Record Quarter Puts PotashCorp Over US $1.1 Billion
Jan. 30, 2008
The company's fourth quarter marked the highest quarterly earnings in company history and raised 2007 earnings to $3.40 per share, 72% higher than the $1.98 per share of 2006. It also stretched the company's streak of record earnings to four consecutive years.
Net income for the quarter reached $376.8 million, more than double the $186 million reported for last year's fourth quarter, and raising full-year net income to a record $1.1 billion, compared to $631.8 million in 2006.
With strong market conditions and rising prices for all three major nutrients, gross margin for the quarter climbed to a record $535 million, up $235.7 million from last year's fourth quarter, and raised the total 2007 gross margin to $1.9 billion, surpassing the previous high of $1.1 billion set in 2005. Adjusted earnings before interest, taxes, depreciation, and amortization (adjusted EBITDA) grew to a record $553.2 million for the quarter, compared to $326.5 million in 4Q 2006. Full-year adjusted EBITDA reached a record $1.9 billion, a 68% improvement over the previous high achieved in 2005.
The market factors behind the record quarter also helped improve the performance of PotashCorp's offshore investments in Arab Potash Company Ltd. (APC) in Jordan, Sociedad Quimica y Minera de Chile S.A. (SQM) in Chile, and Israel Chemicals Ltd. (ICL) in Israel.
For the year, these offshore investments, along with Sinofert Holdings Ltd. (Sinofert) in China, contributed $134.3 million to company earnings.
"Our record performance for the quarter and the full year reflect the increasing potential of our company," said PotashCorp President and Chief Executive Officer Bill Doyle. "For nearly two decades we have carefully assembled and managed our world-class assets with a long-term view. With growing demand and strong market conditions, we have reached new heights in each of the past four years. More important, we are looking ahead and preparing ourselves for expected future growth that we believe will continue to deliver greater value for our customers and investors." While the fourth quarter historically has allowed fertilizer producers to build inventories in anticipation of the coming planting season, strong demand reduced 2007 year-end inventories of all three nutrients. Compared to previous five-year averages, North American producer inventories were down 26% at year-end for potash; urea inventories dropped 17%; and diammonium phosphate (DAP) was down 21%.
The growth in global population and strengthening of world economies that is driving demand for agricultural products and fertilizers is expected to continue, says PotashCorp. China has seen strong increases in its gross domestic product annually for over 15 years and double-digit growth in the past five, while India, Southeast Asia, Brazil and Latin America have more recently been experiencing excellent economic growth.
"One of the biggest challenges our world now faces is how to feed hundreds of millions of new consumers in China, India, and other emerging countries where people are developing appetites for more and better food," said Doyle. "PotashCorp's world-class assets and long-term strategies have been built to serve these customers, both today and in the years ahead. Our attention remains focused on growing our business to meet the need for our essential products - particularly potash. Along the way, we look forward to demonstrating our gross margin potential through expanding volumes, higher prices and lower per-tonne costs, thereby rewarding our shareholders."
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