OREANDA-NEWS. Potash Corporation of Saskatchewan Inc. (PotashCorp) today reported second-quarter earnings of USD 0.73 per share (USD 643 million), bringing earnings for the first six months of 2013 to USD 1.37 per share (USD 1.2 billion). The second-quarter and first-half totals surpassed the USD 0.60 and USD 1.16 per share earned in the respective periods of 2012, although the previous year’s results included a USD 0.39 per share impairment charge related to our investment in Sinofert Holdings Limited (Sinofert).

Second-quarter gross margin of USD 1.0 billion trailed the USD 1.2 billion generated in the same period last year, as contributions from each of our three nutrients fell. As a result, the USD 1.8 billion generated during the first six months of 2013 was slightly below the USD 1.9 billion earned in the comparative period last year.

Adjusted earnings before finance costs, income taxes and depreciation and amortization2 (EBITDA) of USD 1.1 billion for the quarter and USD 2.1 billion for the first six months both trailed 2012 results. Second-quarter cash flow provided by operating activities of USD 1.2 billion approached the record established in the same period last year, elevating our 2013 first-half total to USD 1.9 billion – the highest six-month total in our history.

Our offshore investments in Arab Potash Company (APC) in Jordan, Israel Chemicals Ltd. (ICL) in Israel, Sociedad Quimica y Minera de Chile S.A. (SQM) in Chile and Sinofert in China contributed USD 89 million during the quarter and USD 166 million for the first half of the year. Before the impact of an impairment charge recorded against our earnings in 2012, both totals trailed prior-period levels. The market value of our investments in these publicly traded companies equated to approximately USD 6.8 billion, or USD 8 per PotashCorp share at market close on July 24, 2013.

“Global fertilizer demand was strong during the quarter, but highly competitive markets around the world had an impact on our results,” said PotashCorp President and Chief Executive Officer Bill Doyle. “Despite some weakening of prices in each of our nutrients, the continued engagement of buyers in our key markets was a positive sign. Farmers demonstrated their commitment to improving soil fertility and capitalizing on favorable agricultural economics, which benefits global food production and our company.”
Market Conditions

The pace of global potash shipments remained robust during the quarter as buyers in all key markets were actively securing new supply. In North America, challenging spring planting conditions affected fertilizer activity in some regions, but a late push by farmers to ensure the required nutrients were in place to maximize yields and economic returns kept dealers engaged throughout the quarter. Shipments from North American producers surpassed the second-quarter and six-month totals of 2012, even as dealers managed their supply to minimize inventories at the close of the planting season. In offshore markets – both contract and spot – buyers actively procured new supply or took delivery of committed tonnes, which helped raise shipments from North American producers to record levels for both the second quarter and the first half. Despite a strong demand environment, increased competitive pressures resulted in lower prices in all key markets relative to the same periods last year.

In nitrogen, robust industrial and agricultural demand led to increased shipments from US producers for most products during the quarter. Even with substantial domestic requirements, a delayed spring application season and significant product availability from offshore suppliers put downward pressure on key benchmark prices. This was most notable in urea as US imports rose sharply during the past nine months, whereas prices for ammonia and other nitrogen products fell less dramatically on tighter supply/demand fundamentals.

Global phosphate markets continued to be impacted by the lack of substantive engagement from buyers in India, the world’s largest phosphate importer. Although fertilizer dealers managed their supply requirements cautiously in the absence of clear market direction, demand in North America stayed relatively strong and shipments from US producers to Latin American countries were robust. Despite India’s return to the solid fertilizer market midway through the quarter, prices for all phosphate fertilizer products trended lower.