Your SlideShare is downloading. ×
0
PotashCorp - Citi Basic Material Symposium - Dec. 4, 2013
PotashCorp - Citi Basic Material Symposium - Dec. 4, 2013
PotashCorp - Citi Basic Material Symposium - Dec. 4, 2013
PotashCorp - Citi Basic Material Symposium - Dec. 4, 2013
PotashCorp - Citi Basic Material Symposium - Dec. 4, 2013
PotashCorp - Citi Basic Material Symposium - Dec. 4, 2013
PotashCorp - Citi Basic Material Symposium - Dec. 4, 2013
PotashCorp - Citi Basic Material Symposium - Dec. 4, 2013
PotashCorp - Citi Basic Material Symposium - Dec. 4, 2013
PotashCorp - Citi Basic Material Symposium - Dec. 4, 2013
PotashCorp - Citi Basic Material Symposium - Dec. 4, 2013
PotashCorp - Citi Basic Material Symposium - Dec. 4, 2013
PotashCorp - Citi Basic Material Symposium - Dec. 4, 2013
PotashCorp - Citi Basic Material Symposium - Dec. 4, 2013
PotashCorp - Citi Basic Material Symposium - Dec. 4, 2013
PotashCorp - Citi Basic Material Symposium - Dec. 4, 2013
PotashCorp - Citi Basic Material Symposium - Dec. 4, 2013
PotashCorp - Citi Basic Material Symposium - Dec. 4, 2013
PotashCorp - Citi Basic Material Symposium - Dec. 4, 2013
PotashCorp - Citi Basic Material Symposium - Dec. 4, 2013
PotashCorp - Citi Basic Material Symposium - Dec. 4, 2013
PotashCorp - Citi Basic Material Symposium - Dec. 4, 2013
PotashCorp - Citi Basic Material Symposium - Dec. 4, 2013
PotashCorp - Citi Basic Material Symposium - Dec. 4, 2013
PotashCorp - Citi Basic Material Symposium - Dec. 4, 2013
PotashCorp - Citi Basic Material Symposium - Dec. 4, 2013
PotashCorp - Citi Basic Material Symposium - Dec. 4, 2013
PotashCorp - Citi Basic Material Symposium - Dec. 4, 2013
PotashCorp - Citi Basic Material Symposium - Dec. 4, 2013
Upcoming SlideShare
Loading in...5
×

Thanks for flagging this SlideShare!

Oops! An error has occurred.

×
Saving this for later? Get the SlideShare app to save on your phone or tablet. Read anywhere, anytime – even offline.
Text the download link to your phone
Standard text messaging rates apply

PotashCorp - Citi Basic Material Symposium - Dec. 4, 2013

1,944

Published on

0 Comments
0 Likes
Statistics
Notes
  • Be the first to comment

  • Be the first to like this

No Downloads
Views
Total Views
1,944
On Slideshare
0
From Embeds
0
Number of Embeds
0
Actions
Shares
0
Downloads
3
Comments
0
Likes
0
Embeds 0
No embeds

Report content
Flagged as inappropriate Flag as inappropriate
Flag as inappropriate

Select your reason for flagging this presentation as inappropriate.

Cancel
No notes for slide

Transcript

  1. Citi Basic Materials Conference December 2013 Wayne Brownlee Executive VP & CFO PotashCorp.com
  2. Forward-looking Statements This presentation contains forward-looking statements or forward-looking information (forward-looking statements). These statements can be identified by expressions of belief, expectation or intention, as well as those statements that are not historical fact. These statements are based on certain factors and assumptions including with respect to: foreign exchange rates, expected growth, results of operations, performance, business prospects and opportunities and effective tax rates. While the company considers these factors and assumptions to be reasonable based on information currently available, they may prove to be incorrect. Forward-looking statements are subject to risks and uncertainties that are difficult to predict. The results or events set forth in forward-looking statements may differ materially from actual results or events. Several factors could cause actual results or events to differ materially from those expressed in the forward-looking statements, including, but not limited to the following: variations from our assumptions with respect to foreign exchange rates, expected growth, results of operations, performance, business prospects and opportunities, and effective tax rates; fluctuations in supply and demand in the fertilizer, sulfur, transportation and petrochemical markets; costs and availability of transportation and distribution for our raw materials and products, including railcars and ocean freight; changes in competitive pressures, including pricing pressures; adverse or uncertain economic conditions and changes in credit and financial markets; the results of sales contract negotiations within major markets; economic and political uncertainty around the world; timing and impact of capital expenditures; risks associated with natural gas and other hedging activities; changes in capital markets; unexpected or adverse weather conditions; changes in currency and exchange rates; unexpected geological or environmental conditions, including water inflows; imprecision in reserve estimates; adverse developments in new and pending legal proceedings or government investigations; acquisitions we may undertake; strikes or other forms of work stoppage or slowdowns; rates of return on and the risks associated with our investments; changes in, and the effects of, government policies and regulations; security risks related to our information technology systems; and earnings and the decisions of taxing authorities, which could affect our effective tax rates. Additional risks and uncertainties can be found in our Form 10-K for the fiscal year ended December 31, 2012 under the captions “ForwardLooking Statements” and “Item 1A – Risk Factors” and in our other filings with the US Securities and Exchange Commission and the Canadian provincial securities commissions. Forward-looking statements are given only as at the date of this presentation and the company disclaims any obligation to update or revise the forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law. Slide#2
  3. PotashCorp Overview World’s largest fertilizer producer by capacity; #1 in potash, #3 in nitrogen and phosphate. Canadian potash operations and strategic investments position us to benefit from growth markets. Global leader in potash; nutrient with highest margins and significant barriers to entry. Focused world-class nitrogen and phosphate businesses help provide earnings stability. Slide#3
  4. PotashCorp Highlights • Strong cash flow • Cash flow from operating activities of $3.2B in 2012 • Nine-month cash flow from operating activities in 2013 of $2.6B • Well positioned potash business • Low-cost supplier to key markets • Potential to significantly grow sales volume and further reduce per-tonne operating costs • By year end expect to be nearly 95 percent complete CDN $8.3B potash expansion program • Significantly lower per-tonne expansion cost relative to many competitor projects • Strong balance sheet affords good flexibility • Low leverage relative to historical levels (Net debt to EBITDA) • Access to $3.5B liquidity (commercial paper/credit facility) at low borrowing rates • Proven track record of returning capital to shareholders • Dividend increase of 950 percent since January 2011 • Executing share repurchase program (authorization to repurchase up to 5 percent of o/s) Slide#4
  5. Potash – Near-term Outlook
  6. World Potash Shipments and Consumption Estimated Consumption Exceeded Shipments in 2012 and 2013 Significant destocking at customer level (most pronounced in second-half 2013) Million Tonnes KCl Shipments 60 Consumption 55 50 45 40 35 30 25 20 2001 2003 2005 2007 2009 2011 2013F * Forecast per PotashCorp Source: Fertecon, CRU, Industry Publications, IFA, PotashCorp Slide#6
  7. World Potash Demand Expect Second-half Deferral Will Lead to More Robust Demand in 2014 Million Tonnes KCl 60 55-58 MMT 58 56 54 52 50 48 46 44 42 40 2013 China India Other Asia Latin America orth America N Other 2014F* * Forecast per PotashCorp Source: Fertecon, CRU, Industry Publications, PotashCorp Slide#7
  8. North America Potash Shipments Demand Has Strengthened in Fourth Quarter; Anticipated to Continue into 2014 Domestic Producer Shipments* Offshore Imports* Million Tonnes KCl 1.2 2013 Thousand Tonnes KCl 140 5-year average 2013 5-year average 120 1.0 100 0.8 80 0.6 60 0.4 40 0.2 20 0.0 0 Jan Mar May Jul Sep Nov Jan Mar May Jul Sep Nov * Shipments for Nov/Dec based on PotashCorp estimate. Imports for Oct-Dec based on Blue Johnson and PotashCorp estimates. Source: IPNI, TFI, Blue Johnson, PotashCorp Slide#8
  9. Potash Shipments to Key Offshore Markets Demand Has Been Relatively Strong in Markets Outside of India Million Tonnes KCl 35 Latin America Million Tonnes KCl China Other Asia* 7 30 6 25 5 20 4 15 3 10 2 5 1 0 India 0 2008 2009 2010 2011 2012 2013E 2014F** 2008 2009 2010 2011 2012 2013E 2014F** * Excludes India. **Forecast per PotashCorp; represents mid-point of range. Source: Fertecon, Industry publications, PotashCorp Slide#9
  10. Fertilizer Market Update Potash – Enhancing Competitive Position
  11. Enhancing Our Competitive Position Optimizing Potash Production Portfolio; Well Positioned to Meet Anticipated Demand Million Tonnes (KCl) 20 18 • Focus on production at lower cost facilities while simultaneously balancing our customers’ expected product needs • Fully utilize lower-cost operational capability at Rocanville and Allan • Run Lanigan and Cory at reduced levels until market conditions warrant higher rates • Cease production at Penobsquis while accelerating development of lower-cost Picadilly mine; build inventory through first quarter of 2014 to help satisfy near-term customer needs Constructed Capability* Inventory Operational Capability** 16 14 12 10 8 6 4 2 0 2013 2014E 2015E 2016E * Reflects estimated achievable production level based on constructed capacity, assuming operations are fully staffed and ramped up. ** Reflects estimated achievable production level based on current staffing levels and operational readiness. • Expansion spending nearly complete • Finalize construction (nearly 95 percent spent by end of 2013) to support approximately 17 million tonnes; operational capability will be ramped up according to market conditions Source: PotashCorp Slide#11
  12. Enhancing Our Competitive Position Cost Improvement Through Optimization of Production at Lower-Cost Facilities Cash Cost of Production (Estimate) – Potash US$ Per Tonne 120 Annualized Improvement**: ~$15-$20 per tonne 110 100 Annualized Improvement**: ~$20-$30 per tonne 90 80 70 60 50 2013E Cash Cost* 2014E Cash Cost 2016 Cash Cost Target * Based on October 24, 2013 guidance. ** As compared to 2013 levels (not adjusted for inflation); target assumes successful ramp-up of expansions at lower-cost facilities. Source: PotashCorp Slide#12
  13. Enhancing Our Competitive Position PotashCorp’s Strong Competitive Position Expected to Improve Potash Industry Site Cost Profile* (Pre-announcement) Potash Industry Site Cost Profile* (Post-announcement)*** US$ Per Tonne (FOB Mine**) POT (SK) US$ Per Tonne (FOB Mine**) POT (NB) POT (SK) POT (NB) * Site cost includes all cash operating costs, estimated per-tonne sustaining capital expenditures, royalties and taxes. Darker shaded bars represent CRU estimated mine site production costs at actual production levels; lighter shaded bars represent PotashCorp’s estimate of competitors cost range based on company reported data. ** Competitive position dependent on end-market destination. *** Post announcement includes impact of PotashCorp’s announced changes for 2014 (upper end of range) and 2016 target (lower end of range). Source: CRU, Public Filings, PotashCorp Slide#13
  14. Enhancing Our Competitive Position PotashCorp Retains Operational Flexibility; Greatest Volume Growth Potential Million Tonnes KCl 2013E Production 2014 Operational Capability* 2016F Constructed Capability** PotashCorp PotashCorp’s 2014 operational capability* plus inventory position estimated to be over 10 million tonnes. Other North America*** FSU*** Other*** 0 5 10 15 20 25 * Reflects estimated achievable production level based on current staffing levels and operational readiness. ** Reflects estimated achievable production level based on constructed capacity, assuming operations are fully staffed and ramped up. *** PotashCorp’s estimate of production and constructed capability by region (based on publically available data). Source: Fertecon, CRU, IFA, PotashCorp Slide#14
  15. Enhancing Our Competitive Position Anticipate Global Potash Operating Rate in 2014 Will Approach 90 percent Global Potash Operating Rate* 100 95 90 Estimated Rate Post-Announcement 85 Historical Average (20 year) Estimated Rate Pre-Announcement 80 75 70 65 60 55 50 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014F * Based on percentage of operational capability (estimated annual achievable production level). 2014F based on mid-point of PotashCorp’s demand forecast range of 55-58 MMT. Source: Fertecon, CRU, PotashCorp Slide#15
  16. Phosphate
  17. PotashCorp Phosphate Profile Industrial and Feed Products Provide Flexibility and Enhance Stability in Phosphate Gross Margin Contribution by Product Category PotashCorp Average Realized Sales Price US$/tonne US$ - Millions Fertilizer 800 Feed & Industrial 300 700 2012 YTD* 2013 YTD* 250 600 200 500 400 150 300 100 200 50 100 0 Q3-09 0 Q3-10 Q3-11 Q3-12 Q3-13 Fertilizer Feed & Industrial * Represents first nine months of respective year. Source: PotashCorp Slide#17
  18. Enhancing Our Competitive Position Optimizing P2O5 Production Portfolio; Well Positioned to Meet Customer Needs Production - Million Tonnes (P2O5) 2.5 Aurora White Springs Geismar 2.0 1.5 1.0 0.5 • Focus on improving efficiency and utilizing product mix flexibility to maximize gross margin • Close Suwannee River chemical plant – one of two plants at White Springs • Net reduction of P2O5 (after offset from higher operating rates at Aurora) is ~215,000 tonnes; no expected impact to customers given ability to flex production of end products • Reduce workforce levels at Aurora to improve efficiency 0.0 2013E 2014E 2015E Source: PotashCorp Slide#18
  19. Enhancing Our Competitive Position Optimizing Production Profile and Product Mix Gross Margin Improvement (Estimate) – Phosphate US$ Per P205 Tonne 20 Annualized Estimated Improvement: $10-$15 per tonne 15 10 5 0 2015E* Gross Margin Improvement * As compared to 2013 levels (not adjusted for inflation) Source: PotashCorp Slide#19
  20. Nitrogen
  21. PotashCorp Nitrogen Profile Portfolio of Products Provides Less Exposure to More Volatile Urea Market Year-over-Year* Realized Price Change 2013 YTD* Nitrogen Product Mix (Sales Volume) Percentage Change Ammonia Urea Solutions/NA/AN 10% 5% 35% 0% Ammonia 46% Solutions/NA/AN Urea -5% -10% -15% 19% -20% * Represents first nine months of respective year. Source: PotashCorp, Green Markets Slide#21
  22. PotashCorp Nitrogen Profile New Ammonia Capacity Adds Margin Growth Potential Ammonia Capacity* Highlights Million Tonnes 4.5 Trinidad Augusta Lima Geismar 4.0 3.5 3.0 • Geismar Expansion: New capacity brought on-stream in early 2013, expected to add approximately ~$100M of incremental gross margin in 2013 • Lima Expansion: 2.5 $190 million expansion anticipated to add additional ammonia (+88K st/year) and urea capacity (+80K st/year) by late 2015. New capacity at Lima also anticipated to help grow higher-margin DEF sales potential and supply lower cost ammonia to Aurora 2.0 1.5 1.0 0.5 0.0 2012 2013F 2015 * All estimated capacity amounts as at beginning of year. Source: PotashCorp Slide#22
  23. Nitrogen Gross Margin by Country US Facilities Benefitting From Low Gas Cost; Trinidad Relative Position Improving Gas Cost – US$ Per MMBtu 8 Trinidad Gas* Gross Margin – US$ Millions** 900 US Gas Trinidad US 800 7 700 6 600 5 500 4 400 3 300 2 200 1 100 0 0 Q3-10 Q3-11 Q3-12 Q3-13 2010 2011 2012 2013 * Estimate based on Tampa ammonia priced divided by 100. Actual price based on specific contract, which may vary slightly. ** Represents first nine months of respective year. Source: PotashCorp, Bloomberg Slide#23
  24. Creating Shareholder Value
  25. Financial Impact: Workforce and Operational Changes Anticipate One-time Cash Charge in Fourth-Quarter 2013 Estimated One-time Cash Charge* US$ - Millions 100 Total One-time Cost Estimate*: ~$70M 80 60 40 20 0 Potash Phosphate Nitrogen * Charges expected to be recorded in fourth-quarter 2013; currently reviewing the carrying value of our affected assets and a writedown, if required, will be incorporated into our fourth quarter results Source: PotashCorp Slide#25
  26. PotashCorp’s Opportunity Strong Cash Flow + Reduced Capital Spending = Greater Financial Flexibility PotashCorp Capital Spending** Annual Cash Provided by Operating Activities* US$ Millions US$ Millions 4,000 3,500 Cash Provided by Operating Activities Capital Spending 4,000 3,500 3,000 3,000 2,500 2,500 2,000 2,000 1,500 1,500 1,000 1,000 500 500 0 0 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 * As we adopted International Financial Reporting Standards (IFRS) with effect from January 1, 2010; 2003 to 2009 information is presented on a previous Canadian Generally Accepted Accounting Principals (GAAP) basis. Accordingly, information for 2003 to 2009 may not be comparable to 2010, 2011 and 2012. 2006 2007 2008 2009 2010 2011 2012 2013F 2014F 2015F ** Excluding capitalized interest and major repairs and maintenance. Source: PotashCorp Slide#26
  27. PotashCorp’s Opportunity Utilizing Strong Cash Flow to Enhance Long-term Shareholder Returns Dividend* per Share – US$ Percent Yield $0.40 $0.35 $0.35 5% 4.5% $0.30 $0.25 4% $0.20 3.4% $0.15 3% $0.10 $0.05 $0.03 2.1% $0.00 Q4-10** Q3-11 Q2-12 Q1-13 1.9% 2% * Dividends declared each quarter ** $0.10 per share dividend adjusted for 3 for 1 stock split; rounded to nearest cent. 1% 5 Percent Share Repurchase Program Announced July 24, 2013 (up to $2 billion through August 1, 2014) 0.0% 0% POT AGU MOS CF IPI As at November 28, 2013. Source: PotashCorp Slide#27
  28. Thank you There’s more online: PotashCorp.com Visit us online Facebook.com/PotashCorp Find us on Facebook Twitter.com/PotashCorp Follow us on Twitter
  29. Looking For More Industry and Company Information? Try Our Overview Site: www.potashcorp.com/overview Explore our Key Markets… Find Data on Key Crops… Learn about our Company

×