Declining fertilizer demand and increased domestic competition took a bite out of
For the quarter ended June 30, Potash Corp. of Saskatchewan (PCS) recorded net income of US$61.8 million (or US$1.14 per share) on sales of US$564.5 million, down from income of US$89.1 million (US$1.64 per share) on sales of US$660.4 million in the same period last year.
PCS produced 1.91 million tonnes of potash during the second quarter, down 7% from the previous year. Declining sales to Brazil were partially offset by sales to Europe, Indonesia, Japan and South Korea, says PCS.
In its phosphate business, PCS produced 582,000 tonnes of P2O5 during the recent quarter, compared with 604,000 tonnes a year ago. The company says that lower ammonia costs were offset by higher sulphur and Aurora rock costs, resulting in a cost increase of 4% per unit.
Nitrogen sales dropped 10% between the second quarters of 1998 and 1999, to 2.2 million tonnes. The reduced volumes, particularly in nitrogen solutions, is attributed to fewer corn crops, low grain prices and early spring ammonia application.
On July 1, PCS spent US$36 million to buy and recapitalize Chilean company Minera Yolanda. Full production at the potassium-sodium nitrate operation is expected in two years.
During the latest quarter, the company generated US$170.1 million (US$3.14 per share) in operational cashflow, US$135.1 million of which was spent on debt repayment. As of June 30, the company owes US$589 million.
PCS is preparing for what it predicts will be a tough third quarter by cutting production at several operations. Third quarter earnings may be only half of the US$54.7 million earned last year, the company warns.
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