Engineering News

Profits soar at fertilizer king Potash Corp.
Thu Jan 27, 2005 03:26 PM ET
(Adds details from conference call with analysts. Changes dateline, previous TORONTO. In U.S. dollars unless noted)

WINNIPEG, Manitoba, Jan 27 (Reuters) - Fertilizer producer Potash Corp. of Saskatchewan Inc. mined larger profits after surging world demand led to record volumes and prices in its fourth quarter, the company said on Thursday.

Potash Corp., the world's top fertilizer producer by market value, posted a net profit of $100.1 million, or 88 cents a share on Thursday, up from year-earlier $26.5 million, or 25 cents a share.

"Offshore and domestic customers bought more potash at higher prices than ever before," chief executive Bill Doyle told analysts on a conference call.

The stronger Canadian dollar stripped 11 cents a share from fourth-quarter earnings, the company said.

Potash Corp., based in Saskatoon, Saskatchewan, expects to continue to break records in 2005, Doyle said, noting it alone among major producers has significant spare capacity to supply world demand.

"We've got a lot of room (for price increases) in potash before we kill the goose that laid the golden egg: we wouldn't do that," Doyle said.

The company forecast first-quarter net income of between 80 cents and $1 a share, but said earnings may be affected by the ability of railways to deliver its products on time.

Potash Corp. shares were up C$2.51 at C$100.40 on the Toronto Stock Exchange on Wednesday afternoon.

Fourth-quarter sales climbed to $866.6 million, up more than 20 percent from $717.6 million in the year-before period.

For 2004, Potash Corp. earned $2.70 a share, up from a loss of $1.21 per share in 2003.

Export volumes of potash were up 19 percent, Doyle said. North American potash volumes were up 13 percent as the company's realized prices climbed by a third.

Prices are expected to rise in 2005 and volumes should again increase, although at a slower pace, Doyle said.

"They're going to catch their breath here a little bit," he said, noting Brazil, Canada's largest potash export market, has increased potash consumption by 45 percent over two years to 6.4 million tonnes in 2004.

Potash Corp. added shifts at two mines in Saskatchewan in the quarter to boost production by 12 percent from the year-before period.

It plans to spend about $300 million on further expansion over the next three years, Doyle said, with a goal of 12.5 million tonnes of potash production.

The company plans to increase production to 9.6 million tonnes in 2005, up from 7.9 million tonnes in 2004, he said.

($1=$1.24 Canadian)

Source: Reuters.

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