PotashCorp revenue doubles in second quarter

Potash Corp. of Saskatchewan Inc. saw its revenue more than double in the second quarter thanks to a significant rebound in global demand for fertilizer.

The Saskatoon-based company brought in net earnings of $472 million US, or $1.55 US per share, in the second quarter, compared to second-quarter 2009 earnings of $186.2 million US, or 61 cents US per share.

PotashCorp’s Q2 earnings — the second highest in company history — brought its first-half 2010 revenues up to nearly $1 billion, ringing in at $921.2 million US, or $3.02 US per share.

“The undeniable need for sustainable food production continued to drive fertilizer demand and our performance in the second quarter,” said company president and CEO Bill Doyle.

“As we have stated in the past, fertilizer applications can be deferred, but cannot be ignored. With growing demand for food and supportive crop economics, farmers have been motivated to begin addressing nutrient deficiencies in their soils.

“We believe this has established a strong foundation for improved fertilization practices and for the growth of our company.”

Second-quarter production of potash — a key ingredient in fertilizer along with phosphate and nitrogen, which the company also produces — rose to 2.2 million tonnes over 2009’s Q2 production of 0.6 million tonnes.

Sales of the pink mineral rose to 1.9 million tonnes in the quarter over 0.4 million tones last year, bringing in a potash gross margin of $396.6 million US — nearly four times higher than 2009’s second-quarter potash gross margin of $106.2 million and contributing significantly to overall 2010 Q2 earnings.

With the company saying it believes “the catalysts expected to fuel near-term demand appear to be accelerating,” it has estimated a strong 2010 potash segment gross margin of between $1.4 billion and $1.7 billion US, and total potash shipments between 7.5 and 7.8 million tonnes this year.

PotashCorp forecasts third-quarter net income of 80 cents to $1.20 US per share, and 2010 net income of between $5 and $5.50 US per share.

The company is sticking to its outlook that global potash shipments will reach 50 million tonnes this year, adding it expects 2011 worldwide potash shipments will reach 55 million tonnes.

“With the worst of the global recession behind us, the inevitable need for increased food production and proper fertilizer use is being re-established,” Doyle stated.

“The demand for food has tightened global grain supplies, increasing the importance of addressing nutrient deficiencies in the soil. This is expected to strengthen demand for all nutrients, especially potash, in the near and long term.

“We believe this increased demand gives us the opportunity to demonstrate our unmatched ability to meet the needs of our customers and deliver value to our shareholders.”

The company will be discussing its second-quarter and six-month results with analysts and media later in the day on Thursday.

PotashCorp’s shares on the TSX (POT) rose in early trading to $103.11, up $1.41, or 1.39 per cent, from the close of the markets on Wednesday.

Its shares on the NYSE (POT) also rose early Thursday, reaching $99.50 US, a $1.79 US, or 1.83 per cent, increase from Wednesday’s close.