Symbol: POT
Listed: TSX, NYSE
Key Highlights
- First-quarter earnings of $0.44
per share1
- Agreement to acquire 9.5 percent stake in Fertilizantes
Heringer S.A. (Heringer)
- Full-year 2015 guidance adjusted to $1.75-$2.05 per share; primary changes include:
- Higher Saskatchewan potash taxes: ~$0.07 per share
- Nitrogen (lower volumes and prices): ~$0.04 per share
- Potash (shift in expected sales mix by market): ~$0.03 per share
- Phosphate (lower volumes): ~$0.03
per share
- Second-quarter guidance set at $0.45-$0.55 per share
CEO Commentary
"We delivered stronger earnings compared to last year's first
quarter on improved potash and phosphate contributions," said
PotashCorp President and Chief Executive Officer Jochen Tilk. "We adjust our full-year guidance
largely on higher Saskatchewan
potash taxes and first-quarter performance that trailed our initial
expectations. Looking ahead, we are encouraged by the strength in
global potash demand and see momentum accelerating through the
second quarter, especially in offshore markets"
SASKATOON, April 30, 2015 /CNW/ - Potash Corporation of
Saskatchewan Inc. (PotashCorp) reported first-quarter earnings of
$0.44 per share ($370 million), up from the $0.40 per share ($340
million) generated in 2014's first quarter. Gross margin for
the quarter of $667 million surpassed
the $565 million total for the same
period in 2014. Higher prices and lower per-tonne cost of goods
sold in potash were the primary contributors, more than offsetting
changes to Saskatchewan potash
taxes and weaker nitrogen sales volumes.
Earnings before finance costs, income taxes, depreciation and
amortization (EBITDA)2 of $731
million exceeded the total for 2014's first quarter of
$707 million, while cash from
operating activities of $521 million
during the first quarter was similar to the same period last
year.
Income from our offshore investments contributed $33 million to our first-quarter earnings, well
below the $100 million for the same
period in 2014. This year's total was comprised of equity earnings
from Arab Potash Company (APC) and Sociedad Quimica y Minera de
Chile S.A. (SQM), while 2014's total included contributions from
these two companies as well as a $69
million special dividend from Israel Chemicals Ltd.
(ICL).
Market Conditions
Following a period of especially robust potash markets, demand
and pricing in spot markets eased slightly during the first quarter
of 2015. While currency headwinds, weaker demand in Brazil and later settlements of annual Chinese
contracts caused some caution among buyers, strong consumption
needs kept demand at historically elevated levels. Potash exports
from North American producers increased in the quarter as rail
constraints that limited deliveries in last year's first quarter
largely abated. In the North American market, a slow start to the
spring planting season and record offshore imports resulted in
weaker domestic producer sales compared to last year's first
quarter.
In nitrogen, market fundamentals weakened during the quarter on
reduced agricultural demand and increased supply, including record
Chinese urea exports. Prices for most nitrogen products moved lower
during the quarter, although supply challenges in key exporting
regions kept ammonia prices in North
America elevated relative to the same period last year.
In phosphate, the first quarter of 2015 saw supportive market
fundamentals – especially for liquid fertilizers – on strong demand
and North American supply outages. Prices for all phosphate
products increased compared to the same period last year, although
the solid fertilizer market weakened as the quarter progressed.
Potash
Higher realized prices and lower per-tonne costs increased our
first-quarter potash gross margin to $428
million, surpassing the $300
million generated during the same period in 2014.
First-quarter sales volumes of 2.3 million tonnes were
relatively flat with the same period in 2014. Shipments to offshore
markets rose 17 percent as improved rail logistics enhanced the
ability of Canpotex3 to meet customer demands. The
majority of Canpotex's shipments during the quarter were to Other
Asian countries (47 percent) and Latin
America (21 percent), while China and India accounted for 12 percent and 11 percent,
respectively. North American sales volumes declined by 19 percent
from 2014's comparatively high total.
Our first-quarter average realized potash price of $284 per tonne was above the $250 per tonne for the same period last year as
realized prices reflected the strong recovery throughout 2014
driven by record consumption.
Potash production reached 2.6 million tonnes during the quarter,
exceeding the 2.4 million tonnes produced in 2014's comparative
period. Higher production, operational efficiencies and a favorable
impact from a weakened Canadian dollar lowered our per-tonne costs
by $18 per tonne (15 percent)
compared to the same period last year.
Nitrogen
In nitrogen, gross margin of $181
million trailed the $239
million generated in the first quarter of 2014 on lower
sales volumes and higher production costs. Our US operations
generated $120 million of our
quarterly total with Trinidad
accounting for the remainder.
Sales volumes for the quarter of 1.3 million tonnes fell below
the 1.6 million tonnes sold in 2014's comparative period. Volumes
for the quarter were affected by issues related to product
availability caused by mechanical challenges at our Lima facility and curtailments in Trinidad related to natural gas supply.
Additionally, a delayed start to the spring planting season in
North America led to weaker
fertilizer demand, which constrained sales, especially for urea and
nitrogen solutions.
Our average realized price of $351
per tonne during the quarter exceeded the $344 per tonne in the same period last year due
to stronger ammonia prices.
Per-tonne cost of goods sold for the first quarter increased 8
percent from 2014's comparable period. The primary drivers were
reduced production and higher losses on our hedging positions as
the benefit from lower natural gas costs in the US was offset by a
rise in our ammonia-linked gas prices in Trinidad.
Phosphate
In phosphate, our first-quarter gross margin of $58 million surpassed the $26 million earned during the same period in 2014
as a result of improved realizations and the absence of accelerated
depreciation charges related to the closure of our Suwannee River chemical plant.
Sales volumes for the quarter of 0.7 million tonnes were down 16
percent from the same period last year. While we experienced
production constraints in both periods, this year's first-quarter
also reflected the closure of Suwannee
River capacity and a greater proportion of our phosphoric
acid being directed to products with higher phosphate content.
Our first-quarter average realized price of $574 per tonne was well above the $484 per tonne in the same period of 2014.
Improved market fundamentals and a greater proportion of sales
volumes coming from higher-netback feed, industrial and liquid
fertilizer products were the primary drivers.
Cost of goods sold of $487 per
tonne for the quarter exceeded the $453 per tonne in the same period of 2014,
largely due to lower sales volumes and increased input costs for
sulfur.
Financial
A weaker Canadian dollar, stronger potash prices and changes to
Saskatchewan's potash taxation
regulations announced in March raised provincial mining and other
taxes for the first quarter to $95
million, well above the $54
million recorded in 2014. Despite higher company earnings,
our income tax expense of $140
million was slightly below the same period last year when a
$38 million non-deductible impairment
charge on our investment in Sinofert Holdings Limited (Sinofert)
was recognized.
Capital-related cash expenditures of $228
million during the quarter were relatively flat compared to
the same period in 2014.
During the quarter, we entered into an agreement to acquire a
9.5 percent stake in Heringer, one of Brazil's largest fertilizer distributors. Once
finalized, this investment is expected to further enhance our
ability to serve customers in Brazil and provide flexibility for our growing
New Brunswick potash
operation.
In March, we issued $500 million
in 10-year notes at a rate of 3.00 percent during the quarter. The
proceeds are expected to be used for general corporate purposes and
to redeem $500 million of 3.75
percent notes that mature in September
2015.
Market Outlook
We continue to see encouraging signs in potash. With positive
consumption trends, buyers in all key markets remain engaged and
opportunities are emerging for reliable suppliers who can quickly
respond to customers' needs.
With China's annual potash
contracts now in place and planting underway in the Northern
Hemisphere, we expect global shipments to accelerate and market
fundamentals to improve in the second quarter. Although volatile
currency markets and risks to crop economics have the potential to
disrupt demand expectations, we believe underlying consumption
needs will support 2015 global potash shipments at the upper end of
our previous guidance range of 58-60 million tonnes.
In North America, the need to
replenish soil nutrients from last year's record crop is expected
to support strong potash demand at the farm level. Increased
offshore imports are likely to keep domestic producer shipments –
including those for PotashCorp – below robust 2014 levels through
the balance of the year. Based on these factors – along with a
potential decline in planted acres – we have lowered our 2015
shipment estimate for North
America to 9.3-9.8 million tonnes.
In Latin America, a drawdown of
distributor inventories through the first quarter is expected to
support higher potash import requirements as the year progresses.
We continue to see significant agronomic needs supporting total
shipments to this market of 10.8-11.3 million tonnes, slightly
below 2014's record level.
In China, we expect encouraging
consumption trends to continue, especially for bulk blends and
compound fertilizers with higher potassium content. Recently signed
potash contracts with most major suppliers – including Canpotex
contracts with minimum shipment requirements above those of 2014 –
are expected to support robust shipments through the balance of the
year. As a result of higher-than-anticipated contracted tonnes we
have raised our estimate for total Chinese demand to 14.0-14.5
million tonnes.
In India, we expect positive
consumption trends for direct application and compound fertilizers
to help bolster demand growth. While contract negotiations between
Canpotex and its customers in India are ongoing, we believe the need for
improved fertility will provide the necessary incentive to ensure
potash settlements are completed in a timely manner. For 2015, we
have increased the upper end of our estimate range for total
shipments, which are now forecast at 4.5-5.0 million tonnes.
In Other Asian countries (outside of China and India), agronomic need is expected to support
strong consumption through the balance of 2015. Higher distributor
inventories to begin the year are likely to keep total potash
import requirements below last year's record level, with those for
2015 forecast in the range of 8.4-8.8 million tonnes.
Financial Outlook
We have maintained our annual estimate for potash gross margin
of $1.5-$1.8 billion and sales
volumes of 9.2-9.7 million tonnes. While global demand could push
our sales volumes to the upper end of our guidance range, weaker
pricing and a higher proportion of offshore sales tonnes are likely
to result in lower average realizations compared to previous
expectations. High operating rates, along with lower costs and a
weaker Canadian dollar are expected to result in lower per-tonne
operating costs relative to 2014. As a result of recent changes to
potash taxes in Saskatchewan, we
now forecast provincial mining and other taxes for 2015 to total
20-22 percent of potash gross margin.
In nitrogen, lower global energy costs and increased supply are
anticipated to keep markets subdued relative to 2014. Our
production run rate is expected to improve from first-quarter
levels, but challenges experienced early in the year are likely to
result in annual sales volumes slightly below 2014's total.
In phosphate, we expect market conditions to support a stronger
pricing environment relative to 2014. Although we anticipate
improved production levels will reduce our per-tonne cost of goods
sold through the balance of the year, first-quarter production
challenges, the closure of our Suwannee
River facility and a greater proportion of our sales volume
being directed to higher phosphate content products are expected to
keep sales volumes below 2014 levels and our initial expectations
for 2015.
Given these considerations, we now forecast our combined
nitrogen and phosphate gross margin will be in the range of
$1.0-$1.2 billion in 2015.
We have lowered our estimate of income from offshore equity
investments to a range of $180-$200
million due to a slightly more subdued potash price
environment and reduced dividend expectations from ICL related to
ongoing labor issues. Selling and administrative expenses are now
forecast between $230 million and $245
million.
We have lowered our full-year 2015 earnings guidance to
$1.75-$2.05 per share. For the second
quarter, we forecast a range 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: $1.75-$2.05;
Q2: $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
|
$1.0-$1.2
billion
|
Capital
expenditures
|
~$1.2
billion
|
Effective tax
rate
|
26-28
percent
|
Provincial mining and
other taxes*
|
20-22
percent
|
Selling and
administrative expenses
|
$230-$245
million
|
Finance
costs
|
$200-$210
million
|
Income from offshore
equity investments**
|
$180-$200
million
|
Foreign Exchange
Rate
|
CDN$1.24 per
US$
|
Annual 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
|
Annual Meeting of Shareholders Note
On April 27, 2015 PotashCorp
adopted further amendments to the company's General By-Law which
was previously amended on February
20, 2015. The sole purpose of the amendment was to
delete Section 7.A(5) of the advance notice requirements for
director nominations of the General By-Law.
The full text of the General By-Law (as amended) is available
under PotashCorp's profile at www.sedar.com, on the EDGAR section
of the U.S. Securities and Exchange Commission's website at
www.sec.gov and on the company's website. The by-law
amendments were effective as of the date of their adoption.
Shareholders of PotashCorp will be asked to ratify and confirm the
collective amendments to the General By-Law at the next meeting of
shareholders currently scheduled to be held on May 12, 2015, as required by the Canada Business
Corporations Act.
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 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, including the documents incorporated by
reference, contains "forward-looking statements" (within the
meaning of the US Private Securities Litigation Reform Act of 1995)
or "forward-looking information"(within the meaning of appropriate
Canadian securities legislation) that relate to future events or
our future performance. 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 as set forth in this document, including with respect
to: foreign exchange rates, expected growth, results of operations,
performance, business prospects and opportunities and effective tax
rates. While we consider 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 for 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 interests 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; 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; certain complications that may arise in our mining
process, including water inflows; our ability to attract, retain,
develop and engage skilled employees; risks related to reputational
loss; earnings; and the decisions of taxing authorities, which
could affect our effective tax rates. These risks and
uncertainties are discussed in more detail under the headings "Risk
Factors" and "Management's Discussion and Analysis of Results and
Operations and Financial Condition" in our Annual Report on Form
10-K for the fiscal year ended December 31,
2014 and in other documents and reports subsequently filed
by us with the US Securities and Exchange Commission and the
Canadian provincial securities commissions. Forward-looking
statements are given only as of the date hereof and we disclaim any
obligation to update or revise any forward-looking statements in
this release, whether as a result of new information, future events
or otherwise, except as required by law.
PotashCorp will host a Conference Call on Thursday April 30, 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 as otherwise
noted)
|
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
|
|
March 31
|
|
|
|
|
2015
|
|
2014
|
|
|
|
|
|
|
|
|
|
Sales (Note
2)
|
|
|
|
$
|
1,665
|
|
$
|
1,680
|
Freight,
transportation and distribution
|
|
|
|
|
(128)
|
|
|
(166)
|
Cost of goods
sold
|
|
|
|
|
(870)
|
|
|
(949)
|
Gross Margin
|
|
|
|
|
667
|
|
|
565
|
Selling and
administrative expenses
|
|
|
|
|
(60)
|
|
|
(68)
|
Provincial mining and
other taxes
|
|
|
|
|
(95)
|
|
|
(54)
|
Share of earnings of
equity-accounted investees
|
|
|
|
|
36
|
|
|
33
|
Dividend
income
|
|
|
|
|
-
|
|
|
69
|
Impairment of
available-for-sale investment
|
|
|
|
|
-
|
|
|
(38)
|
Other
income
|
|
|
|
|
11
|
|
|
24
|
Operating Income
|
|
|
|
|
559
|
|
|
531
|
Finance
costs
|
|
|
|
|
(49)
|
|
|
(47)
|
Income Before Income Taxes
|
|
|
|
|
510
|
|
|
484
|
Income taxes (Note
3)
|
|
|
|
|
(140)
|
|
|
(144)
|
Net Income
|
|
|
|
$
|
370
|
|
$
|
340
|
|
|
|
|
|
|
|
|
|
Net Income per Share
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
|
$
|
0.45
|
|
$
|
0.40
|
|
Diluted
|
|
|
|
$
|
0.44
|
|
$
|
0.40
|
|
|
|
|
|
|
|
|
|
Dividends Declared per
Share
|
|
|
|
$
|
0.38
|
|
$
|
0.35
|
|
|
|
|
|
|
|
|
|
Weighted Average Shares
Outstanding
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
|
|
831,390,000
|
|
|
852,919,000
|
|
Diluted
|
|
|
|
|
837,099,000
|
|
|
859,675,000
|
(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
|
|
|
|
|
March 31
|
(Net of related
income taxes)
|
|
|
|
2015
|
|
2014
|
|
|
|
|
|
|
|
Net Income
|
|
|
|
$
370
|
|
$
340
|
Other comprehensive
income
|
|
|
|
|
|
|
|
Items that have been
or may be subsequently reclassified to net income:
|
|
|
|
|
|
|
|
Available-for-sale
investments (1)
|
|
|
|
|
|
|
|
|
|
Net fair value gain
during the period
|
|
|
|
38
|
|
50
|
|
|
Cash flow
hedges
|
|
|
|
|
|
|
|
|
Net fair value loss
during the period (2)
|
|
|
|
(22)
|
|
(1)
|
|
|
|
Reclassification to
income of net loss (3)
|
|
|
|
11
|
|
6
|
|
|
Other
|
|
|
|
(4)
|
|
2
|
Other Comprehensive Income
|
|
|
|
23
|
|
57
|
Comprehensive Income
|
|
|
|
$
393
|
|
$
397
|
(1) Available-for-sale investments are comprised of
shares in Israel Chemicals Ltd. and Sinofert Holdings
Limited.
|
(2) Cash flow
hedges are comprised of natural gas derivative instruments and
treasury lock derivatives and were net of income taxes of $12 (2014
- $1).
|
(3) Net of
income taxes of $(6) (2014 - $(4)).
|
|
(See Notes to the
Condensed Consolidated Financial Statements)
|
Potash Corporation of Saskatchewan
Inc.
|
Condensed Consolidated Statements of Cash
Flow
|
(in millions of US dollars)
|
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
|
|
March 31
|
|
|
|
|
2015
|
|
2014
|
|
|
|
|
|
|
|
Operating Activities
|
|
|
|
|
|
|
Net income
|
|
|
|
$
370
|
|
$ 340
|
Adjustments to
reconcile net income to cash provided by
|
|
|
|
|
|
|
|
operating activities
(Note 4)
|
|
|
|
181
|
|
262
|
Changes in non-cash
operating working capital (Note 4)
|
|
|
|
(30)
|
|
(63)
|
Cash provided by operating
activities
|
|
|
|
521
|
|
539
|
|
|
|
|
|
|
|
Investing Activities
|
|
|
|
|
|
|
Additions to
property, plant and equipment
|
|
|
|
(228)
|
|
(224)
|
Other assets and
intangible assets
|
|
|
|
(5)
|
|
(2)
|
Cash used in investing
activities
|
|
|
|
(233)
|
|
(226)
|
|
|
|
|
|
|
|
Financing Activities
|
|
|
|
|
|
|
Proceeds from
long-term debt obligations
|
|
|
|
494
|
|
737
|
Repayment of
short-term debt obligations
|
|
|
|
(536)
|
|
(470)
|
Dividends
|
|
|
|
(274)
|
|
(293)
|
Repurchase of common
shares
|
|
|
|
-
|
|
(396)
|
Issuance of common
shares
|
|
|
|
30
|
|
14
|
Cash used in financing
activities
|
|
|
|
(286)
|
|
(408)
|
Increase (Decrease) in Cash and Cash
Equivalents
|
|
|
|
2
|
|
(95)
|
Cash and Cash Equivalents, Beginning of
Period
|
|
|
|
215
|
|
628
|
Cash and Cash Equivalents, End of
Period
|
|
|
|
$
217
|
|
$ 533
|
|
|
|
|
|
|
|
Cash and cash
equivalents comprised of:
|
|
|
|
|
|
|
|
Cash
|
|
|
|
$
96
|
|
$ 134
|
|
Short-term
investments
|
|
|
|
121
|
|
399
|
|
|
|
|
$
217
|
|
$ 533
|
(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, 2014
|
$ 1,632
|
$
234
|
$
623
|
$ (119)
|
$
(1)
|
$
503
|
$ 6,423
|
$ 8,792
|
Net income
|
-
|
-
|
-
|
-
|
-
|
-
|
370
|
370
|
Other comprehensive
income (loss)
|
-
|
-
|
38
|
(11)
|
(4)
|
23
|
-
|
23
|
Dividends
declared
|
-
|
-
|
-
|
-
|
-
|
-
|
(313)
|
(313)
|
Effect of share-based
compensation
|
|
|
|
|
|
|
|
|
|
including issuance of
common shares
|
44
|
(1)
|
-
|
-
|
-
|
-
|
-
|
43
|
Shares issued for
dividend
|
|
|
|
|
|
|
|
|
|
reinvestment
plan
|
14
|
-
|
-
|
-
|
-
|
-
|
-
|
14
|
Balance - March 31, 2015
|
$ 1,690
|
$
233
|
$
661
|
$ (130)
|
$
(5)
|
$
526
|
$ 6,480
|
$ 8,929
|
(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)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31,
|
|
December 31,
|
As at
|
|
|
|
2015
|
|
2014
|
|
|
|
|
|
|
|
|
|
|
Assets
|
|
|
|
|
|
|
|
|
|
|
Current
assets
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
|
|
$
|
|
217
|
|
$
|
215
|
|
|
Receivables
|
|
|
|
|
|
837
|
|
|
1,029
|
|
|
Inventories
|
|
|
|
|
|
715
|
|
|
646
|
|
|
Prepaid expenses and
other current assets
|
|
|
|
|
|
61
|
|
|
48
|
|
|
|
|
|
|
1,830
|
|
|
1,938
|
|
Non-current
assets
|
|
|
|
|
|
|
|
|
|
|
|
Property, plant and
equipment
|
|
|
|
|
|
12,692
|
|
|
12,674
|
|
|
Investments in
equity-accounted investees
|
|
|
|
|
|
1,243
|
|
|
1,211
|
|
|
Available-for-sale
investments
|
|
|
|
|
|
1,565
|
|
|
1,527
|
|
|
Other
assets
|
|
|
|
|
|
294
|
|
|
232
|
|
|
Intangible
assets
|
|
|
|
|
|
142
|
|
|
142
|
Total Assets
|
|
|
|
$
|
|
17,766
|
|
$
|
17,724
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities
|
|
|
|
|
|
|
|
|
|
|
Current
liabilities
|
|
|
|
|
|
|
|
|
|
|
|
Short-term debt and
current portion of long-term debt
|
|
|
|
$
|
|
495
|
|
$
|
1,032
|
|
|
Payables and accrued
charges
|
|
|
|
|
|
978
|
|
|
1,086
|
|
|
Current portion of
derivative instrument liabilities
|
|
|
|
|
|
86
|
|
|
80
|
|
|
|
|
|
|
1,559
|
|
|
2,198
|
|
Non-current
liabilities
|
|
|
|
|
|
|
|
|
|
|
|
Long-term debt (Note
5)
|
|
|
|
|
|
3,709
|
|
|
3,213
|
|
|
Derivative instrument
liabilities
|
|
|
|
|
|
129
|
|
|
115
|
|
|
Deferred income tax
liabilities
|
|
|
|
|
|
2,226
|
|
|
2,201
|
|
|
Pension and other
post-retirement benefit liabilities
|
|
|
|
|
|
507
|
|
|
503
|
|
|
Asset retirement
obligations and accrued environmental costs
|
|
|
|
|
|
595
|
|
|
589
|
|
|
Other non-current
liabilities and deferred credits
|
|
|
|
|
|
112
|
|
|
113
|
Total Liabilities
|
|
|
|
|
|
8,837
|
|
|
8,932
|
|
|
|
|
|
|
|
|
|
|
Shareholders' Equity
|
|
|
|
|
|
|
|
|
|
|
Share
capital
|
|
|
|
|
|
1,690
|
|
|
1,632
|
|
|
Unlimited
authorization of common shares without par value; issued
and
outstanding 834,064,270 and 830,242,574
at March 31, 2015 and
December 31, 2014,
respectively
|
|
|
|
|
|
|
|
|
|
|
Contributed
surplus
|
|
|
|
|
|
233
|
|
|
234
|
|
Accumulated other
comprehensive income
|
|
|
|
|
|
526
|
|
|
503
|
|
Retained
earnings
|
|
|
|
|
|
6,480
|
|
|
6,423
|
Total Shareholders' Equity
|
|
|
|
|
|
8,929
|
|
|
8,792
|
Total Liabilities and Shareholders'
Equity
|
|
|
|
$
|
|
17,766
|
|
$
|
17,724
|
(See Notes to the
Condensed Consolidated Financial Statements)
|
Potash Corporation of Saskatchewan Inc.
Notes to the Condensed Consolidated Financial
Statements
For the Three Months Ended March
31, 2015
(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 2014
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 2014 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 May 2015.
In management's opinion, the unaudited interim condensed
consolidated financial statements include all adjustments necessary
to fairly present such information. Interim results are not
necessarily indicative of the results expected for the fiscal
year.
2. Segment Information
The company has three reportable operating segments:
potash, nitrogen and phosphate. The accounting policies of the
segments are the same as those described in Note 1. Inter-segment
sales are made under terms that approximate market
value.
|
|
Three Months Ended March 31,
2015
|
|
|
Potash
|
|
Nitrogen
|
|
Phosphate
|
|
All Others
|
|
Consolidated
|
|
|
|
|
|
|
|
|
|
|
|
Sales - third
party
|
|
$
738
|
|
$
482
|
|
$
445
|
|
$
-
|
|
$
1,665
|
Freight,
transportation and distribution - third party
|
|
(64)
|
|
(23)
|
|
(41)
|
|
-
|
|
(128)
|
Net sales - third
party
|
|
674
|
|
459
|
|
404
|
|
-
|
|
|
Cost of goods sold -
third party
|
|
(246)
|
|
(290)
|
|
(334)
|
|
-
|
|
(870)
|
Margin (cost) on
inter-segment sales (1)
|
|
-
|
|
12
|
|
(12)
|
|
-
|
|
-
|
Gross
margin
|
|
428
|
|
181
|
|
58
|
|
-
|
|
667
|
Depreciation and
amortization
|
|
(58)
|
|
(46)
|
|
(64)
|
|
(4)
|
|
(172)
|
Cash outflows for
additions to property,
|
|
|
|
|
|
|
|
|
|
|
|
plant and
equipment
|
|
111
|
|
60
|
|
36
|
|
21
|
|
228
|
(1) Inter-segment net sales were $18.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31,
2014
|
|
|
Potash
|
|
Nitrogen
|
|
Phosphate
|
|
All Others
|
|
Consolidated
|
|
|
|
|
|
|
|
|
|
|
|
Sales - third
party
|
|
$
671
|
|
$
581
|
|
$
428
|
|
$
-
|
|
$ 1,680
|
Freight,
transportation and distribution - third party
|
|
(86)
|
|
(31)
|
|
(49)
|
|
-
|
|
(166)
|
Net sales - third
party
|
|
585
|
|
550
|
|
379
|
|
-
|
|
|
Cost of goods sold -
third party
|
|
(285)
|
|
(323)
|
|
(341)
|
|
-
|
|
(949)
|
Margin (cost) on
inter-segment sales (1)
|
|
-
|
|
12
|
|
(12)
|
|
-
|
|
-
|
Gross
margin
|
|
300
|
|
239
|
|
26
|
|
-
|
|
565
|
Depreciation and
amortization
|
|
(52)
|
|
(42)
|
|
(78)
|
|
(4)
|
|
(176)
|
Cash outflows for
additions to property,
|
|
|
|
|
|
|
|
|
|
|
|
plant and
equipment
|
|
124
|
|
67
|
|
31
|
|
2
|
|
224
|
(1) Inter-segment net sales were $25.
|
3. 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
|
|
|
|
|
March 31
|
|
|
|
|
2015
|
|
2014
|
Income tax
expense
|
|
|
|
$
|
140
|
|
$
|
144
|
Actual effective tax
rate on ordinary earnings
|
|
|
|
|
27%
|
|
|
27%
|
Actual effective tax
rate including discrete items
|
|
|
|
|
27%
|
|
|
30%
|
Discrete tax
adjustments that impacted the tax
rate
|
|
|
|
$
|
3
|
|
$
|
2
|
In the first quarter of 2014, a $38 discrete non-tax deductible impairment of an
available-for-sale investment was recorded, which increased the
actual effective tax rate including discrete items by 2 percentage
points.
4. Consolidated Statements of Cash Flow
|
|
|
Three Months Ended
|
|
|
|
March 31
|
|
|
|
2015
|
|
2014
|
Reconciliation of cash provided by operating
activities
|
|
|
|
|
|
Net income
|
|
|
$
370
|
|
$ 340
|
Adjustments to
reconcile net income to cash provided by operating
activities
|
|
|
|
|
|
|
Depreciation and
amortization
|
|
|
172
|
|
176
|
|
Share-based
compensation
|
|
|
15
|
|
15
|
|
Net undistributed
earnings of equity-accounted investees
|
|
|
(35)
|
|
(31)
|
|
Impairment of
available-for-sale investment
|
|
|
-
|
|
38
|
|
Provision for
deferred income tax
|
|
|
25
|
|
46
|
|
Pension and other
post-retirement benefits
|
|
|
5
|
|
9
|
|
Asset retirement
obligations and accrued environmental costs
|
|
|
(13)
|
|
8
|
|
Other long-term
liabilities and miscellaneous
|
|
|
12
|
|
1
|
|
Subtotal of
adjustments
|
|
|
181
|
|
262
|
|
|
|
|
|
|
|
Changes in non-cash operating working
capital
|
|
|
|
|
|
|
Receivables
|
|
|
56
|
|
(158)
|
|
Inventories
|
|
|
(62)
|
|
20
|
|
Prepaid expenses and
other current assets
|
|
|
(8)
|
|
18
|
|
Payables and accrued
charges
|
|
|
(16)
|
|
57
|
|
Subtotal of changes
in non-cash operating working capital
|
|
|
(30)
|
|
(63)
|
Cash provided by operating
activities
|
|
|
$
521
|
|
$ 539
|
|
|
|
|
|
|
Supplemental cash flow
disclosure
|
|
|
|
|
|
|
Interest
paid
|
|
|
$
38
|
|
$
24
|
|
Income taxes
paid
|
|
|
$
42
|
|
$
50
|
5. Long-Term Debt
On March 26, 2015, the
company closed the issuance of $500
of 3.00 percent senior notes due April 1,
2025. The senior notes were issued under a US shelf
registration statement.
Potash Corporation of Saskatchewan
Inc.
|
Selected Financial Data
|
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
|
|
|
|
March 31
|
|
|
|
|
|
|
2015
|
|
2014
|
|
|
|
|
|
|
|
|
|
|
|
Potash Sales (tonnes -
thousands)
|
|
|
|
|
|
|
|
|
|
|
|
Manufactured
Product
|
|
|
|
|
|
|
|
|
|
|
|
|
North
America
|
|
|
|
|
|
|
800
|
|
|
988
|
|
|
Offshore
|
|
|
|
|
|
|
1,549
|
|
|
1,323
|
|
Manufactured
Product
|
|
|
|
|
|
|
2,349
|
|
|
2,311
|
|
|
|
|
|
|
|
|
|
|
|
Potash Net Sales
|
|
|
|
|
|
|
|
|
|
|
|
(US $
millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales
|
|
|
|
|
|
$
|
738
|
|
$
|
671
|
|
|
Freight,
transportation and distribution
|
|
|
|
|
|
|
(64)
|
|
|
(86)
|
|
|
Net Sales
|
|
|
|
|
|
$
|
674
|
|
$
|
585
|
|
|
|
|
|
|
|
|
|
|
|
|
Manufactured
Product
|
|
|
|
|
|
|
|
|
|
North
America
|
|
|
$
|
279
|
|
$
|
291
|
|
|
Offshore
|
|
|
|
388
|
|
|
287
|
|
Other miscellaneous
and purchased product
|
|
|
|
7
|
|
|
7
|
|
Net Sales
|
|
|
$
|
674
|
|
$
|
585
|
|
|
|
|
|
|
|
|
Manufactured
Product
|
|
|
|
|
|
|
|
|
Average Realized Sales Price per
MT
|
|
|
|
|
|
|
|
|
|
North
America
|
|
|
$
|
349
|
|
$
|
295
|
|
|
Offshore
|
|
|
$
|
250
|
|
$
|
217
|
|
|
Average
|
|
|
$
|
284
|
|
$
|
250
|
|
Cost of Goods Sold per MT
|
|
|
$
|
(101)
|
|
$
|
(119)
|
|
Gross Margin per MT
|
|
|
$
|
183
|
|
$
|
131
|
|
|
Potash Corporation of Saskatchewan
Inc.
|
Selected Financial Data
|
(unaudited)
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
|
March 31
|
|
|
|
2015
|
2014
|
|
|
|
|
|
Average Natural Gas
Cost in Production per MMBtu
|
|
|
$
|
5.15
|
$
|
5.40
|
Nitrogen Sales (tonnes -
thousands)
|
|
|
|
|
|
Manufactured
Product
|
|
|
|
|
|
|
Ammonia
(1)
|
|
|
489
|
583
|
|
|
Urea
|
|
|
252
|
348
|
|
|
Solutions/Nitric
acid/Ammonium nitrate
|
|
|
568
|
698
|
|
Manufactured
Product
|
|
|
1,309
|
1,629
|
|
|
|
|
|
|
Fertilizer sales
tonnes (1)
|
|
|
388
|
577
|
|
Industrial/Feed sales
tonnes
|
|
|
921
|
1,052
|
|
Manufactured
Product
|
|
|
1,309
|
1,629
|
|
|
|
|
|
Nitrogen Net Sales
|
|
|
|
|
|
(US $
millions)
|
|
|
|
|
|
|
Sales - third
party
|
|
|
$
|
482
|
$
|
581
|
|
|
Freight,
transportation and distribution - third party
|
|
|
(23)
|
(31)
|
|
|
Net sales - third
party
|
|
|
459
|
550
|
|
|
Inter-segment net
sales
|
|
|
18
|
25
|
|
|
Net Sales
|
|
|
$
|
477
|
$
|
575
|
|
|
|
|
|
|
Manufactured
Product
|
|
|
|
|
|
|
Ammonia
(2)
|
|
|
$
|
228
|
$
|
246
|
|
|
Urea
|
|
|
97
|
150
|
|
|
Solutions/Nitric
acid/Ammonium nitrate
|
|
|
134
|
164
|
|
Other miscellaneous
and purchased product (3)
|
|
|
18
|
15
|
|
Net Sales
|
|
|
$
|
477
|
$
|
575
|
|
|
|
|
|
|
Fertilizer net sales
(2)
|
|
|
$
|
133
|
$
|
213
|
|
Industrial/Feed net
sales
|
|
|
326
|
347
|
|
Other miscellaneous
and purchased product (3)
|
|
|
18
|
15
|
|
Net Sales
|
|
|
$
|
477
|
$
|
575
|
|
|
|
|
|
Manufactured
Product
|
|
|
|
|
|
Average Realized Sales Price per
MT
|
|
|
|
|
|
|
Ammonia
|
|
|
$
|
466
|
$
|
422
|
|
|
Urea
|
|
|
$
|
386
|
$
|
433
|
|
|
Solutions/Nitric
acid/Ammonium nitrate
|
|
|
$
|
235
|
$
|
234
|
|
|
Average
|
|
|
$
|
351
|
$
|
344
|
|
|
Fertilizer average
price per MT
|
|
|
$
|
342
|
$
|
370
|
|
|
Industrial/Feed
average price per MT
|
|
|
$
|
354
|
$
|
330
|
|
|
Average
|
|
|
$
|
351
|
$
|
344
|
|
Cost of Goods Sold per MT
|
|
|
$
|
(215)
|
$
|
(199)
|
|
Gross Margin per MT
|
|
|
$
|
136
|
$
|
145
|
|
|
|
|
|
(1) Includes
inter-segment ammonia sales (tonnes - thousands)
|
|
|
|
33
|
|
48
|
(2) Includes
inter-segment ammonia net sales
|
|
|
$
|
18
|
$
|
25
|
(3) Includes
inter-segment other miscellaneous and purchased product net
sales
|
|
$
|
-
|
$
|
-
|
Potash Corporation of Saskatchewan
Inc.
|
Selected Financial Data
|
(unaudited)
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
|
March 31
|
|
|
|
|
2015
|
2014
|
|
|
|
|
|
Phosphate Sales (tonnes -
thousands)
|
|
|
|
|
Manufactured
Product
|
|
|
|
|
|
Fertilizer
|
|
|
371
|
502
|
|
|
Feed and
Industrial
|
|
|
280
|
272
|
|
Manufactured
Product
|
|
|
651
|
774
|
|
|
|
|
|
Phosphate Net Sales
|
|
|
|
|
|
(US $
millions)
|
|
|
|
|
|
|
Sales
|
|
|
$
|
445
|
$
|
428
|
|
|
Freight,
transportation and distribution
|
|
|
(41)
|
(49)
|
|
|
Net Sales
|
|
|
$
|
404
|
$
|
379
|
|
|
|
|
|
|
Manufactured
Product
|
|
|
|
|
|
|
Fertilizer
|
|
|
$
|
194
|
$
|
210
|
|
|
Feed and
Industrial
|
|
|
179
|
165
|
|
Other miscellaneous
and purchased
product
|
|
|
31
|
4
|
|
Net Sales
|
|
|
$
|
404
|
$
|
379
|
|
|
|
|
|
Manufactured
Product
|
|
|
|
|
Average Realized Sales Price per
MT
|
|
|
|
|
Fertilizer
|
|
|
$
|
524
|
$
|
417
|
|
|
Feed and
Industrial
|
|
|
$
|
640
|
$
|
608
|
|
|
Average
|
|
|
$
|
574
|
$
|
484
|
|
Cost of Goods Sold per MT
|
|
|
$
|
(487)
|
$
|
(453)
|
|
Gross Margin per MT
|
|
|
$
|
87
|
$
|
31
|
Potash Corporation of Saskatchewan
Inc.
|
Selected Additional Data
|
(unaudited)
|
|
|
|
|
Exchange Rate (Cdn$/US$)
|
|
|
|
|
|
|
|
2015
|
2014
|
|
|
|
|
|
December
31
|
|
|
|
1.1601
|
March 31
|
|
|
1.2683
|
1.1053
|
First-quarter average
conversion rate
|
|
|
1.2049
|
1.0879
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
|
March 31
|
|
|
|
2015
|
2014
|
|
|
|
|
|
Production
|
|
|
|
|
Potash production
(KCl Tonnes - thousands)
|
|
|
2,612
|
2,395
|
Potash shutdown weeks
(1)
|
|
|
-
|
2
|
Nitrogen production
(N Tonnes - thousands)
|
|
|
792
|
833
|
Phosphate production
(P2O5 Tonnes - thousands)
|
|
|
366
|
369
|
Phosphate
P2O5 operating
rate
|
|
|
62%
|
62%
|
|
|
|
|
|
Shareholders
|
|
|
|
|
PotashCorp's total
shareholder return
|
|
|
-8%
|
11%
|
|
|
|
|
|
Customers
|
|
|
|
|
Product tonnes
involved in customer complaints (thousands)
|
|
|
18
|
13
|
|
|
|
|
|
Community
|
|
|
|
|
Taxes and royalties
($ millions) (2)
|
|
|
242
|
170
|
|
|
|
|
|
Employees
|
|
|
|
|
Percentage of senior
staff positions filled internally
|
|
|
74%
|
100%
|
|
|
|
|
|
Safety
|
|
|
|
|
Total site recordable
injury rate (per 200,000 work hours) (3)
|
|
|
0.92
|
1.06
|
|
|
|
|
|
Environment
|
|
|
|
|
Environmental
incidents (4)
|
|
|
5
|
5
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31,
|
December 31,
|
As at
|
|
|
2015
|
2014
|
|
|
|
|
|
Number of employees
|
|
|
|
|
|
Potash
|
|
|
|
2,589
|
2,534
|
|
Nitrogen
|
|
|
|
802
|
802
|
|
Phosphate
|
|
|
|
1,416
|
1,385
|
|
Other
|
|
|
420
|
415
|
|
Total
|
|
|
|
5,227
|
5,136
|
(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)
|
Total site includes
PotashCorp employees, contractors and others on site (as defined in
our 2014 Annual Integrated Report).
|
(4)
|
Total of reportable
quantity releases, permit excursions and provincial reportable
spills (as defined in our 2014 Annual Integrated
Report).
|
Potash Corporation of Saskatchewan Inc.
Selected Non-IFRS Financial Measures and
Reconciliations
(in millions of US dollars except percentage
amounts)
(unaudited)
The following information is included for convenience
only. Generally, a non-IFRS financial measure is a numerical
measure of a company's performance, 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
|
|
|
March 31
|
|
|
|
2015
|
2014
|
Net income
|
|
|
$
|
370
|
$
|
340
|
Finance
costs
|
|
|
49
|
47
|
Income
taxes
|
|
|
140
|
144
|
Depreciation and
amortization
|
|
|
172
|
176
|
EBITDA
|
|
|
$
|
731
|
$
|
707
|
Impairment of
available-for-sale investment
|
|
|
-
|
38
|
Adjusted EBITDA
|
|
|
$
|
731
|
$
|
745
|
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
|
|
|
March 31
|
|
|
|
2015
|
2014
|
Sales
|
|
|
$
|
1,665
|
$
|
1,680
|
Freight,
transportation and distribution
|
|
|
(128)
|
(166)
|
Net sales
|
|
|
$
|
1,537
|
$
|
1,514
|
|
|
|
|
|
Net income as a percentage of
sales
|
|
|
22%
|
20%
|
Adjusted EBITDA margin
|
|
|
48%
|
49%
|
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
|
|
|
March 31
|
|
|
|
2015
|
2014
|
Cash flow prior to working capital
changes
|
|
|
$
|
551
|
$
|
602
|
Changes in non-cash
operating working capital
|
|
|
|
|
|
Receivables
|
|
|
56
|
(158)
|
|
Inventories
|
|
|
(62)
|
20
|
|
Prepaid expenses and
other current assets
|
|
|
(8)
|
18
|
|
Payables and accrued
charges
|
|
|
(16)
|
57
|
Changes in non-cash operating working
capital
|
|
|
(30)
|
(63)
|
Cash provided by operating
activities
|
|
|
$
|
521
|
$
|
539
|
Additions to
property, plant and equipment
|
|
|
(228)
|
(224)
|
Other assets and
intangible assets
|
|
|
(5)
|
(2)
|
Changes in non-cash
operating working capital
|
|
|
30
|
63
|
Free cash flow
|
|
|
$
|
318
|
$
|
376
|
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.