Low potash prices hurt Potash Corp.

Low potash prices continue to take their toll on on Potash Corp. of Saskatchewan (TSE) whose annual potash output represents about 15% of the world’s total production capacity. For the three months ended Sept. 30, the company reported net income of $2.3 million on sales of $62.2 million, down 79% from net income of $11.4 million on sales of $73.7 million in the year-earlier period.

“The selling price for our product continues to be disappointing,” admitted Potash President C.E. Childers.

Comparing the average price per tonne of potash sold, the company received 8% less in the recent quarter than during the same quarter in 1989.

“Improved product prices are a key element in the profitability of our company,” added Childers.

Nine-month net income fell to $15.5 million (43 cents per share), down 78% from $69.4 million ($1.98 per share) in the year-earlier period. Revenue slumped to $195.5 million from $246.4 million.

On a year-to-date basis, Potash has produced 2.47 million tonnes and sold 2.66 million tonnes. Offshore sales volumes were up 1% in the third quarter while domestic volumes were down 1%.

The company expects an improvement in offshore sales due to the resolution of a rail strike in British Columbia which had hampered shipments. The Chinese have also returned to the marketplace with a fourth-quarter 400,000-tonne purchase from Canpotex.

With a debt to equity ratio of 1-to-12, Potash has this year reduced its debt by $39 million, most of which was done in the third quarter.

Potash Corp. of Saskatchewan (TSE)

3 months ended Sept. 30 1990 1989 Revenue $62,178 $73,701 Net earnings 2,344 11,372

per share n/a n/a 9 months ended Sept. 30 Revenue $195,470 $246,366 Net earnings 15,470 69,373

per share 0.431.98