The following is an excerpt from the Canaccord Genuity Morning Coffee report.
On Tuesday, Urakali, the world’s largest potash producer, reported its first half 013 results. The company exported 3.3 million tons of potash, down 20% year-over-year. Export prices were down 17% to $316 per tonne from $380 per tonne last year.
Total revenues were down 29%. EBITDA (earnings before interest, tax, depreciation and amortization) dropped 40% from US$1.45 billion to $876 million.
EBITDA margin dropped nine points to 65%.
Comments from Uralkali chief of sales and marketing Oleg Petrov have helped steady potash equities globally. Petrov said, “A potash-price decline below $300 a ton is not likely, if it happens it would only be for a short time.’’
In an interview in August,
Potash Corp. of Saskatchewan Inc. (
TSX: T.POT,
Stock Forum) CEO Bill Doyle offered up a great quote on the elasticity of potash demand, “[P]otash is not like shoes. If you cut the price in half, people don’t buy two pairs. You know, if you cut the price of potash in half, farmers are not going to take twice as much. They only need so much. It’s a scientific, agronomic driven business.
It’s farmers are – they don’t want to spend one nickel more than they have to. And so you don’t have a half-price sale where they use twice as much. They just don’t do that. So I think you have to understand that as well, and so I hear people talk about elasticity of demand. It is not based on price. It’s not cut the price in half and use twice as much.
“It’s not the shoe business.’’
Potash Corp. of Saskatchewan Inc. (
TSX: T.POT,
Stock Forum), the market leader, was down 0.85% to $32.70 Thursday, leaving a market cap of $28.4 billion, based on 867.7 million shares outstanding. The 52-week range is $45.13 and $29.67.
U.S company
Mosiac Co. (
NYSE: MOS,
Stock Forum) was down 0.85% to $44.55, leaving a market cap of $18.9 billion, based on 425.9 million shares outstanding. The 52-week range is $64.65 and $39.75.
Agrium Inc. (
TSX: T.AGU,
Stock Forum) was up 0.31% to $91.23, leaving a market cap of $13.5 billion, based on 147.6 million shares outstanding. The 52-week range is $116.38 and $83.46.
Karnalyte Resources Inc. (
TSX: T.KRN,
Stock Forum) saw its stock price drop nearly 3.7% to $2.06 Thursday, leaving the company with a market cap of $56.6 million, based on 27.5 million shares outstanding. The 52-week range is $9.65 and $1.85.
Passport Potash Inc. (
TSX: V.PPI,
Stock Forum) rose 5% to 10 cents, leaving a market cap of $18.4 million, based on 183.6 million shares outstanding. The 52-week range is 26 cents and 9.5 cents.
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