Potash Corp. of Saskatchewan Inc. (POT, Financial) filed Quarterly Report for the period ended 2009-06-30.
Potash Corporation of Saskatchewan Inc. is the world\'s largest potash company the third largest phoshate producer and the second largest nitrogen producer in the world. Behind its growing success lies a vital infrastructure: knowledgeable PCS Sales staff throughout Canada and the United States a transportation network that includes truck train barge lake ship and ocean vessel and warehouses strategically located in major consuming areas. Potash Corp. of Saskatchewan Inc. has a market cap of $29.24 billion; its shares were traded at around $99 with a P/E ratio of 12.2 and P/S ratio of 3.1. The dividend yield of Potash Corp. of Saskatchewan Inc. stocks is 0.4%. Potash Corp. of Saskatchewan Inc. had an annual average earning growth of 12.6% over the past 10 years.
Selling and administrative expenses were $26.3 million lower than in the same quarter last year and $30.1 million lower than the first half of 2008 due to: (1) lower accruals for our short-term incentive plan, as a result of our financial performance being below budget; (2) lower stock option expense; and (3) the price of our common shares not increasing as much during the second quarter and first half of 2009 compared to 2008, causing the expense associated with our deferred share units to decrease. Provincial mining and other taxes declined $181.1 million quarter over quarter and $247.5 million year over year as a result of anticipated lower potash margins and decreased sales tonnes compared to the same period last year. Foreign exchange losses increased quarter over quarter from $1.9 million to $37.9 million and changed from a gain of $25.8 million in the six months ended June 30, 2008 to a loss of $7.7 million in the same period for 2009 due to treasury losses and a stronger Canadian dollar, both of which were slightly offset by a recovery in foreign exchange related to a functional currency tax election during the second quarter of 2009. Interest expense of $26.5 million in the second quarter and $49.7 million for the first half of 2009 was almost two times higher than the same periods in 2008 due to higher debt levels. Other income increased $85.1 million quarter over quarter and $108.2 million year over year due to a $115.3 million gain on disposal of previously written down auction rate securities. This increase was partially offset by a decrease in equity earnings from investments in Arab Potash Company Ltd. (APC) and Sociedad Quimica y Minera de Chile (SQM) of $30.5 million for the quarter and $16.0 million for the first half, respectively, compared to 2008. Dividends from Sinofert Holdings Limited (Sinofert) and Israel Chemicals Limited (ICL) contributed $40.4 million, in total, to other income for the three and six months ended June 30, 2009 compared to $33.7 million for the same periods in 2008. Other income for the first half of 2008 included a $43.8 million provision for other-than-temporary impairment of auction rate securities, which was partially offset by a $25.3 million gain on the Sinofert forward share purchase contract.
Other comprehensive income of $404.5 million for the second quarter of 2009 fell $565.5 million from the same period last year due to our combined investments in ICL and Sinofert contributing $456.7 million less than last year and $138.2 million lower natural gas hedging gains as a result of declining natural gas prices. Other comprehensive income fell $717.5 million year over year due to ICL and Sinofert contributing $532.0 million less and a $227.5 million negative change in the value of our natural gas derivatives.
Property, plant and equipment and investments were the largest contributors to the increase in assets during the first six months of 2009. Additions to property, plant and equipment were $765.7 million ($536.8 million, or 70 percent, related to the potash segment). Investments increased $422.4 million mainly due to the fair value of our investments in ICL and Sinofert increasing $428.2 million and $35.9 million, respectively, while our investments in SQM and APC declined $24.4 million as dividends received exceeded our share of earnings during the first six months of 2009. Investments in auction rate securities declined $17.2 million as the company settled an arbitration proceeding instituted against an investment firm that purchased the auction rate securities without our approval. In exchange for transferring the securities to the investment firm, we received $132.5 million in cash plus $3.0 million
Liabilities increased as a result of the settlement of the issuance of $1,000.0 million in new senior notes in May, offset by a net reduction in outstanding commercial paper and credit facilities borrowings of $245.8 million as proceeds from the senior notes issuance were used to repay these borrowings and for general corporate purposes, and a $592.9 million decrease in accounts payable and accrued charges. The primary reasons accounts payable and accrued charges declined were: (1) income taxes payable decreased $468.7 million as a result of payments made during the first six months of 2009 and significantly lower earnings compared to 2008; (2) $77.4 million lower accrued payroll due to lower incentives and stock-based compensation accruals; and (3) accrued provincial mining taxes declined $43.5 million due to significantly reduced demand and forecasted lower potash margins. Liabilities were further reduced by a $24.4 million reduction in the future income tax liability compared to December 31, 2008, which was primarily due to a restructuring of one of our investment holdings during the first quarter of 2009 offset, in part, by a functional currency tax election made during the second quarter of 2009 and future taxes applicable to earnings in the current year.
Share capital, contributed surplus, accumulated other comprehensive income (AOCI) and retained earnings all increased at June 30, 2009 compared to December 31, 2008. AOCI increased $441.5 million as a result of a $437.6 million increase in unrealized gains on available-for-sale securities (primarily the companys investment in ICL which increased $428.2 million and Sinofert which increased $35.9 million, offset in part by a future income tax liability increase of $26.5 million). Net income of $495.4 million for the first six months of 2009 increased retained earnings while dividends declared of $59.2 million reduced the balance, for a net increase in retained earnings of $436.2 million at June 30, 2009 compared to December 31, 2008.
Read the The complete ReportPOT is in the portfolios of George Soros of Soros Fund Management LLC, Mohnish Pabrai of Pabrai Mohnish, PRIMECAP Management, Wallace Weitz of Weitz Wallace R & Co.
Potash Corporation of Saskatchewan Inc. is the world\'s largest potash company the third largest phoshate producer and the second largest nitrogen producer in the world. Behind its growing success lies a vital infrastructure: knowledgeable PCS Sales staff throughout Canada and the United States a transportation network that includes truck train barge lake ship and ocean vessel and warehouses strategically located in major consuming areas. Potash Corp. of Saskatchewan Inc. has a market cap of $29.24 billion; its shares were traded at around $99 with a P/E ratio of 12.2 and P/S ratio of 3.1. The dividend yield of Potash Corp. of Saskatchewan Inc. stocks is 0.4%. Potash Corp. of Saskatchewan Inc. had an annual average earning growth of 12.6% over the past 10 years.
Highlight of Business Operations:
Second-quarter earnings of $187.1 million were 79 percent lower than the same quarter in 2008 as fertilizer and industrial demand for potash and phosphate products were weak and pricing for phosphate and nitrogen products were significantly lower. Earnings per share of $0.62 in the second quarter reflected strong potash pricing and a gain on disposal of auction rate securities. Earnings for the first six months of 2009 were $495.4 million ($1.63 per share), 66 percent lower than the record $1,471.1 million ($4.54 per share) earned in the first half of last year. Second-quarter gross margin was $170.6 million compared to $1,437.3 million in the same period last year, with 62 percent of the current total generated by potash. For the six months ended June 30, 2009, gross margin of $400.2 million fell 83 percent compared to $2,293.3 million in the first six months of 2008, with potash comprising 68 percent of the current total.Selling and administrative expenses were $26.3 million lower than in the same quarter last year and $30.1 million lower than the first half of 2008 due to: (1) lower accruals for our short-term incentive plan, as a result of our financial performance being below budget; (2) lower stock option expense; and (3) the price of our common shares not increasing as much during the second quarter and first half of 2009 compared to 2008, causing the expense associated with our deferred share units to decrease. Provincial mining and other taxes declined $181.1 million quarter over quarter and $247.5 million year over year as a result of anticipated lower potash margins and decreased sales tonnes compared to the same period last year. Foreign exchange losses increased quarter over quarter from $1.9 million to $37.9 million and changed from a gain of $25.8 million in the six months ended June 30, 2008 to a loss of $7.7 million in the same period for 2009 due to treasury losses and a stronger Canadian dollar, both of which were slightly offset by a recovery in foreign exchange related to a functional currency tax election during the second quarter of 2009. Interest expense of $26.5 million in the second quarter and $49.7 million for the first half of 2009 was almost two times higher than the same periods in 2008 due to higher debt levels. Other income increased $85.1 million quarter over quarter and $108.2 million year over year due to a $115.3 million gain on disposal of previously written down auction rate securities. This increase was partially offset by a decrease in equity earnings from investments in Arab Potash Company Ltd. (APC) and Sociedad Quimica y Minera de Chile (SQM) of $30.5 million for the quarter and $16.0 million for the first half, respectively, compared to 2008. Dividends from Sinofert Holdings Limited (Sinofert) and Israel Chemicals Limited (ICL) contributed $40.4 million, in total, to other income for the three and six months ended June 30, 2009 compared to $33.7 million for the same periods in 2008. Other income for the first half of 2008 included a $43.8 million provision for other-than-temporary impairment of auction rate securities, which was partially offset by a $25.3 million gain on the Sinofert forward share purchase contract.
Other comprehensive income of $404.5 million for the second quarter of 2009 fell $565.5 million from the same period last year due to our combined investments in ICL and Sinofert contributing $456.7 million less than last year and $138.2 million lower natural gas hedging gains as a result of declining natural gas prices. Other comprehensive income fell $717.5 million year over year due to ICL and Sinofert contributing $532.0 million less and a $227.5 million negative change in the value of our natural gas derivatives.
Property, plant and equipment and investments were the largest contributors to the increase in assets during the first six months of 2009. Additions to property, plant and equipment were $765.7 million ($536.8 million, or 70 percent, related to the potash segment). Investments increased $422.4 million mainly due to the fair value of our investments in ICL and Sinofert increasing $428.2 million and $35.9 million, respectively, while our investments in SQM and APC declined $24.4 million as dividends received exceeded our share of earnings during the first six months of 2009. Investments in auction rate securities declined $17.2 million as the company settled an arbitration proceeding instituted against an investment firm that purchased the auction rate securities without our approval. In exchange for transferring the securities to the investment firm, we received $132.5 million in cash plus $3.0 million
Liabilities increased as a result of the settlement of the issuance of $1,000.0 million in new senior notes in May, offset by a net reduction in outstanding commercial paper and credit facilities borrowings of $245.8 million as proceeds from the senior notes issuance were used to repay these borrowings and for general corporate purposes, and a $592.9 million decrease in accounts payable and accrued charges. The primary reasons accounts payable and accrued charges declined were: (1) income taxes payable decreased $468.7 million as a result of payments made during the first six months of 2009 and significantly lower earnings compared to 2008; (2) $77.4 million lower accrued payroll due to lower incentives and stock-based compensation accruals; and (3) accrued provincial mining taxes declined $43.5 million due to significantly reduced demand and forecasted lower potash margins. Liabilities were further reduced by a $24.4 million reduction in the future income tax liability compared to December 31, 2008, which was primarily due to a restructuring of one of our investment holdings during the first quarter of 2009 offset, in part, by a functional currency tax election made during the second quarter of 2009 and future taxes applicable to earnings in the current year.
Share capital, contributed surplus, accumulated other comprehensive income (AOCI) and retained earnings all increased at June 30, 2009 compared to December 31, 2008. AOCI increased $441.5 million as a result of a $437.6 million increase in unrealized gains on available-for-sale securities (primarily the companys investment in ICL which increased $428.2 million and Sinofert which increased $35.9 million, offset in part by a future income tax liability increase of $26.5 million). Net income of $495.4 million for the first six months of 2009 increased retained earnings while dividends declared of $59.2 million reduced the balance, for a net increase in retained earnings of $436.2 million at June 30, 2009 compared to December 31, 2008.
Read the The complete ReportPOT is in the portfolios of George Soros of Soros Fund Management LLC, Mohnish Pabrai of Pabrai Mohnish, PRIMECAP Management, Wallace Weitz of Weitz Wallace R & Co.
