Symbol: POT
Listed: TSX, NYSE
Key Highlights
- Fourth-quarter earnings of $0.24
per share1; full-year total of $1.52 per share
- Annual cash provided by operating activities of $2.3 billion
- Indefinite suspension of Picadilly,
New Brunswick potash operation in January 2016
- Quarterly dividend reduced by 34 percent to $0.25 per share
- Full-year 2016 guidance of $0.90-$1.20 per share; $0.10-$0.20 for the first quarter
CEO Commentary
"Weaker fertilizer prices late in the year reduced our earnings for
the quarter, giving rise to a more cautious outlook for all three
nutrients as we begin 2016," said PotashCorp President and Chief
Executive Officer Jochen Tilk.
"Against this backdrop, our focus has been not
only to navigate these challenges but to further strengthen our
company for the future by:
- supporting our longstanding potash business model, including
matching supply to demand;
- enhancing our best-in-class assets; and
- protecting our long-term financial health and flexibility.
"We made the very difficult decisions to suspend potash
production in New Brunswick and
realign our dividend. These actions are part of our thoughtful and
holistic approach to strategically position the company and balance
the interests of our shareholders, debtholders, employees and
communities who depend on our enduring success. Longer term, we
maintain our conviction that the drivers of fertilizer demand –
rising global crop production and supportive farmer economics –
will support improved market conditions."
SASKATOON, Jan. 28, 2016 /CNW/ - Potash Corporation of
Saskatchewan Inc. (PotashCorp) reported fourth-quarter earnings of
$0.24 per share ($201 million), bringing earnings for the full
year to $1.52 per share ($1.3 billion). These totals for the quarter and
full year trailed the $0.49 per share
($407 million) and $1.82 per share ($1.5
billion) earned in the same periods of 2014.
Gross margin for the quarter ($386 million) and the year ($2.3 billion) was below 2014 levels ($746 million and $2.6
billion, respectively), due primarily to weaker nitrogen
prices and lower potash volumes.
Cash from operating activities of $623 million for the quarter and $2.3 billion for the year was below 2014 results
by 13 percent and 11 percent, respectively. Quarterly and annual
earnings before finance costs, income taxes and depreciation and
amortization (EBITDA)2 of $482
million and $2.6 billion,
respectively, were also lower than in the comparable periods of
2014.
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 $27
million to our quarterly earnings, trailing the $31 million generated in the fourth quarter of
2014. Our earnings for the year from these three investments – plus
a dividend from Sinofert Holdings Limited (Sinofert) in
China – totaled $162 million, below the $210 million earned in 2014, which included a
special dividend from ICL. The market value of our investments in
these four publicly traded companies was approximately $3.5 billion, or $4
per PotashCorp share, at market close on January 27, 2016.
Market Conditions
Challenging conditions, including currency weakness relative to the
US dollar in emerging markets, continued to weigh on fertilizer
markets through the fourth quarter. Cautious buying patterns
resulted in deteriorating prices across all three nutrients as the
year ended.
Global potash shipments for the fourth quarter
remained relatively flat compared to 2014, with increased
deliveries to China offsetting
slightly weaker demand in most other markets.
Nitrogen markets continued to feel the effects of
falling energy prices. Lower production costs in key producing
regions increased competitive supply, which – combined with a
weaker-than-normal fall application season in the US and slower
demand in Brazil – caused prices
for nearly all nitrogen products to trend lower during the
quarter.
In phosphate, record Chinese exports, seasonally
slow demand in India and the US
and continued caution in Brazil
weighed on prices for solid fertilizers. Prices for feed,
industrial, and liquid fertilizer products were more resilient,
supported by strong demand and tighter supply.
Potash
Reduced sales volumes and a softening price environment –
particularly in the second half of 2015 – resulted in gross margin
of $183 million for the quarter and
$1.3 billion for the year, below
2014's comparative totals of $445
million and $1.4 billion,
respectively.
Sales volumes for both the quarter (down 31
percent) and the year (down 6 percent) trailed those achieved in
the same periods of 2014. The most significant decline for both the
quarter and full year was in North
America, which reflected a pullback in demand from 2014's
especially strong levels, as well as increased competition.
Offshore, the majority of Canpotex's3 shipments for the
quarter were to China (40 percent)
and Other Asian markets outside of China and India (30 percent), while Latin America and India accounted for 18 percent and 4 percent,
respectively.
Our average realized potash price for the quarter
was $238 per tonne, down considerably
from $284 per tonne in the same
period last year, reflecting the declining price environment in
2015.
Inventory-related shutdowns at our Saskatchewan mines and the closure of our
Penobsquis, New Brunswick
operation reduced production volumes and resulted in per-tonne cost
of goods sold for the quarter of $132, which was 26 percent higher than in the
comparable period in 2014. For the year, per-tonne cost of goods
sold of $111 was relatively flat with
the previous year as the favorable impact of a weaker Canadian
dollar was offset primarily by increased shutdown weeks.
Nitrogen
In nitrogen, weaker prices had a negative impact on our results for
the fourth quarter and the full year. Gross margin of $142 million for the quarter and $706 million for the year trailed results from
the same periods in 2014 by 39 percent and 30 percent,
respectively. Our US operations accounted for 61 percent of our
nitrogen gross margin for the quarter, with Trinidad providing the remainder.
Sales volumes of 1.6 million tonnes for the
quarter were similar to those in the same period of 2014. Extended
expansion-related downtime, coupled with weaker demand, resulted in
sales volumes for 2015 of 5.9 million tonnes, down 7 percent from
the previous year.
Our average realized price of $288 per tonne during the quarter was down
significantly from the $405 per tonne
achieved in the same period last year as lower energy costs and
increased global supply weighed heavily on prices for all nitrogen
products.
Cost of goods sold for the fourth quarter was
$199 per tonne, down 21 percent from
2014, driven largely by lower natural gas costs in the US and
Trinidad.
Phosphate
Gross margin for the quarter totaled $61
million, down slightly from the $67
million earned during the same period last year, due to
lower sales volumes and price realizations. For the year, we
generated $241 million, up from the
$202 million earned in 2014,
primarily due to increased prices for liquid fertilizers.
For the quarter, sales volumes of 0.8 million
tonnes were relatively flat compared to the same period in 2014,
while volumes for the year of 2.9 million tonnes trailed 2014, due
primarily to the absence of production from the Suwannee River
chemical plant.
Our average realized phosphate price for the
fourth quarter of $522 per tonne was
similar to 2014's as improved prices for liquid fertilizers offset
declining prices for DAP and MAP.
Per-tonne cost of goods sold was $443 for the quarter, similar to last year.
Financial
Provincial mining and other taxes of $46
million for the quarter were lower than the $82 million in the same period last year, due to
weaker potash earnings. For the year, provincial mining and other
taxes totaled $310 million, 21
percent more than in 2014 because of a weaker Canadian dollar and
changes in the timing of allowable deductions within Saskatchewan's potash taxation
regulations.
Income tax expense for the fourth quarter
($69 million) and full year
($451 million) was down from the same
periods last year due primarily to lower earnings.
Potash Market Outlook
We expect global potash shipments in the range of 59-62 million
tonnes, in line with 2015's total of approximately 60 million
tonnes.
In North
America, lower dealer inventories and significant nutrient
requirements following consecutive years of large crops are
expected to support growth of potash shipments in 2016 to a range
of 9.2-9.7 million tonnes.
In Latin
America, we expect agronomic need and favorable crop
economics to keep demand at elevated levels, although credit
availability and currency weakness are anticipated to keep growth
in this market relatively modest. For the full year, we forecast
shipments of 10.8-11.3 million tonnes, slightly above 2015
levels.
In China,
elevated inventories are likely to keep demand below 2015's record
of more than 15.0 million tonnes. We anticipate shipments in the
range of 13.5-14.5 million tonnes, with strong consumption trends
for bulk blends and compound fertilizers continuing.
Demand in India
is expected to strengthen in 2016. We forecast deliveries of
4.2-4.7 million tonnes to this market, a slight increase from 2015
when a weak monsoon and currency issues reduced demand late in the
year.
In Other Asian markets, supportive crop economics
and substantial agronomic need are expected to keep demand fairly
robust in 2016. We anticipate deliveries in the range of 8.5-8.8
million tonnes, slightly above 2015 levels.
Financial Outlook
Based on these market factors, we anticipate our 2016 potash sales
volumes will be in the range of 8.3-9.1 million tonnes. For the
year, we forecast potash gross margin of $0.8-$1.1 billion, down significantly from 2015
as the sharp decline in potash prices through the second half of
that year is expected to weigh on margins in 2016.
Our guidance reflects the suspension of our
Picadilly potash operations
announced in mid-January, including favorable impacts on our cost
of goods sold of $40-$50 million and
reduced capital expenditures of $50
million. The company has concluded that the announced change
will not result in any impairment charges although our guidance
does reflect approximately $35
million in severance and transition costs expected to be
recorded in the first quarter of 2016.
In nitrogen, we expect improved operating rates
at our US facilities and our recently completed Lima nitrogen expansion to increase our sales
volumes in 2016. Despite higher sales volumes and reduced costs
from lower natural gas prices, a weaker pricing environment –
driven by an increase in competitive supply – is expected to result
in considerably lower gross margin.
In phosphate, we anticipate weaker market
fundamentals will keep prices for most products below 2015 levels,
although our historically more stable feed and industrial products
are forecast to be less impacted. We expect lower input costs and
our focus on improved reliability will reduce costs and increase
the amount of product available for sale, which we anticipate will
help keep gross margin at a level similar to 2015.
Given these considerations, we forecast combined
nitrogen and phosphate gross margin will be in the range of
$0.7-$0.9 billion in 2016.
We estimate provincial mining and other taxes in
the range of 22-24 percent of potash gross margin, similar to the
2015 percentage.
Based on these factors, we forecast full-year
2016 earnings of $0.90-$1.20 per
share, including first-quarter earnings of $0.10-$0.20 per share. Our quarterly guidance
reflects the severance and transition charges related to the
suspension of production at Picadilly and an expectation of some potash
demand being deferred to the second quarter.
Other annual guidance numbers – including those
noted above – are outlined in the table below.
2016 Guidance
|
Earnings per
share
|
Annual: $0.90-$1.20
Q1: $0.10-$0.20
|
Potash sales
volumes
|
8.3-9.1 million
tonnes
|
Potash gross
margin
|
$0.8-$1.1
billion
|
Nitrogen and
phosphate gross margin
|
$0.7-$0.9
billion
|
Capital
expenditures*
|
$0.8-$0.9
billion
|
Effective tax
rate
|
25-27
percent
|
Provincial mining and
other taxes**
|
22-24
percent
|
Selling and
administrative expenses
|
$240-$250
million
|
Finance
costs
|
$210-$220
million
|
Income from offshore
equity investments***
|
$120-$140
million
|
Annual foreign
exchange rate assumption
|
CDN$1.38 per
US$
|
Annual EPS
sensitivity to foreign exchange
|
US$ strengthens vs.
CDN$ by $0.02 = +$0.01 EPS
|
* Does not include
capitalized interest
|
** As a percentage of
potash gross margin
|
*** Includes income
from dividends and share of equity earnings
|
Dividend
Our Board of Directors has declared a quarterly dividend of US
$0.25 per share payable May 3, 2016 to shareholders of record
April 12, 2016.
"We are committed to preserving a strong balance
sheet and investment-grade credit rating, but also believe in
retaining a competitive dividend. In consideration of these
objectives, we have decided to reduce our quarterly dividend by 34
percent," said Tilk. "We believe this level – representing a payout
ratio of close to 100 percent of 2016 earnings – remains highly
competitive and balances the interests of our many stakeholders,
including equity and debtholders."
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" (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," "forecast," "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, including
mine and inventory shutdowns or suspensions; 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, January 28, 2016 at 1:00 pm Eastern Time.
Telephone
Conference:
|
Dial-in
numbers:
|
|
|
- From Canada
and the US 1-800-597-1419
|
|
- From
Elsewhere
1-604-638-5350
|
|
|
|
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
|
Twelve Months Ended
|
|
December 31
|
December 31
|
|
2015
|
2014
|
2015
|
2014
|
|
|
|
|
|
|
|
|
|
Sales (Note
2)
|
$
|
1,354
|
$
|
1,902
|
$
|
6,279
|
$
|
7,115
|
Freight,
transportation and distribution
|
|
(108)
|
|
(144)
|
|
(488)
|
|
(609)
|
Cost of goods
sold
|
|
(860)
|
|
(1,012)
|
|
(3,522)
|
|
(3,859)
|
Gross Margin
|
|
386
|
|
746
|
|
2,269
|
|
2,647
|
Selling and
administrative expenses
|
|
(67)
|
|
(73)
|
|
(239)
|
|
(245)
|
Provincial mining and
other taxes
|
|
(46)
|
|
(82)
|
|
(310)
|
|
(257)
|
Share of earnings of
equity-accounted investees
|
|
18
|
|
17
|
|
121
|
|
102
|
Dividend
income
|
|
12
|
|
17
|
|
50
|
|
117
|
Impairment of
available-for-sale investment
|
|
-
|
|
-
|
|
-
|
|
(38)
|
Other income
(expenses) (Note 3)
|
|
11
|
|
(14)
|
|
22
|
|
22
|
Operating Income
|
|
314
|
|
611
|
|
1,913
|
|
2,348
|
Finance
costs
|
|
(44)
|
|
(42)
|
|
(192)
|
|
(184)
|
Income Before Income Taxes
|
|
270
|
|
569
|
|
1,721
|
|
2,164
|
Income taxes (Note
4)
|
|
(69)
|
|
(162)
|
|
(451)
|
|
(628)
|
Net Income
|
$
|
201
|
$
|
407
|
$
|
1,270
|
$
|
1,536
|
|
|
|
|
|
|
|
|
|
Net Income per Share
|
|
|
|
|
|
|
|
|
|
Basic
|
$
|
0.24
|
$
|
0.49
|
$
|
1.52
|
$
|
1.83
|
|
Diluted
|
$
|
0.24
|
$
|
0.49
|
$
|
1.52
|
$
|
1.82
|
|
|
|
|
|
|
|
|
|
Dividends Declared per Share
|
$
|
0.38
|
$
|
0.35
|
$
|
1.52
|
$
|
1.40
|
|
|
|
|
|
|
|
|
|
Weighted Average Shares Outstanding
|
|
|
|
|
|
|
|
|
|
Basic
|
835,828,000
|
829,983,000
|
834,141,000
|
838,101,000
|
|
Diluted
|
837,208,000
|
835,984,000
|
837,349,000
|
844,544,000
|
(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)
|
2015
|
2014
|
2015
|
2014
|
|
|
|
|
|
|
|
|
|
Net Income
|
$
|
201
|
$
|
407
|
$
|
1,270
|
$
|
1,536
|
Other comprehensive
income (loss)
|
|
|
|
|
|
|
|
|
|
Items that will not
be reclassified to net income:
|
|
|
|
|
|
|
|
|
|
|
Net actuarial gain
(loss) on defined benefit plans (1)
|
|
36
|
|
(109)
|
|
36
|
|
(109)
|
|
Items that have been
or may be subsequently reclassified to net income:
|
|
|
|
|
|
|
|
|
|
|
Available-for-sale
investments (2)
|
|
|
|
|
|
|
|
|
|
|
|
Net fair value (loss)
gain during the period
|
|
(155)
|
|
37
|
|
(546)
|
|
(157)
|
|
|
Cash flow
hedges
|
|
|
|
|
|
|
|
|
|
|
|
Net fair value loss
during the period (3)
|
|
(10)
|
|
(33)
|
|
(52)
|
|
(40)
|
|
|
|
Reclassification to
income of net loss (4)
|
|
15
|
|
6
|
|
54
|
|
26
|
|
|
Other
|
|
(2)
|
|
(2)
|
|
(9)
|
|
1
|
Other Comprehensive Loss
|
|
(116)
|
|
(101)
|
|
(517)
|
|
(279)
|
Comprehensive Income
|
$
|
85
|
$
|
306
|
$
|
753
|
$
|
1,257
|
(1) Net
of income taxes of $(22) (2014 - $60) for the three months ended
December 31, 2015 and $(22) (2014 - $60) for the twelve months
ended December 31, 2015.
|
(2) Available-for-sale investments are comprised of
shares in Israel Chemicals Ltd., Sinofert Holdings Limited and
other.
|
(3) Cash
flow hedges are comprised of natural gas derivative instruments and
treasury lock derivatives and were net of income taxes of $8 (2014
- $18) for the three months ended December 31, 2015 and $31 (2014 -
$22) for the twelve months ended December 31,
2015.
|
(4) Net
of income taxes of $(9) (2014 - $(3)) for the three months ended
December 31, 2015 and $(30) (2014 - $(14)) for the twelve months
ended December 31, 2015.
|
|
(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
|
|
2015
|
2014
|
2015
|
2014
|
|
|
|
|
|
|
|
|
|
Operating Activities
|
|
|
|
|
|
|
|
|
Net income
|
$
|
201
|
$
|
407
|
$
|
1,270
|
$
|
1,536
|
Adjustments to
reconcile net income to cash provided by
|
|
|
|
|
|
|
|
|
|
operating activities
(Note 5)
|
|
289
|
|
347
|
|
941
|
|
1,168
|
Changes in non-cash
operating working capital (Note 5)
|
|
133
|
|
(41)
|
|
127
|
|
(90)
|
Cash provided by operating activities
|
|
623
|
|
713
|
|
2,338
|
|
2,614
|
|
|
|
|
|
|
|
|
|
Investing Activities
|
|
|
|
|
|
|
|
|
Additions to
property, plant and equipment
|
|
(415)
|
|
(412)
|
|
(1,217)
|
|
(1,138)
|
Other assets and
intangible assets
|
|
1
|
|
(10)
|
|
(67)
|
|
(22)
|
Cash used in investing activities
|
|
(414)
|
|
(422)
|
|
(1,284)
|
|
(1,160)
|
|
|
|
|
|
|
|
|
|
Financing Activities
|
|
|
|
|
|
|
|
|
Proceeds from
long-term debt obligations
|
|
-
|
|
-
|
|
494
|
|
737
|
Repayment of
long-term debt obligations
|
|
-
|
|
-
|
|
(502)
|
|
(500)
|
Proceeds from
(repayment of) short-term debt obligations
|
|
103
|
|
52
|
|
(19)
|
|
66
|
Dividends
|
|
(305)
|
|
(284)
|
|
(1,204)
|
|
(1,141)
|
Repurchase of common
shares
|
|
-
|
|
-
|
|
-
|
|
(1,065)
|
Issuance of common
shares
|
|
11
|
|
4
|
|
53
|
|
36
|
Cash used in financing activities
|
|
(191)
|
|
(228)
|
|
(1,178)
|
|
(1,867)
|
Increase (Decrease) in Cash and Cash
Equivalents
|
|
18
|
|
63
|
|
(124)
|
|
(413)
|
Cash and Cash Equivalents, Beginning of
Period
|
|
73
|
|
152
|
|
215
|
|
628
|
Cash and Cash Equivalents, End of Period
|
$
|
91
|
$
|
215
|
$
|
91
|
$
|
215
|
|
|
|
|
|
|
|
|
|
Cash and cash
equivalents comprised of:
|
|
|
|
|
|
|
|
|
|
Cash
|
$
|
30
|
$
|
89
|
$
|
30
|
$
|
89
|
|
Short-term
investments
|
|
61
|
|
126
|
|
61
|
|
126
|
|
$
|
91
|
$
|
215
|
$
|
91
|
$
|
215
|
|
(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
(Loss)
|
|
|
|
|
|
|
|
|
|
Net
unrealized
|
Net
|
Net
|
|
Total
|
|
|
|
|
|
|
|
|
|
gain on
|
loss on
|
actuarial
|
|
Accumulated
|
|
|
|
|
|
|
|
|
|
available-
|
derivatives
|
gain on
|
|
Other
|
|
|
|
|
|
Share
|
Contributed
|
for-sale
|
designated
as
|
defined
|
|
Comprehensive
|
Retained
|
Total
|
|
Capital
|
Surplus
|
investments
|
cash flow
hedges
|
benefit plans
(1)
|
Other
|
Income (Loss)
|
Earnings
|
Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance - December 31, 2014
|
$
|
1,632
|
$
|
234
|
$
|
623
|
$
|
(119)
|
$
|
-
|
$
|
(1)
|
$
|
503
|
$
|
6,423
|
$
|
8,792
|
Net income
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
1,270
|
|
1,270
|
Other comprehensive
(loss) income
|
|
-
|
|
-
|
|
(546)
|
|
2
|
|
36
|
|
(9)
|
|
(517)
|
|
-
|
|
(517)
|
Dividends
declared
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
(1,274)
|
|
(1,274)
|
Effect of share-based
compensation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
including issuance of
common shares
|
|
72
|
|
(4)
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
68
|
Shares issued for
dividend
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
reinvestment
plan
|
|
43
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
43
|
Transfer of net
actuarial gain on
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
defined benefit
plans
|
|
-
|
|
-
|
|
-
|
|
-
|
|
(36)
|
|
-
|
|
(36)
|
|
36
|
|
-
|
Balance - December 31, 2015
|
$
|
1,747
|
$
|
230
|
$
|
77
|
$
|
(117)
|
$
|
-
|
$
|
(10)
|
$
|
(50)
|
$
|
6,455
|
$
|
8,382
|
(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
|
2015
|
2014
|
|
|
|
|
|
Assets
|
|
|
|
|
|
Current
assets
|
|
|
|
|
|
|
Cash and cash
equivalents
|
$
|
91
|
$
|
215
|
|
|
Receivables
|
|
640
|
|
1,029
|
|
|
Inventories
|
|
749
|
|
646
|
|
|
Prepaid expenses and
other current assets
|
|
73
|
|
48
|
|
|
1,553
|
|
1,938
|
|
Non-current
assets
|
|
|
|
|
|
|
Property, plant and
equipment
|
|
13,212
|
|
12,674
|
|
|
Investments in
equity-accounted investees
|
|
1,243
|
|
1,211
|
|
|
Available-for-sale
investments
|
|
984
|
|
1,527
|
|
|
Other
assets
|
|
285
|
|
232
|
|
|
Intangible
assets
|
|
192
|
|
142
|
Total Assets
|
$
|
17,469
|
$
|
17,724
|
|
|
|
|
|
|
|
|
|
|
Liabilities
|
|
|
|
|
|
Current
liabilities
|
|
|
|
|
|
|
Short-term debt and
current portion of long-term debt
|
$
|
517
|
$
|
1,032
|
|
|
Payables and accrued
charges
|
|
1,146
|
|
1,086
|
|
|
Current portion of
derivative instrument liabilities
|
|
84
|
|
80
|
|
|
1,747
|
|
2,198
|
|
Non-current
liabilities
|
|
|
|
|
|
|
Long-term debt (Note
6)
|
|
3,710
|
|
3,213
|
|
|
Derivative instrument
liabilities
|
|
109
|
|
115
|
|
|
Deferred income tax
liabilities
|
|
2,438
|
|
2,201
|
|
|
Pension and other
post-retirement benefit liabilities
|
|
431
|
|
503
|
|
|
Asset retirement
obligations and accrued environmental costs
|
|
574
|
|
589
|
|
|
Other non-current
liabilities and deferred credits
|
|
78
|
|
113
|
Total Liabilities
|
|
9,087
|
|
8,932
|
|
|
|
|
|
Shareholders' Equity
|
|
|
|
|
|
Share
capital
|
|
1,747
|
|
1,632
|
|
|
Unlimited
authorization of common shares without par value; issued
and
|
|
|
|
|
|
|
outstanding
836,540,151 and 830,242,574 at December 31, 2015 and
|
|
|
|
|
|
|
December 31, 2014,
respectively
|
|
|
|
|
|
Contributed
surplus
|
|
230
|
|
234
|
|
Accumulated other
comprehensive (loss) income
|
|
(50)
|
|
503
|
|
Retained
earnings
|
|
6,455
|
|
6,423
|
Total Shareholders' Equity
|
|
8,382
|
|
8,792
|
Total Liabilities and Shareholders' Equity
|
$
|
17,469
|
$
|
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 and Twelve Months Ended December 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 condensed consolidated financial
statements are consistent with those used in the preparation of the
company's 2014 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 2014 annual consolidated financial
statements. The company's 2015 annual consolidated financial
statements will include additional information under IFRS in its
Annual Integrated Report in February
2016.
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. 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 December 31, 2015
|
|
|
Potash
|
Nitrogen
|
Phosphate
|
All Others
|
Consolidated
|
|
|
|
|
|
|
|
|
|
|
|
Sales - third
party
|
$
|
454
|
$
|
459
|
$
|
441
|
|
-
|
$
|
1,354
|
Freight,
transportation and distribution - third party
|
|
(36)
|
|
(28)
|
|
(44)
|
|
-
|
|
(108)
|
Net sales - third
party
|
|
418
|
|
431
|
|
397
|
|
-
|
|
|
Cost of goods sold -
third party
|
|
(235)
|
|
(305)
|
|
(320)
|
|
-
|
|
(860)
|
Margin (cost) on
inter-segment sales (1)
|
|
-
|
|
16
|
|
(16)
|
|
-
|
|
-
|
Gross
margin
|
|
183
|
|
142
|
|
61
|
|
-
|
|
386
|
Depreciation and
amortization
|
|
(45)
|
|
(57)
|
|
(59)
|
|
(7)
|
|
(168)
|
Cash outflows for
additions to property,
|
|
|
|
|
|
|
|
|
|
|
|
plant and
equipment
|
|
196
|
|
113
|
|
75
|
|
31
|
|
415
|
(1) Inter-segment net sales were $25.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Twelve Months Ended December 31, 2015
|
|
|
Potash
|
Nitrogen
|
Phosphate
|
All Others
|
Consolidated
|
|
|
|
|
|
|
|
|
|
|
|
Sales - third
party
|
$
|
2,543
|
$
|
1,960
|
$
|
1,776
|
$
|
-
|
$
|
6,279
|
Freight,
transportation and distribution - third party
|
|
(214)
|
|
(101)
|
|
(173)
|
|
-
|
|
(488)
|
Net sales - third
party
|
|
2,329
|
|
1,859
|
|
1,603
|
|
-
|
|
|
Cost of goods sold -
third party
|
|
(1,007)
|
|
(1,210)
|
|
(1,305)
|
|
-
|
|
(3,522)
|
Margin (cost) on
inter-segment sales (1)
|
|
-
|
|
57
|
|
(57)
|
|
-
|
|
-
|
Gross
margin
|
|
1,322
|
|
706
|
|
241
|
|
-
|
|
2,269
|
Depreciation and
amortization
|
|
(214)
|
|
(198)
|
|
(240)
|
|
(33)
|
|
(685)
|
Cash outflows for
additions to property,
|
|
|
|
|
|
|
|
|
|
|
|
plant and
equipment
|
|
537
|
|
398
|
|
202
|
|
80
|
|
1,217
|
(1) Inter-segment net sales were $87.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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.
|
|
|
|
|
|
|
|
|
|
|
3. Other Income (Expenses)
|
Three Months Ended
|
Twelve Months Ended
|
|
December 31
|
December 31
|
|
2015
|
2014
|
2015
|
2014
|
Foreign exchange
gain
|
$
|
12
|
$
|
8
|
$
|
48
|
$
|
8
|
Legal
settlements
|
|
-
|
|
-
|
|
-
|
|
17
|
Other
expenses
|
|
(1)
|
|
(22)
|
|
(26)
|
|
(3)
|
|
$
|
11
|
$
|
(14)
|
$
|
22
|
$
|
22
|
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
|
|
|
2015
|
2014
|
2015
|
2014
|
Income tax
expense
|
|
$
|
69
|
$
|
162
|
$
|
451
|
$
|
628
|
Actual effective tax
rate on ordinary earnings
|
|
|
26%
|
|
29%
|
|
27%
|
|
28%
|
Actual effective tax
rate including discrete items
|
|
|
25%
|
|
29%
|
|
26%
|
|
29%
|
Discrete tax
adjustments that impacted the tax rate
|
|
$
|
(2)
|
$
|
(1)
|
$
|
(7)
|
$
|
20
|
Significant items to note include the following:
- The actual effective tax rate on ordinary earnings for the
three and twelve months ended December 31,
2015 decreased compared to the same periods last year due to
different income weightings between jurisdictions.
- In third-quarter 2015, a current tax recovery of $17 was recorded upon the conclusion of a tax
authority audit.
- In third-quarter 2014, a deferred tax expense of $11 was recorded as a result of a Chilean income
tax rate increase.
5. Consolidated Statements of Cash Flow
|
Three Months Ended
|
Twelve Months Ended
|
|
December 31
|
December 31
|
|
2015
|
2014
|
2015
|
2014
|
Reconciliation of cash provided by operating
activities
|
|
|
|
|
|
|
|
|
Net income
|
$
|
201
|
$
|
407
|
$
|
1,270
|
$
|
1,536
|
Adjustments to
reconcile net income to cash provided by
|
|
|
|
|
|
|
|
|
|
operating
activities
|
|
|
|
|
|
|
|
|
|
|
Depreciation and
amortization
|
|
168
|
|
182
|
|
685
|
|
701
|
|
|
Share-based
compensation
|
|
2
|
|
6
|
|
22
|
|
28
|
|
|
Net distributed
(undistributed) earnings of equity-accounted investees
|
|
12
|
|
17
|
|
(35)
|
|
68
|
|
|
Impairment of
available-for-sale investment
|
|
-
|
|
-
|
|
-
|
|
38
|
|
|
Provision for
deferred income tax
|
|
55
|
|
126
|
|
204
|
|
268
|
|
|
Pension and other
post-retirement benefits
|
|
3
|
|
5
|
|
30
|
|
28
|
|
|
Asset retirement
obligations and accrued environmental costs
|
|
39
|
|
2
|
|
20
|
|
18
|
|
|
Other long-term
liabilities and miscellaneous
|
|
10
|
|
9
|
|
15
|
|
19
|
|
|
Subtotal of
adjustments
|
|
289
|
|
347
|
|
941
|
|
1,168
|
|
|
|
|
|
|
|
|
|
|
|
Changes in non-cash operating working
capital
|
|
|
|
|
|
|
|
|
|
|
Receivables
|
|
173
|
|
(140)
|
|
259
|
|
(220)
|
|
|
Inventories
|
|
(21)
|
|
46
|
|
(99)
|
|
70
|
|
|
Prepaid expenses and
other current assets
|
|
(3)
|
|
8
|
|
(19)
|
|
29
|
|
|
Payables and accrued
charges
|
|
(16)
|
|
45
|
|
(14)
|
|
31
|
|
|
Subtotal of changes
in non-cash operating working capital
|
|
133
|
|
(41)
|
|
127
|
|
(90)
|
Cash provided by operating activities
|
$
|
623
|
$
|
713
|
$
|
2,338
|
$
|
2,614
|
|
|
|
|
|
|
|
|
|
Supplemental cash flow disclosure
|
|
|
|
|
|
|
|
|
|
|
Interest
paid
|
$
|
63
|
$
|
55
|
$
|
193
|
$
|
187
|
|
|
Income taxes
paid
|
$
|
21
|
$
|
113
|
$
|
171
|
$
|
405
|
6. 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. On September 30,
2015, the company fully repaid $500 of 3.75 percent senior notes at
maturity.
7. Share-Based Compensation
On May 12, 2015, the company's
shareholders approved the 2015 Performance Option Plan under which
the company may, after February 20,
2015 and before January 1,
2016, grant options to acquire up to 3,500,000 common
shares. Under the plan, the exercise price shall not be less than
the quoted market closing price of the company's common shares on
the last trading day immediately preceding the date of the grant,
and an option's maximum term is 10 years. In general, options will
vest, if at all, according to a schedule based on the three-year
average excess of the company's consolidated cash flow return on
investment over weighted average cost of capital. As of
December 31, 2015, options to
purchase a total of 3,474,900 common shares had been granted under
the plan. The weighted average fair value of options granted was
$5.48 per share, estimated as of the
date of grant using the Black-Scholes-Merton option-pricing model
with the following weighted average assumptions:
Exercise price per
option
|
|
|
|
|
|
|
|
|
|
|
$
|
32.41
|
Expected annual
dividend per share
|
|
|
|
|
|
|
|
|
|
|
$
|
1.52
|
Expected
volatility
|
|
|
|
|
|
|
|
|
|
|
|
31%
|
Risk-free interest
rate
|
|
|
|
|
|
|
|
|
|
|
|
1.54%
|
Expected life of
options
|
|
|
|
|
|
|
|
|
|
|
|
5.5 years
|
8. Subsequent Events
On January 19, 2016, the company
announced the indefinite suspension of its Picadilly, New Brunswick potash operations,
which will be placed in care-and-maintenance mode. The company's
international customers that were historically served by
New Brunswick will now be served
from Saskatchewan through Canpotex
Limited.
On January 27, 2016, the company's
Board of Directors reduced its quarterly dividend to $0.25 per share from $0.38 per share.
Potash Corporation of Saskatchewan Inc.
|
Selected Financial Data
|
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
Twelve Months Ended
|
|
December 31
|
December 31
|
|
2015
|
2014
|
2015
|
2014
|
|
|
|
|
|
|
|
|
|
Potash Sales (tonnes - thousands)
|
|
|
|
|
|
|
|
|
|
Manufactured
Product
|
|
|
|
|
|
|
|
|
|
|
North
America
|
|
459
|
|
829
|
|
2,591
|
|
3,549
|
|
|
Offshore
|
|
1,277
|
|
1,671
|
|
6,181
|
|
5,797
|
|
Manufactured
Product
|
|
1,736
|
|
2,500
|
|
8,772
|
|
9,346
|
|
|
|
|
|
|
|
|
|
Potash Net Sales
|
|
|
|
|
|
|
|
|
|
(US $
millions)
|
|
|
|
|
|
|
|
|
|
|
Sales
|
$
|
454
|
$
|
777
|
$
|
2,543
|
$
|
2,828
|
|
|
Freight,
transportation and distribution
|
|
(36)
|
|
(62)
|
|
(214)
|
|
(291)
|
|
|
Net Sales
|
$
|
418
|
$
|
715
|
$
|
2,329
|
$
|
2,537
|
|
|
|
|
|
|
|
|
|
|
Manufactured
Product
|
|
|
|
|
|
|
|
|
|
|
North
America
|
$
|
125
|
$
|
296
|
$
|
825
|
$
|
1,162
|
|
|
Offshore
|
|
288
|
|
412
|
|
1,487
|
|
1,354
|
|
Other miscellaneous
and purchased product
|
|
5
|
|
7
|
|
17
|
|
21
|
|
Net Sales
|
$
|
418
|
$
|
715
|
$
|
2,329
|
$
|
2,537
|
|
|
|
|
|
|
|
|
|
Manufactured
Product
|
|
|
|
|
|
|
|
|
|
Average Realized Sales Price per MT
|
|
|
|
|
|
|
|
|
|
|
North
America
|
$
|
271
|
$
|
358
|
$
|
318
|
$
|
328
|
|
|
Offshore
|
$
|
226
|
$
|
246
|
$
|
241
|
$
|
234
|
|
|
Average
|
$
|
238
|
$
|
284
|
$
|
263
|
$
|
269
|
|
Cost of Goods Sold per MT
|
$
|
(132)
|
$
|
(105)
|
$
|
(111)
|
$
|
(113)
|
|
Gross Margin per MT
|
$
|
106
|
$
|
179
|
$
|
152
|
$
|
156
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Potash Corporation of Saskatchewan Inc.
|
Selected Financial Data
|
(unaudited)
|
|
|
|
|
Three Months Ended
|
Twelve Months Ended
|
|
December 31
|
December 31
|
|
2015
|
2014
|
2015
|
2014
|
|
|
|
|
|
|
|
|
|
Average Natural Gas
Cost in Production per MMBtu
|
$
|
4.28
|
$
|
6.34
|
$
|
4.70
|
$
|
5.77
|
Nitrogen Sales (tonnes - thousands)
|
|
|
|
|
|
|
|
|
|
Manufactured
Product
|
|
|
|
|
|
|
|
|
|
|
Ammonia
(1)
|
|
567
|
|
652
|
|
2,228
|
|
2,428
|
|
|
Urea
|
|
308
|
|
195
|
|
1,048
|
|
1,049
|
|
|
Solutions/Nitric
acid/Ammonium nitrate
|
|
684
|
|
664
|
|
2,650
|
|
2,875
|
|
Manufactured
Product
|
|
1,559
|
|
1,511
|
|
5,926
|
|
6,352
|
|
|
|
|
|
|
|
|
|
|
Fertilizer sales
tonnes (1)
|
|
539
|
|
380
|
|
1,989
|
|
2,079
|
|
Industrial/Feed sales
tonnes
|
|
1,020
|
|
1,131
|
|
3,937
|
|
4,273
|
|
Manufactured
Product
|
|
1,559
|
|
1,511
|
|
5,926
|
|
6,352
|
|
|
|
|
|
|
|
|
|
Nitrogen Net Sales
|
|
|
|
|
|
|
|
|
|
(US $
millions)
|
|
|
|
|
|
|
|
|
|
|
Sales - third
party
|
$
|
459
|
$
|
626
|
$
|
1,960
|
$
|
2,425
|
|
|
Freight,
transportation and distribution - third party
|
|
(28)
|
|
(28)
|
|
(101)
|
|
(117)
|
|
|
Net sales - third
party
|
|
431
|
|
598
|
|
1,859
|
|
2,308
|
|
|
Inter-segment net
sales
|
|
25
|
|
24
|
|
87
|
|
107
|
|
|
Net Sales
|
$
|
456
|
$
|
622
|
$
|
1,946
|
$
|
2,415
|
|
|
|
|
|
|
|
|
|
|
Manufactured
Product
|
|
|
|
|
|
|
|
|
|
|
Ammonia
(2)
|
$
|
225
|
$
|
385
|
$
|
978
|
$
|
1,260
|
|
|
Urea
|
|
91
|
|
75
|
|
362
|
|
439
|
|
|
Solutions/Nitric
acid/Ammonium nitrate
|
|
132
|
|
153
|
|
567
|
|
679
|
|
Other miscellaneous
and purchased product (3)
|
|
8
|
|
9
|
|
39
|
|
37
|
|
Net Sales
|
$
|
456
|
$
|
622
|
$
|
1,946
|
$
|
2,415
|
|
|
|
|
|
|
|
|
|
|
Fertilizer net sales
(2)
|
$
|
149
|
$
|
138
|
$
|
637
|
$
|
778
|
|
Industrial/Feed net
sales
|
|
299
|
|
475
|
|
1,270
|
|
1,600
|
|
Other miscellaneous
and purchased product (3)
|
|
8
|
|
9
|
|
39
|
|
37
|
|
Net Sales
|
$
|
456
|
$
|
622
|
$
|
1,946
|
$
|
2,415
|
|
|
|
|
|
|
|
|
|
Manufactured
Product
|
|
|
|
|
|
|
|
|
|
Average Realized Sales Price per MT
|
|
|
|
|
|
|
|
|
|
|
Ammonia
|
$
|
397
|
$
|
590
|
$
|
439
|
$
|
519
|
|
|
Urea
|
$
|
297
|
$
|
384
|
$
|
346
|
$
|
418
|
|
|
Solutions/Nitric
acid/Ammonium nitrate
|
$
|
193
|
$
|
231
|
$
|
214
|
$
|
236
|
|
|
Average
|
$
|
288
|
$
|
405
|
$
|
322
|
$
|
374
|
|
|
Fertilizer average
price per MT
|
$
|
278
|
$
|
362
|
$
|
321
|
$
|
374
|
|
|
Industrial/Feed
average price per MT
|
$
|
293
|
$
|
420
|
$
|
323
|
$
|
374
|
|
|
Average
|
$
|
288
|
$
|
405
|
$
|
322
|
$
|
374
|
|
Cost of Goods Sold per MT
|
$
|
(199)
|
$
|
(253)
|
$
|
(206)
|
$
|
(218)
|
|
Gross Margin per MT
|
$
|
89
|
$
|
152
|
$
|
116
|
$
|
156
|
(1) Includes
inter-segment ammonia sales (tonnes - thousands)
|
|
48
|
|
29
|
|
161
|
|
170
|
(2) Includes
inter-segment ammonia net sales
|
$
|
25
|
$
|
20
|
$
|
86
|
$
|
101
|
(3) Includes
inter-segment other miscellaneous and purchased product net
sales
|
$
|
-
|
$
|
4
|
$
|
1
|
$
|
6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Potash Corporation of Saskatchewan Inc.
|
Selected Financial Data
|
(unaudited)
|
|
|
|
|
Three Months Ended
|
Twelve Months Ended
|
|
December 31
|
December 31
|
|
2015
|
2014
|
2015
|
2014
|
|
|
|
|
|
|
|
|
|
Phosphate Sales (tonnes - thousands)
|
|
|
|
|
|
|
|
|
|
Manufactured
Product
|
|
|
|
|
|
|
|
|
|
|
Fertilizer
|
|
474
|
|
501
|
|
1,713
|
|
1,987
|
|
|
Feed and
Industrial
|
|
284
|
|
293
|
|
1,137
|
|
1,155
|
|
Manufactured
Product
|
|
758
|
|
794
|
|
2,850
|
|
3,142
|
|
|
|
|
|
|
|
|
|
Phosphate Net Sales
|
|
|
|
|
|
|
|
|
|
(US $
millions)
|
|
|
|
|
|
|
|
|
|
|
Sales
|
$
|
441
|
$
|
499
|
$
|
1,776
|
$
|
1,862
|
|
|
Freight,
transportation and distribution
|
|
(44)
|
|
(54)
|
|
(173)
|
|
(201)
|
|
|
Net Sales
|
$
|
397
|
$
|
445
|
$
|
1,603
|
$
|
1,661
|
|
|
|
|
|
|
|
|
|
|
Manufactured
Product
|
|
|
|
|
|
|
|
|
|
|
Fertilizer
|
$
|
219
|
$
|
233
|
$
|
827
|
$
|
889
|
|
|
Feed and
Industrial
|
|
177
|
|
187
|
|
727
|
|
713
|
|
Other miscellaneous
and purchased product
|
|
1
|
|
25
|
|
49
|
|
59
|
|
Net Sales
|
$
|
397
|
$
|
445
|
$
|
1,603
|
$
|
1,661
|
|
|
|
|
|
|
|
|
|
Manufactured
Product
|
|
|
|
|
|
|
|
|
|
Average Realized Sales Price per MT
|
|
|
|
|
|
|
|
|
|
|
Fertilizer
|
$
|
461
|
$
|
465
|
$
|
483
|
$
|
447
|
|
|
Feed and
Industrial
|
$
|
624
|
$
|
636
|
$
|
640
|
$
|
617
|
|
|
Average
|
$
|
522
|
$
|
528
|
$
|
545
|
$
|
510
|
|
Cost of Goods Sold per MT
|
$
|
(443)
|
$
|
(446)
|
$
|
(463)
|
$
|
(448)
|
|
Gross Margin per MT
|
$
|
79
|
$
|
82
|
$
|
82
|
$
|
62
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Potash Corporation of Saskatchewan Inc.
|
Selected Additional Data
|
(unaudited)
|
|
|
|
|
|
|
|
|
|
Exchange Rate (Cdn$/US$)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2015
|
2014
|
|
|
|
|
|
|
|
|
|
December
31
|
|
|
|
|
|
1.3840
|
|
1.1601
|
Fourth-quarter
average conversion rate
|
|
|
|
|
|
1.3206
|
|
1.1184
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
Twelve Months Ended
|
|
December 31
|
December 31
|
|
2015
|
2014
|
2015
|
2014
|
|
|
|
|
|
|
|
|
|
Shareholders
|
|
|
|
|
|
|
|
|
PotashCorp's total
shareholder return
|
|
-15%
|
|
3%
|
|
-49%
|
|
12%
|
|
|
|
|
|
|
|
|
|
Production
|
|
|
|
|
|
|
|
|
Potash production
(KCl Tonnes - thousands)
|
|
1,975
|
|
2,557
|
|
9,105
|
|
8,726
|
Potash shutdown weeks
(1)
|
|
15
|
|
4
|
|
28
|
|
18
|
Nitrogen production
(N Tonnes - thousands)
|
|
802
|
|
720
|
|
3,081
|
|
3,170
|
Ammonia operating
rate
|
|
91%
|
|
79%
|
|
87%
|
|
90%
|
Phosphate production
(P2O5 Tonnes - thousands)
|
|
427
|
|
412
|
|
1,614
|
|
1,671
|
Phosphate
P2O5 operating
rate
|
|
90%
|
|
87%
|
|
74%
|
|
76%
|
|
|
|
|
|
|
|
|
|
Customers
|
|
|
|
|
|
|
|
|
Product tonnes
involved in customer complaints (thousands)
|
|
8
|
|
39
|
|
59
|
|
63
|
|
|
|
|
|
|
|
|
|
Community
|
|
|
|
|
|
|
|
|
Taxes and royalties
($ millions) (2)
|
|
78
|
|
156
|
|
654
|
|
715
|
|
|
|
|
|
|
|
|
|
Employees
|
|
|
|
|
|
|
|
|
Percentage of senior
staff positions filled internally
|
|
86%
|
|
38%
|
|
77%
|
|
78%
|
|
|
|
|
|
|
|
|
|
Safety
|
|
|
|
|
|
|
|
|
Total site recordable
injury rate (per 200,000 work hours) (3)
|
|
0.97
|
|
0.66
|
|
1.01
|
|
1.01
|
|
|
|
|
|
|
|
|
|
Environment
|
|
|
|
|
|
|
|
|
Environmental
incidents (4)
|
|
8
|
|
5
|
|
24
|
|
24
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31,
|
December 31,
|
As at
|
|
|
|
|
2015
|
2014
|
|
|
|
|
|
|
|
|
|
Number of employees
|
|
|
|
|
|
|
|
|
|
Potash
|
|
|
|
|
|
2,689
|
|
2,534
|
|
Nitrogen
|
|
|
|
|
|
812
|
|
802
|
|
Phosphate
|
|
|
|
|
|
1,438
|
|
1,385
|
|
Other
|
|
|
|
|
|
456
|
|
415
|
|
Total
|
|
|
|
|
|
5,395
|
|
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
|
Twelve Months Ended
|
|
|
|
|
|
|
|
|
|
December 31
|
December 31
|
|
|
|
|
|
|
|
|
|
2015
|
2014
|
2015
|
2014
|
Net income
|
|
|
|
|
|
|
|
|
$
|
201
|
$
|
407
|
$
|
1,270
|
$
|
1,536
|
Finance
costs
|
|
|
|
|
|
|
|
|
|
44
|
|
42
|
|
192
|
|
184
|
Income
taxes
|
|
|
|
|
|
|
|
|
|
69
|
|
162
|
|
451
|
|
628
|
Depreciation and
amortization
|
|
|
|
|
|
|
|
|
|
168
|
|
182
|
|
685
|
|
701
|
EBITDA
|
|
|
|
|
|
|
|
|
$
|
482
|
$
|
793
|
$
|
2,598
|
$
|
3,049
|
Impairment of
available-for-sale investment
|
|
|
|
|
|
|
|
|
|
-
|
|
-
|
|
-
|
|
38
|
Adjusted EBITDA
|
|
|
|
|
|
|
|
|
$
|
482
|
$
|
793
|
$
|
2,598
|
$
|
3,087
|
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
|
Twelve Months Ended
|
|
|
|
|
|
|
|
|
|
December 31
|
December 31
|
|
|
|
|
|
|
|
|
|
2015
|
2014
|
2015
|
2014
|
Sales
|
|
|
|
|
|
|
|
|
$
|
1,354
|
$
|
1,902
|
$
|
6,279
|
$
|
7,115
|
Freight,
transportation and distribution
|
|
|
|
|
|
|
|
|
|
(108)
|
|
(144)
|
|
(488)
|
|
(609)
|
Net sales
|
|
|
|
|
|
|
|
|
$
|
1,246
|
$
|
1,758
|
$
|
5,791
|
$
|
6,506
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income as a percentage of sales
|
|
|
|
|
|
|
|
|
|
15%
|
|
21%
|
|
20%
|
|
22%
|
Adjusted EBITDA margin
|
|
|
|
|
|
|
|
|
|
39%
|
|
45%
|
|
45%
|
|
47%
|
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
|
|
|
|
|
|
|
|
|
|
2015
|
2014
|
2015
|
2014
|
Cash flow prior to working capital
changes
|
|
|
|
|
|
|
|
|
$
|
490
|
$
|
754
|
$
|
2,211
|
$
|
2,704
|
Changes in non-cash
operating working capital
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Receivables
|
|
|
|
|
|
|
|
|
|
173
|
|
(140)
|
|
259
|
|
(220)
|
|
Inventories
|
|
|
|
|
|
|
|
|
|
(21)
|
|
46
|
|
(99)
|
|
70
|
|
Prepaid expenses and
other current assets
|
|
|
|
|
|
|
|
|
|
(3)
|
|
8
|
|
(19)
|
|
29
|
|
Payables and accrued
charges
|
|
|
|
|
|
|
|
|
|
(16)
|
|
45
|
|
(14)
|
|
31
|
Changes in non-cash operating working
capital
|
|
|
|
|
|
|
|
|
|
133
|
|
(41)
|
|
127
|
|
(90)
|
Cash provided by operating activities
|
|
|
|
|
|
|
|
|
$
|
623
|
$
|
713
|
$
|
2,338
|
$
|
2,614
|
Additions to
property, plant and equipment
|
|
|
|
|
|
|
|
|
|
(415)
|
|
(412)
|
|
(1,217)
|
|
(1,138)
|
Other assets and
intangible assets
|
|
|
|
|
|
|
|
|
|
1
|
|
(10)
|
|
(67)
|
|
(22)
|
Changes in non-cash
operating working capital
|
|
|
|
|
|
|
|
|
|
(133)
|
|
41
|
|
(127)
|
|
90
|
Free cash flow
|
|
|
|
|
|
|
|
|
$
|
76
|
$
|
332
|
$
|
927
|
$
|
1,544
|
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.