Thursday July 26, 6:01 am Eastern Time
PotashCorp's Second Quarter Gross Margin Increases 8%; Fully-Diluted EPS $0.83
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Outlook
The outlook for the second half of the year is mixed. In potash, sales should be steady as Brazil buys for its spring season and China continues to import. Volumes lost year-to-date domestically are not expected to be recovered in the second half, but offshore potash volumes could provide some catch-up.
In phosphate, the Company's ability to produce a variety of products to sell to a diverse group of industries will continue to pay dividends. However, recent restarts in North America DAP production will add to the pressure already being felt due to the imbalance of supply and demand. To further exacerbate the problem, India's new subsidy announcement has further disadvantaged DAP imports so there is little hope for near-term improvement on the demand side of the equation.
The collapse in nitrogen prices and a high level of inventories along with the restart of some idled production and new South American capacity mean the outlook for improvement appears to stretch beyond the second half of 2001. However, nitrogen will continue to be influenced by natural gas prices which have been very volatile this year and therefore difficult to predict.
In consideration of these conditions, the Company is less optimistic for the second half of 2001 and now believes its 2001 earnings will be in the range of $3.00 to $3.25 per share with third-quarter earnings of approximately $0.35 per share.
Conclusion
``While recently released USDA crop production and inventory numbers offer reasonable prospects for next year's acreage and application rates, we don't intend to wait for another cycle to pull us out of the current problems facing our industry,'' Doyle concluded. ``We will continue to utilize our operating strategy to strengthen our position. In phosphate, we are adding to our product diversity which will enable us to capture the superior margins of our non-fertilizer products. In nitrogen, we'll continue to position our Trinidad production for the highest netbacks, and in potash we'll continue to match supply to demand. All of this will be underpinned by the strength of our cash position.''
Potash Corporation of Saskatchewan Inc. is the world's largest fertilizer enterprise producing the three primary nutrients and is a leading supplier to three distinct market categories: agriculture, as the world's largest fertilizer producer; animal nutrition, with the world's largest capacity in phosphate feed ingredients; and industrial chemicals, as the world's largest producer of industrial nitrogen products and one of only three North American suppliers of industrial phosphates. |
