trailed the $2.04 per share ($1.8
billion) earned in the previous full year.
With improved contributions from all three nutrient segments,
fourth-quarter gross margin of $746
million surpassed the $460
million generated during the same period in 2013. For the
full year, totals reached $2.6
billion, slightly below the $2.8
billion earned in 2013.
Cash flow prior to working capital changes of $754 million during the quarter exceeded the
prior year result (up 33 percent), but lower earnings through the
first nine months caused our annual total of $2.7 billion to trail 2013's comparative period
(down 8 percent). Free cash flow2 for both the fourth
quarter and full year surpassed the respective totals in 2013.
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 $31
million to our quarterly earnings, exceeding the
$25 million in fourth-quarter 2013. A
weaker earnings environment caused annual contributions of
$210 million from these investments
to trail the $276 million earned in
2013, which included a dividend from Sinofert Holdings Limited in
China (Sinofert). The market value
of our holdings in these publicly traded companies equated to
approximately $4 billion, or
$5 per PotashCorp share, at market
close on January 28, 2015.
Market Conditions
In contrast to an especially weak demand environment during the
second half of 2013, the record pace of global potash shipments
evident through the first nine months of 2014 continued in the
fourth quarter. Demand was strong in all key markets, especially
offshore, where exports from North American producers increased
significantly. In North America,
domestic shipments remained high as dealers worked to position
product to meet fall fertilizer demand and prepare for the spring
season. After increasing through most of the year, spot prices in
many markets moderated slightly during the quarter, although
remaining above those in the same period of 2013.
In nitrogen, supply challenges in key exporting countries
supported favorable market fundamentals. These conditions helped
sustain ammonia benchmark prices at higher levels than in 2013's
similar period, although seasonal demand weakness and improving
supply availability caused them to trend lower late in the quarter.
Markets for urea and other nitrogen products were relatively flat
with fourth-quarter 2013, but increased on improved demand as the
year came to a close.
In phosphate, improved market fundamentals – buoyed by record
annual shipments to Latin America
and periodic supply outages – caused prices in the fourth quarter
to surpass those of the same period in 2013. Despite subdued Indian
demand for most phosphate products in 2014, imports and prices for
phosphoric acid remained relatively strong given rising consumption
of NPK fertilizers.
Potash
The combination of increased sales volumes, lower costs and
slightly higher realized prices raised our fourth-quarter potash
gross margin to $445 million,
surpassing the $228 million generated
during the same period in 2013. This strength raised full-year
gross margin to $1.4 billion,
although moderated pricing levels as the year began caused it to
trail the $1.6 billion earned in
2013.
Sales volumes reached a fourth-quarter record of 2.5 million
tonnes, raising our 2014 total to 9.3 million tonnes – the second
highest in PotashCorp's history. For the quarter, offshore sales
volumes represented the largest increase, up 80 percent relative to
the same period in 2013 on improved demand across all key markets.
The majority of Canpotex3 shipments during the quarter
were to Other Asian countries (38 percent) and China (24 percent), while Latin America and India accounted for 19 percent and 12 percent,
respectively. In North America,
the need to secure product to meet healthy fall demand resulted in
historically strong fourth-quarter sales volumes, consistent with
levels in 2013 when a similar dynamic took hold.
North American and offshore price improvements realized during
the quarter were largely offset by a greater proportion of sales to
lower-priced markets resulting in our fourth-quarter average
realized price of $284 per tonne
staying relatively flat with 2013's comparative period.
Efficiencies from our operational and workforce realignment and
increased production contributed to significantly lower cost of
goods sold in 2014 – allowing us to achieve our cost reduction
target. Compared to 2013, these factors, along with a weaker
Canadian dollar, translated into improvements for both the quarter
(down $45 per tonne) and full year
(down $23 per tonne). Totals for 2013
included approximately $32 million in
charges for severance-related costs.
Nitrogen
In nitrogen, higher prices helped raise gross margin for the
quarter to $234 million, well above
the $188 million earned during the
same period in 2013. Our US operations generated $118 million of our quarterly result, and
Trinidad accounted for the
remainder. For the full year, a robust pricing environment and
higher sales volumes brought our gross margin in this nutrient to a
record $1.0 billion.
Sales volumes for the quarter of 1.5 million tonnes were
relatively flat with 2013's comparative period as an extended
maintenance turnaround at our Lima
facility and greater natural gas-related curtailments in
Trinidad limited our ability to
sell more tonnes. For full-year 2014, improved production across
most of our operations helped raise annual sales volumes to 6.4
million tonnes – the highest in our history.
With strong market fundamentals supporting key benchmark prices
at higher levels, our average realized price for the fourth quarter
of $405 per tonne was up 24 percent
relative to the same period in 2013. The most significant
contributor was the price of ammonia, which rose by 31 percent.
Downtime at Lima and higher
natural gas costs were the main drivers of higher per-tonne cost of
goods sold for the fourth quarter, up 24 percent from 2013's
comparable period.
Phosphate
In phosphate, fourth-quarter gross margin totaled $67 million, surpassing the $44 million earned during the same period in
2013. Despite an improving gross margin trend throughout 2014, the
closure of our Suwannee River
chemical plant in July and production challenges at our operations
negatively impacted our results. For the full-year, gross margin of
$202 million – which includes
approximately $48 million in
accelerated depreciation charges and $34
million related to adjustments to asset retirement
obligations and water treatment costs – fell well short of the
$304 million earned in 2013.
With fewer tonnes of production available, our sales volumes for
both the fourth quarter (0.8 million tonnes) and full year (3.1
million tonnes) trailed the respective periods of 2013.
Our fourth-quarter average realized phosphate price was
$528 per tonne, well above the
$455 per tonne in the same period of
2013. The primary drivers were improved pricing for liquid
fertilizers and the allocation of a greater proportion of our
production to higher-netback products.
Cost of goods sold of $446 per
tonne for the quarter exceeded the $401 per tonne in 2013's similar period, largely
due to reduced production and increased input costs for ammonia and
sulfur. Totals in 2013 included approximately $17 million in severance-related costs.
Financial
The timing of annual potash production tax accruals combined
with reduced capital spending in Saskatchewan and stronger potash earnings
raised provincial mining and other taxes for the fourth quarter to
$82 million, compared to the
$40 million recorded in 2013's
comparative period.
Income tax expense of $162 million
for the quarter exceeded the $100
million recognized in fourth-quarter 2013 due to improved
earnings.
Capital-related cash expenditures totaled $412 million during the quarter, relatively flat
compared to the same period in 2013. Capital expenditures in 2014
of $1.1 billion declined
significantly from the $1.6 billion
spent in 2013 as our multi-year potash expansion program nears
completion.
Market Outlook
Despite a strong US recovery, weakening economic growth in other
regions of the world continues to temper the global outlook. In
this environment, currencies have generally weakened relative to
the US dollar and commodity prices remain subdued. While we closely
monitor these factors, we enter 2015 with a positive – albeit
moderated – view for our business.
The agricultural outlook remains supportive. Even as prices for
many crops settled at lower levels in 2014, we believe they
continue to provide economic incentives for farmers to improve
yields, encouraging growth in demand for our products.
In potash, global shipments are expected to slow from 2014's
record level of more than 61 million tonnes. We believe the
conditions that emerged in 2014, including encouraging consumption
trends, a drawdown of producer inventories and potential production
constraints among certain competitors, will help offset the
expected reduction in shipments. In this environment, we see
opportunity for suppliers with the ability to quickly respond to
customers' needs. For 2015, we estimate global shipments will range
between 58 million and 60 million tonnes with strong consumption
underpinning demand.
In North America, we expect the
necessity of replenishing nutrients at the farm level after a
record crop in 2014 will support healthy demand as we approach the
spring season. Customers are now working to position product and
PotashCorp is shipping tonnage against significant winter-fill
commitments. The anticipated reduction in planted acres and
improved distributor inventories are likely to result in a modest
decline in annual shipments compared to 2014, with 2015 totals
anticipated at 9.5-10 million tonnes.
Potash shipments to Latin
America are expected to remain strong. After a subdued start
to the year, customers in this region are now engaging and
procuring new tonnage. We anticipate that weaker crop economics
will result in some moderation of growth in this market and
forecast total shipments of 10.8-11.3 million tonnes in 2015.
In China, with the completion
of potash deliveries against previous contracts, negotiations
continue on new first-half supply agreements. We see the
encouraging Chinese consumption trends that emerged in 2014
continuing, especially for compound fertilizers with higher
potassium content. We forecast Chinese demand at 12.5-13.0 million
tonnes in 2015, including import expectations of 6.5-7 million
tonnes.
In India, we also saw positive
consumption trends for both direct application and compound
fertilizers, and these will help drive continuing demand growth.
Canpotex has completed shipments against previous contracts and is
beginning to negotiate new supply agreements to meet Indian
customers' needs. For 2015, we forecast potash shipments of 4.5-4.8
million tonnes.
Potash demand in Other Asian countries (outside of China and India) has been slow to gain momentum this
year due to higher distributor inventories. We see this situation
improving as agronomic need and supportive crop economics –
especially for oil palm – are expected to foster greater import
needs as the year progresses. We forecast shipments to these
countries for 2015 to be in the range of 8.3-8.7 million
tonnes.
Financial Outlook
Based on our capability and outlook for 2015, we estimate annual
potash sales volumes of 9.2-9.7 million tonnes. We believe
increased operational capability at New
Brunswick and our Saskatchewan facilities – estimated at 10.9
million tonnes – will provide us with the flexibility to respond as
market opportunities emerge. Given higher prices in most potash
markets at the beginning of 2015, and our expectation of slightly
lower per-tonne costs, we forecast full-year potash gross margin
will reach $1.5-$1.8 billion.
In nitrogen, the potential for fewer supply-related disruptions,
lower global energy prices and slightly weaker agricultural
fundamentals could result in a more tempered pricing environment in
2015. With gas supply restrictions at our Trinidad facility predicted to continue, our
annual sales volumes are estimated to be relatively consistent with
2014. We believe lower natural gas costs will contribute to
improved per-tonne operating costs, but given our expectation of a
slightly weaker pricing environment, we anticipate that gross
margin in nitrogen will trail the record level achieved in
2014.
Improving phosphate market conditions are expected to support
better results in 2015. Although we will be affected by lower
production capability (due to the closure of Suwannee River), the absence of closure-related
costs, a relative shift to higher-margin products and the
anticipation of better pricing are expected to enhance gross
margin.
Given these considerations, we forecast our combined nitrogen
and phosphate gross margin will be in the range of $1.1-$1.3 billion in 2015, relatively flat with
2014.
Capital expenditures are anticipated to be approximately
$1.2 billion in 2015. This amount is
expected to be slightly above the previous year given higher
sustaining spending for our phosphate division to adhere to a
recent EPA ruling along with a carryover of certain amounts of
capital from 2014.
Based on these factors, we forecast full-year 2015 earnings of
$1.90-$2.20 per share, including
first-quarter earnings of $0.45-$0.55
per share. Along with those noted above, other annual guidance
numbers are outlined in the table below.
2015
Guidance
|
Earnings per
share
|
Annual:
$1.90-$2.20; Q1: $0.45-$0.55
|
Potash sales
volumes
|
9.2-9.7 million
tonnes
|
Potash gross
margin
|
$1.5-$1.8
billion
|
Nitrogen and
phosphate gross margin
|
$1.1-$1.3
billion
|
Capital
expenditures
|
~$1.2
billion
|
Effective tax
rate
|
26-28
percent
|
Provincial mining and
other taxes*
|
15-17
percent
|
Selling and
administrative expenses
|
$235-$245
million
|
Finance
costs
|
$200-$210
million
|
Income from offshore
investments**
|
$195-$205
million
|
Foreign Exchange
Rate
|
CDN$1.24 per
US$
|
EPS sensitivity to
Foreign Exchange
|
US$ strengthens vs.
CDN$ by $0.02 = +$0.01 EPS
|
* As a percentage of
potash gross margin
|
** Includes income
from dividends and share of equity earnings
|
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 integrated fertilizer and
related industrial and feed products company by capacity and plays
an integral role in global food production. PotashCorp is the
world's largest producer, by capacity, of potash and one of the
largest producers of nitrogen and phosphate. These three essential
nutrients are 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. While agriculture is its primary market, the company also
produces products for animal feed 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 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 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; changes in competitive pressures, including
pricing pressures; costs and availability of transportation and
distribution of our raw materials and products, including railcars
and ocean freight; risks and uncertainties related to operating and
workforce changes made in response to our industry and the markets
we serve; risks and uncertainties related to our international
operations and assets; failure to prevent or respond to a major
safety incident; 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; risks associated with natural gas and
other hedging activities; changes in capital markets; unexpected or
adverse weather conditions; catastrophic events or malicious acts,
including terrorism; changes in currency and exchange rates;
imprecision in reserve estimates; adverse developments in new and
pending legal proceedings or government investigations; our
prospects to reinvest capital in strategic opportunities and
acquisitions; our ownership of non-controlling equity investments
in other companies; the impact of further technological innovation;
increases in the price or reduced availability of the raw materials
that we use; security risks related to our information technology
systems; certain complications that may arise in our mining
process, including water inflows; our ability to attract, retain,
develop and engage skilled employees; 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; 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 January 29, 2015 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 Income
|
(in millions of US
dollars except per-share and share amounts)
|
(unaudited)
|
|
|
Three Months
Ended
|
Twelve Months
Ended
|
|
December
31
|
December
31
|
|
2014
|
2013
|
2014
|
2013
|
|
|
|
|
|
Sales (Note
2)
|
$ 1,902
|
$ 1,541
|
$ 7,115
|
$ 7,305
|
Freight,
transportation and distribution
|
(144)
|
(137)
|
(609)
|
(572)
|
Cost of goods
sold
|
(1,012)
|
(944)
|
(3,859)
|
(3,943)
|
Gross
Margin
|
746
|
460
|
2,647
|
2,790
|
Selling and
administrative expenses
|
(73)
|
(66)
|
(245)
|
(231)
|
Provincial mining and
other taxes
|
(82)
|
(40)
|
(257)
|
(194)
|
Share of earnings of
equity-accounted investees
|
17
|
21
|
102
|
195
|
Dividend
income
|
17
|
7
|
117
|
92
|
Impairment of
available-for-sale investment (Note 3)
|
-
|
-
|
(38)
|
-
|
Other (expenses)
income
|
(14)
|
(15)
|
22
|
(36)
|
Operating
Income
|
611
|
367
|
2,348
|
2,616
|
Finance
costs
|
(42)
|
(37)
|
(184)
|
(144)
|
Income Before
Income Taxes
|
569
|
330
|
2,164
|
2,472
|
Income taxes (Note
4)
|
(162)
|
(100)
|
(628)
|
(687)
|
Net
Income
|
$
407
|
$ 230
|
$ 1,536
|
$ 1,785
|
|
|
|
|
|
Net Income per
Share
|
|
|
|
|
|
Basic
|
$
0.49
|
$ 0.27
|
$
1.83
|
$ 2.06
|
|
Diluted
|
$
0.49
|
$ 0.26
|
$
1.82
|
$ 2.04
|
|
|
|
|
|
Dividends Declared
per Share
|
$
0.35
|
$ 0.35
|
$
1.40
|
$ 1.33
|
|
|
|
|
|
Weighted Average
Shares Outstanding
|
|
|
|
|
|
Basic
|
829,983,000
|
861,331,000
|
838,101,000
|
864,596,000
|
|
Diluted
|
835,984,000
|
868,015,000
|
844,544,000
|
873,982,000
|
(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
|
|
Twelve Months
Ended
|
|
December
31
|
|
December
31
|
(Net of related
income taxes)
|
2014
|
|
2013
|
|
2014
|
|
2013
|
Net
Income
|
$
407
|
|
$
230
|
|
$ 1,536
|
|
$ 1,785
|
Other comprehensive
loss
|
|
|
|
|
|
|
|
|
Items that will not
be reclassified to net income:
|
|
|
|
|
|
|
|
|
|
Net actuarial (loss)
gain on defined benefit plans (1)
|
(109)
|
|
14
|
|
(109)
|
|
164
|
|
Items that have been
or may be subsequently reclassified to net income:
|
|
|
|
|
|
|
|
|
|
Available-for-sale
investments (2)
|
|
|
|
|
|
|
|
|
|
|
Net fair value gain
(loss) during the period
|
37
|
|
(22)
|
|
(157)
|
|
(759)
|
|
|
Cash flow
hedges
|
|
|
|
|
|
|
|
|
|
|
Net fair value loss
during the period (3)
|
(33)
|
|
-
|
|
(40)
|
|
-
|
|
|
|
Reclassification to
income of net loss (4)
|
6
|
|
8
|
|
26
|
|
33
|
|
|
Other
|
(2)
|
|
(1)
|
|
1
|
|
-
|
Other
Comprehensive Loss
|
(101)
|
|
(1)
|
|
(279)
|
|
(562)
|
Comprehensive
Income
|
$
306
|
|
$
229
|
|
$ 1,257
|
|
$ 1,223
|
|
|
|
|
|
(1) Net
of income taxes of $60 (2013 - $(5)) for the three months ended
December 31, 2014 and $60 (2013 - $(92)) for the twelve months
ended December 31, 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 $18 (2013 - $NIL) for the three
months
ended December 31,
2014 and $22 (2013 - $NIL) for the twelve months ended December 31,
2014.
|
(4) Net of
income taxes of $(3) (2013 - $(4)) for the three months ended
December 31, 2014 and $(14) (2013 - $(18)) for the twelve months
ended December 31, 2014.
|
|
(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
|
Twelve Months
Ended
|
|
December
31
|
December
31
|
|
2014
|
2013
|
2014
|
2013
|
|
|
|
|
|
Operating
Activities
|
|
|
|
|
Net income
|
$
407
|
$ 230
|
$ 1,536
|
$ 1,785
|
Adjustments to
reconcile net income to cash provided by
|
|
|
|
|
|
operating activities
(Note 5)
|
347
|
336
|
1,168
|
1,142
|
Changes in non-cash
operating working capital (Note 5)
|
(41)
|
90
|
(90)
|
285
|
Cash provided by
operating activities
|
713
|
656
|
2,614
|
3,212
|
|
|
|
|
|
Investing
Activities
|
|
|
|
|
Additions to
property, plant and equipment
|
(412)
|
(414)
|
(1,138)
|
(1,624)
|
Other assets and
intangible assets
|
(10)
|
8
|
(22)
|
-
|
Cash used in
investing activities
|
(422)
|
(406)
|
(1,160)
|
(1,624)
|
|
|
|
|
|
Financing
Activities
|
|
|
|
|
Proceeds from
long-term debt obligations
|
-
|
-
|
737
|
-
|
Repayment of, and
finance costs on, long-term debt obligations
|
-
|
-
|
(500)
|
(254)
|
Proceeds from
short-term debt obligations
|
52
|
357
|
66
|
101
|
Dividends
|
(284)
|
(297)
|
(1,141)
|
(997)
|
Repurchase of common
shares
|
-
|
(245)
|
(1,065)
|
(411)
|
Issuance of common
shares
|
4
|
8
|
36
|
39
|
Cash used in
financing activities
|
(228)
|
(177)
|
(1,867)
|
(1,522)
|
Increase
(Decrease) in Cash and Cash Equivalents
|
63
|
73
|
(413)
|
66
|
Cash and Cash
Equivalents, Beginning of Period
|
152
|
555
|
628
|
562
|
Cash and Cash
Equivalents, End of Period
|
$
215
|
$ 628
|
$
215
|
$ 628
|
|
|
|
|
|
Cash and cash
equivalents comprised of:
|
|
|
|
|
|
Cash
|
$
89
|
$ 129
|
$
89
|
$ 129
|
|
Short-term
investments
|
126
|
499
|
126
|
499
|
|
$
215
|
$ 628
|
$
215
|
$ 628
|
(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 on
|
|
Other
|
|
|
|
Share
|
Contributed
|
for-sale
|
designated
as
|
defined
|
|
Comprehensive
|
Retained
|
Total
|
|
Capital
|
Surplus
|
investments
|
cash flow
hedges
|
benefit plans
(1)
|
Other
|
Income
|
Earnings
|
Equity
|
|
|
|
|
|
|
|
|
|
|
Balance - December
31, 2013
|
$ 1,600
|
$
219
|
$
780
|
$ (105)
|
$
-
|
$ (2)
|
$
673
|
$ 7,136
|
$ 9,628
|
Net income
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
1,536
|
1,536
|
Other comprehensive
(loss) income
|
-
|
-
|
(157)
|
(14)
|
(109)
|
1
|
(279)
|
-
|
(279)
|
Share
repurchase
|
(53)
|
(2)
|
-
|
-
|
-
|
-
|
-
|
(976)
|
(1,031)
|
Dividends
declared
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
(1,164)
|
(1,164)
|
Effect of share-based
compensation
|
|
|
|
|
|
|
|
|
|
|
including issuance of
common shares
|
49
|
17
|
-
|
-
|
-
|
-
|
-
|
-
|
66
|
Shares issued for
dividend
|
|
|
|
|
|
|
|
|
|
|
reinvestment
plan
|
36
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
36
|
Transfer of net
actuarial loss
|
|
|
|
|
|
|
|
|
|
on defined benefit
plans
|
-
|
-
|
-
|
-
|
109
|
-
|
109
|
(109)
|
-
|
Balance - December
31, 2014
|
$ 1,632
|
$
234
|
$
623
|
$ (119)
|
$
-
|
$ (1)
|
$
503
|
$ 6,423
|
$ 8,792
|
|
|
|
|
|
|
|
|
|
|
(1) Any
amounts incurred during a period were 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 Financial Position
|
(in millions of US
dollars except share amounts)
|
(unaudited)
|
|
|
|
|
|
December
31,
|
|
December
31,
|
As at
|
2014
|
|
2013
|
|
|
|
|
Assets
|
|
|
|
|
Current
assets
|
|
|
|
|
|
Cash and cash
equivalents
|
$
215
|
|
$ 628
|
|
|
Receivables
|
1,029
|
|
752
|
|
|
Inventories
|
646
|
|
728
|
|
|
Prepaid expenses and
other current assets
|
48
|
|
81
|
|
1,938
|
|
2,189
|
|
Non-current
assets
|
|
|
|
|
|
Property, plant and
equipment
|
12,674
|
|
12,233
|
|
|
Investments in
equity-accounted investees
|
1,211
|
|
1,276
|
|
|
Available-for-sale
investments (Note 3)
|
1,527
|
|
1,722
|
|
|
Other
assets
|
232
|
|
401
|
|
|
Intangible
assets
|
142
|
|
137
|
Total
Assets
|
$ 17,724
|
|
$ 17,958
|
|
|
|
|
|
|
|
|
Liabilities
|
|
|
|
|
Current
liabilities
|
|
|
|
|
|
Short-term debt and
current portion of long-term debt (Note 6)
|
$ 1,032
|
|
$ 967
|
|
|
Payables and accrued
charges
|
1,086
|
|
1,104
|
|
|
Current portion of
derivative instrument liabilities
|
80
|
|
42
|
|
2,198
|
|
2,113
|
|
Non-current
liabilities
|
|
|
|
|
|
Long-term debt (Note
6)
|
3,213
|
|
2,970
|
|
|
Derivative instrument
liabilities
|
115
|
|
129
|
|
|
Deferred income tax
liabilities
|
2,201
|
|
2,013
|
|
|
Pension and other
post-retirement benefit liabilities
|
503
|
|
410
|
|
|
Asset retirement
obligations and accrued environmental costs
|
589
|
|
557
|
|
|
Other non-current
liabilities and deferred credits
|
113
|
|
138
|
Total
Liabilities
|
8,932
|
|
8,330
|
|
|
|
|
Shareholders'
Equity
|
|
|
|
|
Share
capital
|
1,632
|
|
1,600
|
|
|
Unlimited
authorization of common shares without par value;
issued and outstanding 830,242,574 and
856,116,325 at
December 31, 2014 and 2013,
respectively
|
|
|
|
|
|
|
|
|
Contributed
surplus
|
234
|
|
219
|
|
Accumulated other
comprehensive income
|
503
|
|
673
|
|
Retained
earnings
|
6,423
|
|
7,136
|
Total
Shareholders' Equity
|
8,792
|
|
9,628
|
Total Liabilities
and Shareholders' Equity
|
$ 17,724
|
|
$ 17,958
|
(See Notes to the
Condensed Consolidated Financial Statements)
|
|
|
|
|
Potash Corporation of Saskatchewan
Inc.
Notes to the Condensed Consolidated Financial
Statements
For the Three and Twelve Months Ended December 31,
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 condensed
consolidated financial statements are consistent with those used in
the preparation of the company's 2013 annual consolidated financial
statements.
These unaudited 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.
The company's 2014 annual consolidated financial statements will
include additional information under IFRS in its Annual Integrated
Report in February 2015.
In management's opinion, the unaudited condensed consolidated
financial statements include all adjustments necessary to present
fairly such information.
2. 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
December 31, 2014
|
|
Potash
|
|
Nitrogen
|
|
Phosphate
|
|
All
Others
|
|
Consolidated
|
|
|
|
|
|
|
|
|
|
|
Sales - third
party
|
$
777
|
|
$
626
|
|
$
499
|
|
$
-
|
|
$
1,902
|
Freight,
transportation and distribution - third party
|
(62)
|
|
(28)
|
|
(54)
|
|
-
|
|
(144)
|
Net sales - third
party
|
715
|
|
598
|
|
445
|
|
-
|
|
|
Cost of goods sold -
third party
|
(270)
|
|
(378)
|
|
(364)
|
|
-
|
|
(1,012)
|
Margin (cost) on
inter-segment sales (1)
|
-
|
|
14
|
|
(14)
|
|
-
|
|
-
|
Gross
margin
|
445
|
|
234
|
|
67
|
|
-
|
|
746
|
Depreciation and
amortization
|
(59)
|
|
(45)
|
|
(63)
|
|
(15)
|
|
(182)
|
Cash outflows for
additions to property,
plant and
equipment
|
156
|
|
179
|
|
62
|
|
15
|
|
412
|
|
|
|
|
|
|
(1) Inter-segment net sales were $24.
|
|
|
|
|
|
|
|
Three Months Ended
December 31, 2013
|
|
Potash
|
|
Nitrogen
|
|
Phosphate
|
|
All
Others
|
|
Consolidated
|
|
|
|
|
|
|
|
|
|
|
Sales - third
party
|
$
564
|
|
$
494
|
|
$
483
|
|
$
-
|
|
$ 1,541
|
Freight,
transportation and distribution - third party
|
(60)
|
|
(23)
|
|
(54)
|
|
-
|
|
(137)
|
Net sales - third
party
|
504
|
|
471
|
|
429
|
|
-
|
|
|
Cost of goods sold -
third party
|
(276)
|
|
(298)
|
|
(370)
|
|
-
|
|
(944)
|
Margin (cost) on
inter-segment sales (1)
|
-
|
|
15
|
|
(15)
|
|
-
|
|
-
|
Gross
margin
|
228
|
|
188
|
|
44
|
|
-
|
|
460
|
Depreciation and
amortization
|
(39)
|
|
(40)
|
|
(80)
|
|
(18)
|
|
(177)
|
Cash outflows for
additions to property,
plant and
equipment
|
279
|
|
72
|
|
60
|
|
3
|
|
414
|
|
|
|
|
|
|
(1) Inter-segment net sales were $28.
|
|
|
|
|
|
|
|
Twelve Months
Ended December 31, 2014
|
|
Potash
|
|
Nitrogen
|
|
Phosphate
|
|
All
Others
|
|
Consolidated
|
|
|
|
|
|
|
|
|
|
|
Sales - third
party
|
$
2,828
|
|
$
2,425
|
|
$
1,862
|
|
$
-
|
|
$
7,115
|
Freight,
transportation and distribution - third party
|
(291)
|
|
(117)
|
|
(201)
|
|
-
|
|
(609)
|
Net sales - third
party
|
2,537
|
|
2,308
|
|
1,661
|
|
-
|
|
|
Cost of goods sold -
third party
|
(1,102)
|
|
(1,357)
|
|
(1,400)
|
|
-
|
|
(3,859)
|
Margin (cost) on
inter-segment sales (1)
|
-
|
|
59
|
|
(59)
|
|
-
|
|
-
|
Gross
margin
|
1,435
|
|
1,010
|
|
202
|
|
-
|
|
2,647
|
Depreciation and
amortization
|
(224)
|
|
(173)
|
|
(297)
|
|
(7)
|
|
(701)
|
Cash outflows for
additions to property,
plant and equipment
|
521
|
|
388
|
|
203
|
|
26
|
|
1,138
|
|
|
|
|
|
|
(1) Inter-segment net sales were $107.
|
|
|
|
|
|
Twelve Months
Ended December 31, 2013
|
|
Potash
|
|
Nitrogen
|
|
Phosphate
|
|
All
Others
|
|
Consolidated
|
|
|
|
|
|
|
|
|
|
|
Sales - third
party
|
$ 2,963
|
|
$ 2,275
|
|
$ 2,067
|
|
$
-
|
|
$ 7,305
|
Freight,
transportation and distribution - third party
|
(256)
|
|
(101)
|
|
(215)
|
|
-
|
|
(572)
|
Net sales - third
party
|
2,707
|
|
2,174
|
|
1,852
|
|
-
|
|
|
Cost of goods sold -
third party
|
(1,134)
|
|
(1,316)
|
|
(1,493)
|
|
-
|
|
(3,943)
|
Margin (cost) on
inter-segment sales (1)
|
-
|
|
55
|
|
(55)
|
|
-
|
|
-
|
Gross
margin
|
1,573
|
|
913
|
|
304
|
|
-
|
|
2,790
|
Depreciation and
amortization
|
(176)
|
|
(161)
|
|
(294)
|
|
(35)
|
|
(666)
|
Cash outflows for
additions to property,
plant and
equipment
|
1,151
|
|
184
|
|
238
|
|
51
|
|
1,624
|
|
|
|
|
|
|
(1) Inter-segment net sales were $139.
|
|
|
|
|
|
|
|
|
|
|
|
3. 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
|
|
10
|
|
10
|
|
10
|
|
-
|
Balance — June 30,
2014
|
|
$
210
|
|
$
(369)
|
|
$
10
|
|
$
(379)
|
Increase in fair
value
|
|
11
|
|
11
|
|
11
|
|
-
|
Balance — September
30, 2014
|
|
$
221
|
|
$
(358)
|
|
$
21
|
|
$
(379)
|
Increase in fair
value
|
|
31
|
|
31
|
|
31
|
|
-
|
Balance — December
31, 2014
|
|
$
252
|
|
$
(327)
|
|
$
52
|
|
$
(379)
|
4. Income
Taxes
A separate estimated average annual effective tax rate was
determined for each taxing jurisdiction and applied individually to
the pre-tax income of each jurisdiction.
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
Twelve Months
Ended
|
|
|
December
31
|
|
December
31
|
|
|
2014
|
|
2013
|
|
2014
|
|
2013
|
Income tax
expense
|
|
$
162
|
|
$
100
|
|
$
628
|
|
$
687
|
Actual effective tax
rate on ordinary earnings
|
|
29%
|
|
25%
|
|
28%
|
|
26%
|
Actual effective tax
rate including discrete items
|
|
29%
|
|
30%
|
|
29%
|
|
28%
|
Discrete tax
adjustments that impacted the tax rate
|
|
$
(1)
|
|
$
18
|
|
$
20
|
|
$
55
|
Significant items to note include the
following:
- The actual effective tax rate on ordinary earnings for the
three and twelve months ended December 31,
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 2013, a tax expense of $8
(recovery of $1 in the fourth
quarter) was recorded to adjust the 2012 income tax
provision.
- In fourth-quarter 2013, a net tax expense of $13 was recorded to adjust the deferred tax asset
related to foreign tax loss carryforwards to the amount expected to
be realized upon utilization.
- In fourth-quarter 2013, a deferred tax expense of $10 was recorded as a result of a planned
distribution of earnings from a foreign
jurisdiction.
- In second-quarter 2013, a deferred tax expense of $11 was recorded as a result of a Canadian income
tax rate increase.
5. Consolidated Statements of Cash Flow
|
|
Three Months
Ended
|
|
Twelve Months
Ended
|
|
|
December
31
|
|
December
31
|
|
|
2014
|
|
2013
|
|
2014
|
|
2013
|
Reconciliation of
cash provided by operating activities
|
|
|
|
|
|
|
|
|
Net income
|
|
$
407
|
|
$
230
|
|
$
1,536
|
|
$ 1,785
|
Adjustments to
reconcile net income to cash provided by
operating
activities
|
|
|
|
|
|
|
|
|
|
Depreciation and
amortization
|
|
182
|
|
177
|
|
701
|
|
666
|
|
Share-based
compensation
|
|
6
|
|
2
|
|
28
|
|
27
|
|
Net distributed
(undistributed) earnings of equity-accounted
investees
|
|
17
|
|
47
|
|
68
|
|
(15)
|
|
Impairment of
available-for-sale investment (Note 3)
|
|
-
|
|
-
|
|
38
|
|
-
|
|
Provision for
deferred income tax
|
|
126
|
|
86
|
|
268
|
|
397
|
|
Pension and other
post-retirement benefits
|
|
5
|
|
(6)
|
|
28
|
|
(16)
|
|
Asset retirement
obligations and accrued environmental costs
|
|
2
|
|
14
|
|
18
|
|
(2)
|
|
Other long-term
liabilities and miscellaneous
|
|
9
|
|
16
|
|
19
|
|
85
|
|
Subtotal of
adjustments
|
|
347
|
|
336
|
|
1,168
|
|
1,142
|
|
|
|
|
|
|
|
|
|
|
|
Changes in
non-cash operating working capital
|
|
|
|
|
|
|
|
|
|
Receivables
|
|
(140)
|
|
114
|
|
(220)
|
|
276
|
|
Inventories
|
|
46
|
|
(1)
|
|
70
|
|
28
|
|
Prepaid expenses and
other current assets
|
|
8
|
|
3
|
|
29
|
|
(1)
|
|
Payables and accrued
charges
|
|
45
|
|
(26)
|
|
31
|
|
(18)
|
|
Subtotal of changes
in non-cash operating working capital
|
|
(41)
|
|
90
|
|
(90)
|
|
285
|
Cash provided by
operating activities
|
|
$
713
|
|
$
656
|
|
$
2,614
|
|
$ 3,212
|
|
|
|
|
|
|
|
|
|
Supplemental cash
flow disclosure
|
|
|
|
|
|
|
|
|
|
Interest
paid
|
|
$
55
|
|
$
68
|
|
$
187
|
|
$
191
|
|
Income taxes
paid
|
|
$
113
|
|
$
76
|
|
$
405
|
|
$
189
|
6. 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.
Potash Corporation
of Saskatchewan Inc.
Selected Financial
Data
(unaudited)
|
|
|
|
|
Three Months
Ended
|
|
Twelve Months
Ended
|
|
December
31
|
|
December
31
|
|
2014
|
|
2013
|
|
2014
|
|
2013
|
|
|
|
|
|
|
|
|
Potash Sales
(tonnes - thousands)
|
|
|
|
|
|
|
|
|
Manufactured
Product
|
|
|
|
|
|
|
|
|
|
North
America
|
829
|
|
836
|
|
3,549
|
|
3,185
|
|
|
Offshore
|
1,671
|
|
929
|
|
5,797
|
|
4,915
|
|
Manufactured
Product
|
2,500
|
|
1,765
|
|
9,346
|
|
8,100
|
|
|
|
|
|
|
|
|
Potash Net
Sales
|
|
|
|
|
|
|
|
|
(US $
millions)
|
|
|
|
|
|
|
|
|
|
Sales
|
$
777
|
|
$ 564
|
|
$ 2,828
|
|
$ 2,963
|
|
|
Freight,
transportation and distribution
|
(62)
|
|
(60)
|
|
(291)
|
|
(256)
|
|
|
Net Sales
|
$
715
|
|
$ 504
|
|
$ 2,537
|
|
$ 2,707
|
|
|
|
|
|
|
|
|
|
Manufactured
Product
|
|
|
|
|
|
|
|
|
|
North
America
|
$
296
|
|
$ 287
|
|
$ 1,162
|
|
$ 1,210
|
|
|
Offshore
|
412
|
|
211
|
|
1,354
|
|
1,482
|
|
Other miscellaneous
and purchased product
|
7
|
|
6
|
|
21
|
|
15
|
|
Net Sales
|
$
715
|
|
$ 504
|
|
$ 2,537
|
|
$ 2,707
|
|
|
|
|
|
|
|
|
Manufactured
Product
|
|
|
|
|
|
|
|
|
Average Realized
Sales Price per MT
|
|
|
|
|
|
|
|
|
|
North
America
|
$
358
|
|
$ 343
|
|
$
328
|
|
$ 380
|
|
|
Offshore
|
$
246
|
|
$ 227
|
|
$
234
|
|
$ 302
|
|
|
Average
|
$
284
|
|
$ 282
|
|
$
269
|
|
$ 332
|
|
Cost of Goods Sold
per MT
|
$
(105)
|
|
$ (150)
|
|
$
(113)
|
|
$ (136)
|
|
Gross Margin per
MT
|
$
179
|
|
$ 132
|
|
$
156
|
|
$ 196
|
|
|
|
|
Potash Corporation
of Saskatchewan Inc.
|
Selected Financial
Data
|
(unaudited)
|
|
|
|
|
|
Three Months
Ended
|
|
Twelve Months
Ended
|
|
December
31
|
|
December
31
|
|
2014
|
|
2013
|
|
2014
|
|
2013
|
|
|
|
|
|
|
|
|
Average Natural Gas
Cost in Production per MMBtu
|
$
6.34
|
|
$ 4.83
|
|
$
5.77
|
|
$ 5.38
|
Nitrogen Sales
(tonnes - thousands)
|
|
|
|
|
|
|
|
|
Manufactured
Product
|
|
|
|
|
|
|
|
|
|
Ammonia
(1)
|
652
|
|
543
|
|
2,428
|
|
2,163
|
|
|
Urea
|
195
|
|
270
|
|
1,049
|
|
1,070
|
|
|
Solutions/Nitric
acid/Ammonium nitrate
|
664
|
|
685
|
|
2,875
|
|
2,663
|
|
Manufactured
Product
|
1,511
|
|
1,498
|
|
6,352
|
|
5,896
|
|
|
|
|
|
|
|
|
|
Fertilizer sales
tonnes (1)
|
380
|
|
472
|
|
2,079
|
|
1,833
|
|
Industrial/Feed sales
tonnes
|
1,131
|
|
1,026
|
|
4,273
|
|
4,063
|
|
Manufactured
Product
|
1,511
|
|
1,498
|
|
6,352
|
|
5,896
|
|
|
|
|
|
|
|
|
Nitrogen Net
Sales
|
|
|
|
|
|
|
|
|
(US $
millions)
|
|
|
|
|
|
|
|
|
|
Sales - third
party
|
$
626
|
|
$ 494
|
|
$ 2,425
|
|
$ 2,275
|
|
|
Freight,
transportation and distribution - third party
|
(28)
|
|
(23)
|
|
(117)
|
|
(101)
|
|
|
Net sales - third
party
|
598
|
|
471
|
|
2,308
|
|
2,174
|
|
|
Inter-segment net
sales
|
24
|
|
28
|
|
107
|
|
139
|
|
|
Net Sales
|
$
622
|
|
$ 499
|
|
$ 2,415
|
|
$ 2,313
|
|
|
|
|
|
|
|
|
|
Manufactured
Product
|
|
|
|
|
|
|
|
|
|
Ammonia
(2)
|
$
385
|
|
$ 244
|
|
$ 1,260
|
|
$ 1,143
|
|
|
Urea
|
75
|
|
96
|
|
439
|
|
443
|
|
|
Solutions/Nitric
acid/Ammonium nitrate
|
153
|
|
149
|
|
679
|
|
638
|
|
Other miscellaneous
and purchased product (3)
|
9
|
|
10
|
|
37
|
|
89
|
|
Net Sales
|
$
622
|
|
$ 499
|
|
$ 2,415
|
|
$ 2,313
|
|
|
|
|
|
|
|
|
|
Fertilizer net sales
(2)
|
$
138
|
|
$ 156
|
|
$
778
|
|
$ 722
|
|
Industrial/Feed net
sales
|
475
|
|
333
|
|
1,600
|
|
1,502
|
|
Other miscellaneous
and purchased product (3)
|
9
|
|
10
|
|
37
|
|
89
|
|
Net Sales
|
$
622
|
|
$ 499
|
|
$ 2,415
|
|
$ 2,313
|
|
|
|
|
|
|
|
|
Manufactured
Product
|
|
|
|
|
|
|
|
|
Average Realized
Sales Price per MT
|
|
|
|
|
|
|
|
|
|
Ammonia
|
$
590
|
|
$ 449
|
|
$
519
|
|
$ 529
|
|
|
Urea
|
$
384
|
|
$ 356
|
|
$
418
|
|
$ 414
|
|
|
Solutions/Nitric
acid/Ammonium nitrate
|
$
231
|
|
$ 218
|
|
$
236
|
|
$ 240
|
|
|
Average
|
$
405
|
|
$ 326
|
|
$
374
|
|
$ 377
|
|
|
Fertilizer average
price per MT
|
$
362
|
|
$ 331
|
|
$
374
|
|
$ 396
|
|
|
Industrial/Feed
average price per MT
|
$
420
|
|
$ 325
|
|
$
374
|
|
$ 370
|
|
|
Average
|
$
405
|
|
$ 326
|
|
$
374
|
|
$ 377
|
|
Cost of Goods Sold
per MT
|
$
(253)
|
|
$ (204)
|
|
$
(218)
|
|
$ (225)
|
|
Gross Margin per
MT
|
$
152
|
|
$ 122
|
|
$
156
|
|
$ 152
|
|
|
|
|
|
|
|
|
(1) Includes
inter-segment ammonia sales (tonnes - thousands)
|
29
|
|
48
|
|
170
|
|
184
|
(2) Includes
inter-segment ammonia net sales
|
$
20
|
|
$
27
|
|
$
101
|
|
$ 106
|
(3) Includes
inter-segment other miscellaneous and purchased product net
sales
|
$
4
|
|
$
1
|
|
$
6
|
|
$
33
|
|
|
|
|
Potash Corporation
of Saskatchewan Inc.
|
Selected Financial
Data
|
(unaudited)
|
|
|
|
|
|
Three Months
Ended
|
|
Twelve Months
Ended
|
|
December
31
|
|
December
31
|
|
2014
|
|
2013
|
|
2014
|
|
2013
|
Phosphate Sales
(tonnes - thousands)
|
|
|
|
|
|
|
|
|
Manufactured
Product
|
|
|
|
|
|
|
|
|
|
Fertilizer
|
501
|
|
637
|
|
1,987
|
|
2,496
|
|
|
Feed and
Industrial
|
293
|
|
297
|
|
1,155
|
|
1,184
|
|
Manufactured
Product
|
794
|
|
934
|
|
3,142
|
|
3,680
|
Phosphate Net
Sales
|
|
|
|
|
|
|
|
|
(US $
millions)
|
|
|
|
|
|
|
|
|
|
Sales
|
$
499
|
|
$ 483
|
|
$ 1,862
|
|
$ 2,067
|
|
|
Freight,
transportation and distribution
|
(54)
|
|
(54)
|
|
(201)
|
|
(215)
|
|
|
Net Sales
|
$
445
|
|
$ 429
|
|
$ 1,661
|
|
$ 1,852
|
|
Manufactured
Product
|
|
|
|
|
|
|
|
|
|
Fertilizer
|
$
233
|
|
$ 244
|
|
$
889
|
|
$ 1,079
|
|
|
Feed and
Industrial
|
187
|
|
181
|
|
713
|
|
749
|
|
Other miscellaneous
and purchased product
|
25
|
|
4
|
|
59
|
|
24
|
|
Net Sales
|
$
445
|
|
$ 429
|
|
$ 1,661
|
|
$ 1,852
|
Manufactured
Product
|
|
|
|
|
|
|
|
|
Average Realized
Sales Price per MT
|
|
|
|
|
|
|
|
|
|
Fertilizer
|
$
465
|
|
$ 383
|
|
$
447
|
|
$ 433
|
|
|
Feed and
Industrial
|
$
636
|
|
$ 608
|
|
$
617
|
|
$ 632
|
|
|
Average
|
$
528
|
|
$ 455
|
|
$
510
|
|
$ 497
|
|
Cost of Goods Sold
per MT
|
$
(446)
|
|
$ (401)
|
|
$
(448)
|
|
$ (415)
|
|
Gross Margin per
MT
|
$
82
|
|
$
54
|
|
$
62
|
|
$
82
|
|
|
|
|
|
|
|
|
Potash Corporation
of Saskatchewan Inc.
|
Selected
Additional Data
|
(unaudited)
|
|
|
|
|
|
|
|
|
Exchange Rate
(Cdn$/US$)
|
|
|
|
|
|
|
|
|
|
|
|
|
2014
|
|
2013
|
|
|
|
|
|
|
|
|
December
31
|
|
|
|
|
1.1601
|
|
1.0636
|
Fourth-quarter
average conversion rate
|
|
|
|
|
1.1184
|
|
1.0399
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
Twelve Months
Ended
|
|
|
December
31
|
|
December
31
|
|
|
|
2014
|
|
2013
|
|
2014
|
|
2013
|
|
|
|
|
|
|
|
|
|
|
Production
|
|
|
|
|
|
|
|
|
|
Potash production
(KCl Tonnes - thousands)
|
|
|
2,557
|
|
1,940
|
|
8,726
|
|
7,792
|
Potash shutdown weeks
(1)
|
|
|
4
|
|
10
|
|
18
|
|
42
|
Nitrogen production
(N Tonnes - thousands)
|
|
|
720
|
|
798
|
|
3,170
|
|
2,952
|
Phosphate production
(P2O5 Tonnes - thousands)
|
|
|
412
|
|
505
|
|
1,671
|
|
2,058
|
Phosphate
P2O5 operating
rate
|
|
|
87%
|
|
85%
|
|
76%
|
|
87%
|
|
|
|
|
|
|
|
|
|
|
Shareholders
|
|
|
|
|
|
|
|
|
|
PotashCorp's total
shareholder return
|
|
|
3%
|
|
6%
|
|
12%
|
|
-16%
|
|
|
|
|
|
|
|
|
|
|
Customers
|
|
|
|
|
|
|
|
|
|
Product tonnes
involved in customer complaints (thousands)
|
|
|
39
|
|
27
|
|
63
|
|
43
|
|
|
|
|
|
|
|
|
|
|
Community
|
|
|
|
|
|
|
|
|
|
Taxes and royalties
($ millions) (2)
|
|
|
156
|
|
84
|
|
715
|
|
568
|
|
|
|
|
|
|
|
|
|
|
Employees
|
|
|
|
|
|
|
|
|
|
Annualized turnover
rate (excluding retirements) (3)
|
|
|
3%
|
|
7%
|
|
12%
|
|
5%
|
|
|
|
|
|
|
|
|
|
|
Safety
|
|
|
|
|
|
|
|
|
|
Total site recordable
injury rate (per 200,000 work hours) (4)
|
|
|
0.66
|
|
0.86
|
|
1.01
|
|
1.06
|
|
|
|
|
|
|
|
|
|
|
Environment
|
|
|
|
|
|
|
|
|
|
Environmental
incidents (5)
|
|
|
5
|
|
4
|
|
24
|
|
17
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December
31,
|
|
December
31,
|
As at
|
|
|
|
|
|
|
2014
|
|
2013
|
|
|
|
|
|
|
|
|
|
|
Number of
employees (6)
|
|
|
|
|
|
|
|
|
|
|
Potash
|
|
|
|
|
|
|
2,534
|
|
2,912
|
|
Nitrogen
|
|
|
|
|
|
|
802
|
|
789
|
|
Phosphate
|
|
|
|
|
|
|
1,385
|
|
1,637
|
|
Other
|
|
|
|
|
|
|
415
|
|
449
|
|
Total
|
|
|
|
|
|
|
5,136
|
|
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 did 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, cash flows or financial position 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
|
|
Twelve Months
Ended
|
|
|
December
31
|
|
December
31
|
|
|
2014
|
|
2013
|
|
2014
|
|
2013
|
Net
income
|
|
$
407
|
|
$ 230
|
|
$ 1,536
|
|
$ 1,785
|
Finance
costs
|
|
42
|
|
37
|
|
184
|
|
144
|
Income
taxes
|
|
162
|
|
100
|
|
628
|
|
687
|
Depreciation and
amortization
|
|
182
|
|
177
|
|
701
|
|
666
|
EBITDA
|
|
$
793
|
|
$ 544
|
|
$ 3,049
|
|
$ 3,282
|
Termination benefit
costs
|
|
-
|
|
60
|
|
-
|
|
60
|
Impairment of
available-for-sale investment
|
|
-
|
|
-
|
|
38
|
|
-
|
Adjusted
EBITDA
|
|
$
793
|
|
$ 604
|
|
$ 3,087
|
|
$ 3,342
|
|
|
|
|
|
|
|
|
|
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, termination benefit costs 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, termination benefit
costs, 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
|
|
Twelve Months
Ended
|
|
December
31
|
|
December
31
|
|
2014
|
|
2013
|
|
2014
|
|
2013
|
Sales
|
$ 1,902
|
|
$ 1,541
|
|
$ 7,115
|
|
$ 7,305
|
Freight,
transportation and distribution
|
(144)
|
|
(137)
|
|
(609)
|
|
(572)
|
Net
sales
|
$ 1,758
|
|
$ 1,404
|
|
$ 6,506
|
|
$ 6,733
|
|
|
|
|
|
|
|
|
Net income as a
percentage of sales
|
21%
|
|
15%
|
|
22%
|
|
24%
|
Adjusted EBITDA
margin
|
45%
|
|
43%
|
|
47%
|
|
50%
|
|
|
|
|
|
|
|
|
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
|
|
Twelve Months
Ended
|
|
December
31
|
|
December
31
|
|
2014
|
|
2013
|
|
2014
|
|
2013
|
Cash flow prior to
working capital changes
|
$
754
|
|
$ 566
|
|
$ 2,704
|
|
$ 2,927
|
Changes in non-cash
operating working capital
|
|
|
|
|
|
|
|
|
Receivables
|
(140)
|
|
114
|
|
(220)
|
|
276
|
|
Inventories
|
46
|
|
(1)
|
|
70
|
|
28
|
|
Prepaid expenses and
other current assets
|
8
|
|
3
|
|
29
|
|
(1)
|
|
Payables and accrued
charges
|
45
|
|
(26)
|
|
31
|
|
(18)
|
Changes in
non-cash operating working capital
|
(41)
|
|
90
|
|
(90)
|
|
285
|
Cash provided by
operating activities
|
$
713
|
|
$ 656
|
|
$ 2,614
|
|
$ 3,212
|
Additions to
property, plant and equipment
|
(412)
|
|
(414)
|
|
(1,138)
|
|
(1,624)
|
Other assets and
intangible assets
|
(10)
|
|
8
|
|
(22)
|
|
-
|
Changes in non-cash
operating working capital
|
41
|
|
(90)
|
|
90
|
|
(285)
|
Free cash
flow
|
$
332
|
|
$ 160
|
|
$ 1,544
|
|
$ 1,303
|
|
|
|
|
|
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.