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What Lifted PotashCorp’s 1Q17 Earnings in 1Q17?

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PotashCorp sales

In the preceding part of this series, we discussed how Potash Corporation of Saskatchewan’s (POT) EPS (earnings per share) during the 1Q17 quarter almost doubled on a YoY (year-over-year) basis. However, PotashCorp’s sales performance gives a different picture. Overall, sales for the company fell ~8% YoY to $1.1 billion from $1.2 billion in 1Q16.

Segment sales

PotashCorp earns about one-third of its sales from its three NPK (nitrogen, phosphorous, and potassium) segments equally. The Potash segment’s sales in 1Q17 grew 13% YoY to $365 million from $322 million in 1Q16.

By comparison, the Nitrogen segment’s sales fell ~11% YoY to $365 million from $412 million in 1Q16. Later in this series, we’ll dig deeper into the reasons for the sales performance of nitrogen products and other fertilizers, which will help us align our expectations for companies (SOIL) like CF Industries (CF), Intrepid Potash (IPI), and Agrium (AGU), which have yet to report their earnings.

The Phosphate segment’s sales were hit the most, declining by as much as 25% YoY to $271 million from $359 million in 1Q17. While the Potash segment had meaningful gains, it was not enough to offset the sales declines from the Nitrogen and Phosphate segments.

Sales drivers

Shipment volumes and realized prices are two key drivers of sales. We’ll discuss shipments and realized prices for each of the above segments in details. But first, let’s take a closer look at the Potash segment’s shipment performance.

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