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PotashCorp: an investor's guide to the fertilizer giant

PotashCorp: an investor's guide to the fertilizer giant (Part 1 of 9)

PotashCorp: An investor’s guide to the fertilizer giant

PotashCorp

PotashCorp (POT) is one of the largest fertilizer producers in the world. PotashCorp produces and sells potash, nitrogen, and phosphate—all three types of fertilizers on the market. Since its peak in February 2011, PotashCorp’s share price has declined by over 40%, mainly due to industry-related events. As of March 21, 2014, PotashCorp is trading at a market cap of $29.2 billion. Recently, the company released its 4Q2013 earnings, missing EPS (earnings per share) estimates of $0.32 by $0.01.

In 2013, PotashCorp sold 8.1 million tonnes of potash, 3.7 million tonnes of phosphate, and 5.8 million tonnes of nitrogen. It’s the largest potash producer worldwide by capacity, with 19% of global capacity. To a lesser extent, the company’s phosphate and nitrogen segments are considerably large as well, representing 4% and 2% of global capacity, respectively.

World Fertilizer Production Capacity 2013Enlarge Graph

Except for a nitrogen fertilizer production facility in Trinidad, PotashCorp operates exclusively in Canada and the U.S. However, it has significant investments in other fertilizer producers located in Chile, the Middle East, and China.

In 2013, most potash sales, 61%, came from offshore, while the remaining 39% were completed in North America. On the other hand, only 15% and 33% of nitrogen and phosphate sales, respectively, came from offshore locations, which mostly consisted of Latin America and Asia.

In the potash market, PotashCorp’s main peers include Intrepid Potash (IPI), Mosaic (MOS), and Agrium (AGU) in North America, and Uralkali, Sociedad Quimica y Minera (SQM), Israel Chemicals, K+S, and the Arab Potash Company. In the phosphate market, the main participants include potash producers Mosaic (MOS) and Agrium (AGU), as well as CF Industries (CF). Finally, CF Industries (CF), Agrium (AGU), along with Yara in Europe and Indian producer National Fertilizers, are the main competitors in the nitrogen industry. Note that the company also makes up 6.7% of the Market Vectors Agribusiness ETF (MOO).

Note: The World Production Capacity 2013 graph was changed due to incorrect data (April 5th, 2014).

The Realist Discussions

  • Raphael

    CF has ten thousand tons of nitrogen capacity?
    Try 14.5 million.

  • Hansen Harlley

    Potash Corporation is the world’s largest producer of potash, nitrogen and phosphate fertilizers, and controls nearly 20% of the global supply of potash.

    • mikewatson021

      Potash Corporation earns a bulk of its revenues (42%) through the sales of potash, while phosphates account for 30% of its sales, and sales of nitrogenous fertilizers generate 28% of the company’s topline.