PotashCorp Reports Record First-Quarter Earnings on Stronger Prices and Volumes

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    Symbol: POT
    Listed: TSX, NYSE
    >>

SASKATOON, April 28 /CNW/ - Potash Corporation of Saskatchewan Inc. (PotashCorp) today reported record first-quarter earnings of $0.84 per share(1) ($732 million), 71 percent above the $0.49 per share ($444 million) earned in the same period last year. Strong demand and improved prices for all three nutrients resulted in record first-quarter gross margin of $1.1 billion, significantly above the $729 million earned in last year's first quarter. Earnings before finance costs, income taxes and depreciation and amortization (EBITDA)(2) of $1.1 billion and cash flow prior to working capital changes(2) of $899 million substantially exceeded the first-quarter 2010 totals of $776 million and $633 million, respectively.

Fueled by strong fertilizer market conditions, our strategic offshore investments in Arab Potash Company Ltd. (APC) in Jordan and Sociedad Quimica y Minera de Chile S.A. (SQM) in Chile added $51 million to operating income in the quarter, nearly double the $26 million contribution for the same period last year. The market value of our investments in these publicly traded companies, together with our positions in Israel Chemicals Ltd. (ICL) in Israel and Sinofert Holdings Limited (Sinofert) in China, was $10.3 billion as of market close on April 27, 2011, equating to approximately $12 per PotashCorp share.

"Tight global grain inventories, strong crop returns and the need to address nutrient deficiencies are powerful motivators for the world's farmers, and the impact was evident in our record first-quarter results," said PotashCorp President and Chief Executive Officer Bill Doyle. "Robust demand for all three nutrients demonstrated a global push to improve crop yields and reflected the importance of fertilizer to food production. This is especially true of potash and, as higher prices for our core nutrient continued to take hold, we began to demonstrate the earnings potential of our company."

Market Conditions

Prices for many key crop commodities increased during the quarter, fueled by declining inventories and growing concern that farmers will be challenged to keep pace with rising demand. However, higher prices did little to temper demand for crops used for food, fiber, fuel and animal feed which kept global grain inventories at extremely low levels.

Global potash demand approached record territory during the quarter as all major potash-consuming markets actively moved to fill immediate needs. Strong demand - particularly from Latin America and Asian countries outside of China and India - helped raise offshore shipments from North American producers to a record 3.0 million tonnes, surpassing the previous mark achieved in the second quarter of 2007 and 28 percent above the first quarter of 2010. Domestic shipments from North American producers remained robust at 2.4 million tonnes in the first quarter, even on the heels of strong demand in fourth-quarter 2010. Although the first-quarter total was below the 3.0 million tonnes shipped in the same period last year - when dealers first began to address the limited movement of 2009 - it reflected continued demand strength in North America. Rising global demand reportedly left many potash producers sold out for the second quarter, even with India's contracted shipments completed at the end of March. With global supply capabilities being tested and North American producer inventory levels falling well below the previous five-year average, realized and announced prices moved higher in nearly all markets.

Solid phosphate fertilizer markets were supported by strong domestic demand ahead of the key planting season, with first-quarter shipments from US producers to North American customers increasing 13 percent from the same period last year. Offshore shipments declined 17 percent as customers slowed their purchasing ahead of the settlement of new supply contracts with India, the world's largest phosphate importer. The continuation of strong demand - along with rising costs for key inputs (including phosphate rock, sulfur and ammonia) and production curtailments in North Africa due to political unrest - pushed prices significantly higher compared to first-quarter 2010.

In nitrogen, healthy demand for ammonia continued, with US domestic shipments at similar levels to the first quarter of 2010. With strong global agricultural demand, improved industrial demand and higher natural gas prices in key European producing regions, including the Ukraine, prices for all nitrogen products rose significantly. Urea experienced some softness on rising supply availability, but demand and pricing began to firm by the end of the quarter. Competitive US gas prices continue to support healthy margins for domestic producers.

Potash

Higher prices and sales volumes elevated potash gross margin to a first-quarter record of $743 million, 40 percent above the previous quarterly record of $530 million generated in the same period last year.

Strong demand resulted in record first-quarter sales volumes of 2.8 million tonnes - the second-highest quarterly total in our history and 13 percent above the 2.5 million tonnes sold in the same period last year. Offshore volumes rose 42 percent to 1.7 million tonnes on the strength of record sales by Canpotex Limited (Canpotex), the offshore marketing company for Saskatchewan potash producers. Key spot markets purchased aggressively, with the majority of Canpotex shipments sent to Latin America (27 percent) and Asian countries other than China and India (45 percent), while China (16 percent) began purchasing on a six-month pricing agreement and India (7 percent) completed shipments under its previous annual contract. North American sales volumes of 1.1 million tonnes represented our third-highest quarterly total, trailing the record first quarter of 2010 when the depleted supply chain absorbed 1.3 million tonnes.

Our first-quarter average realized price of $366 per tonne was $45 per tonne higher than in the same period last year, as realizations began to reflect the shipment of tonnage booked at higher prices. By the end of the quarter, North American realized prices included both the September and October 2010 price increases, while offshore spot-market realizations reflected previously announced increases.

Strong sales pulled inventories down significantly despite near-record quarterly production, as our potash facilities operated near their full capabilities during the quarter with no shutdown weeks, compared to the 13 weeks taken in the first quarter of 2010. Higher operating rates had a favorable impact on our per-tonne cost of goods sold, but the benefits were partially offset by the translation of Canadian-dollar production costs to a weaker US dollar and higher depreciation expense.

Phosphate

Robust agricultural fundamentals helped push up prices for all phosphate products and raised gross margin for the first quarter of 2011 to $150 million, more than double the $64 million earned in the same period last year. Liquid and solid fertilizers generated $50 million and $48 million in gross margin, respectively, while industrial ($26 million) and feed phosphate ($22 million) products also made significant contributions.

Total phosphate sales volumes of 0.9 million tonnes were relatively flat on a quarter-over-quarter basis. Sales of liquid fertilizer products increased 41 percent over the same period last year as we allocated more production to capitalize on the higher-margin opportunity in this product line. This limited sales of solid, feed and industrial products for the quarter.

Our average realized phosphate price climbed to $559 per tonne, up 33 percent over the first quarter of 2010. The largest price increases were evident in liquid and solid fertilizers, which rose 49 percent and 44 percent, respectively, from last year's first quarter on strong agricultural fundamentals and higher production costs. Prices for feed products - up 23 percent from first-quarter 2010 - increased less rapidly than fertilizer prices as a result of challenging livestock feed economics, while industrial prices rose 21 percent, as these products include certain longer-term contracts that lag current market conditions.

Although higher operating levels had a favorable impact on our per-tonne fixed costs for phosphate products compared to the same period last year, this was more than offset by significantly higher sulfur and ammonia input costs.

Nitrogen

Supported by a strong pricing environment, our nitrogen gross margin climbed to a first-quarter record of $203 million. This was 50 percent higher than the $135 million generated in the same quarter of 2010 and represented the third-highest quarterly total in company history. Our Trinidad operation contributed $118 million in gross margin, while our US operations delivered $85 million.

First-quarter nitrogen sales volumes totaled 1.3 million tonnes, relatively flat compared to the same quarter last year. Ammonia sales rose 20 percent as a greater percentage of our production was allocated to this higher-margin product to meet strong industrial and agricultural demand, limiting production of downstream products.

Our first-quarter average realized nitrogen price was $368 per tonne, 32 percent higher than in the same period of 2010. Ammonia prices rose 38 percent, while urea was up 19 percent and other nitrogen products 26 percent.

The total average natural gas cost for first-quarter 2011, including our hedge position, was $5.84 per MMBtu, an increase of 19 percent over the same period last year. The majority of the increase was the result of higher Trinidad gas costs, which are primarily indexed to the Tampa ammonia price and reflected the sharp rise in this benchmark.

Financial

Our quarterly results are now being prepared based on International Financial Reporting Standards (IFRS). The new policies have been consistently applied to all of the periods presented in this news release and all prior period information has been restated or reclassified for comparative purposes unless otherwise noted. Further details on the transition to IFRS are provided in the notes to our unaudited interim condensed consolidated financial statements as well as in our Annual Report on Form 10-K for the year ended December 31, 2010.

Following the three-for-one stock split announcement in January 2011, our common shares began trading on a post-split basis on the Toronto and New York stock exchanges in February.

Higher earnings raised first-quarter income tax expense to $243 million, up from $191 million in the same quarter of 2010. Selling and administrative expenses for the quarter increased year-over-year, from $60 million to $75 million, primarily due to higher compensation expense accruals driven by a higher common share price.

Potash expansion projects at our Allan, Cory, Rocanville and New Brunswick facilities continued throughout the first quarter, and accounted for the majority of our $441 million in capital expenditures on property, plant and equipment.

Outlook

With rising demand putting pressure on global supplies of a wide range of crop commodities, we believe the need for high-yield agriculture around the world has never been greater. Higher crop prices reflect tight supply/demand fundamentals, providing farmers with significant economic opportunities and motivating them to improve soil fertility to maximize production. We believe this is a global opportunity that holds true for corn farmers in the US, produce growers in China, soybean producers in Brazil, and others.

While record or near-record prices for many crops - including $7-per-bushel corn and $14-per-bushel soybeans - are creating headlines, farmers are recognizing a business opportunity that extends beyond short-term price movements. Even at crop prices well below current levels, farmers see the opportunity to generate a significant return on their investment. This is shifting their emphasis towards maximizing yields to capitalize on the economic opportunity - and that is best achieved by improving fertilization application practices to replenish nutrients in the soil and protect its fertility for future crops. We believe that the growth in demand for food and fertilizers is supportive for our business in the current environment, and are confident that these powerful trends will lead to even greater opportunities in the years ahead, especially in potash.

Rising demand from fertilizer buyers around the world is putting pressure on the global potash industry's supply capabilities and creating an environment of rising prices. These conditions continue to provide a powerful earnings opportunity for PotashCorp because of our unmatched ability to expand our operational capability and increase production over the next five years to meet this growing demand. Since 2003 and continuing through the darkest days of the global recession, we have been investing in new operational capability to prepare for the situation that we believe is unfolding.

We recently completed construction of the first portion of a two-phase expansion at our Cory facility and are ramping up its new production. We expect to complete major projects at New Brunswick and Allan in 2012 and at Rocanville, our largest project, by 2014, with new production from all our expansion projects ramped up by 2015. Cumulatively, these projects are expected to raise our operational capability to an estimated 17.1 million tonnes annually, an increase of more than 50 percent from 2011 levels. Our additional tonnes represent the largest percentage of new potash capacity expected to become available worldwide over the next several years, and, we believe, will be well timed to meet the rise in global demand.

The fundamental demand drivers that supported our decision to invest in our potash expansion program continue today. We believe the rising need for potash is not a product of short-term surges or inventory restocking following the deferrals of 2009, but a response to the increasing crop nutrient requirements necessary to feed a growing world. Based on current conditions, we continue to anticipate 2011 global potash demand of 55-60 million tonnes.

In North America, strong spring demand has PotashCorp fully committed through the end of May, with sales at $515 per short ton (FOB) to Midwest warehouses - a price that has yet to reflect the $45 per short ton increase announced in February. Despite adverse weather impacting the early progress of spring plantings and large volumes shipped during the past two quarters, we anticipate that high application rates will support robust second-quarter demand. We expect supportive crop economics will also lead to strong second-half demand.

Potash demand in Latin America is projected to reach a record of approximately 10 million tonnes due to strong crop economics and limited distributor inventory entering the year. Second-quarter shipments are likely to be at more seasonal levels as distributors work to move record first-quarter shipments to customers, and are expected to reflect a recently realized increase in the Canpotex delivered price to Brazil to $520 per tonne.

Rising demand from growers in Asian countries outside of China and India - many striving to address the significant potash requirements of crops such as oil palm and sugarcane to capitalize on attractive economics - is expected to account for the largest share of Canpotex sales in the second quarter. Demand in this region is now forecast to reach 7.3 million tonnes in 2011, supporting higher prices - including a $50 per tonne increase on new business announced by Canpotex in April.

China, which now purchases through six-month contracts, is expected to receive shipments under first-half agreements, although continued pressure on its domestic food supply and reduced potash inventories are expected to support higher second-half volume commitments. We anticipate 2011 potash (KCl) consumption could approach 11 million tonnes, including imports of approximately 7 million tonnes.

With strong demand in all other markets, Canpotex is expected to have limited product available to ship to India in the second quarter, even if new supply contracts are settled. With low inventory levels and significant agronomic need, we believe India's requirements remain high. We anticipate strong pressure from fertilizer distributors and farmers to ensure potash is available for their coming planting season.

Given global conditions, we now estimate our 2011 potash segment gross margin will be between $2.7 billion and $2.9 billion and total shipments within the range of 9.6-10.0 million tonnes.

In phosphate, the recent settlement of key supply contracts with India is expected to support healthy export demand through 2011. With strong agricultural demand and higher phosphate rock and phosphoric acid prices, markets for processed phosphate products are likely to remain strong throughout 2011, although rising ammonia and sulfur prices may limit upside margin potential. Sales volumes and prices for nitrogen products should also remain relatively strong, based on continuing agricultural strength and improved industrial demand. We forecast combined 2011 gross margin for our phosphate and nitrogen segments to be in the range of $1.1 billion to $1.3 billion.

We now estimate selling and administration expenses will be slightly higher than 2010 levels and finance costs for 2011 to approximate $150-$160 million.

PotashCorp expects second-quarter net income to be in the range of $0.70 to $0.90 per share, with full-year earnings in the range of $3.00 to $3.40 per share.

Conclusion

"By operating with a long-term view, we have positioned our company to capitalize on the opportunities that are unfolding today," said Doyle. "As global food producers tackle the challenge of feeding a growing population, PotashCorp is prepared to play an important role in meeting the rising demand for fertilizer, especially potash. We look forward to meeting the increasing needs of our customers and creating new opportunities to deliver long-term growth for our investors."

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    Notes
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    1.  All references to per-share amounts pertain to diluted net income per
        share.
    2.  See reconciliation and description of non-IFRS financial measures in
        the attached section titled "Selected Non-IFRS Financial Measures and
        Reconciliations."
    >>

Potash Corporation of Saskatchewan Inc. is the world's largest fertilizer enterprise by capacity producing the three primary plant nutrients and a leading supplier to three distinct market categories: agriculture, with the largest capacity in the world in potash, third largest in each of nitrogen and phosphate; animal nutrition, with the world's largest capacity in phosphate feed ingredients; and industrial chemicals, as the largest global producer of industrial nitrogen products and the world's largest capacity for production of purified industrial phosphoric acid. PotashCorp's common shares are listed on the Toronto Stock Exchange and the New York Stock Exchange.

This release contains forward-looking statements or forward-looking information (forward-looking statements). 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. Several factors could cause actual results to differ materially from those expressed in the forward-looking statements, including, but not limited to: fluctuations in supply and demand in fertilizer, sulfur, transportation and petrochemical markets; changes in competitive pressures, including pricing pressures; the recent global financial crisis and conditions and changes in credit markets; the results of sales contract negotiations with major markets; timing and amount of capital expenditures; risks associated with natural gas and other hedging activities; changes in capital markets and corresponding effects on the company's investments; changes in currency and exchange rates; unexpected geological or environmental conditions, including water inflow; strikes and other forms of work stoppage or slowdowns; changes in, and the effects of, government policies and regulations; and earnings, exchange rates and the decisions of taxing authorities, all of 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, 2010 under the captions "Forward-Looking Statements" and "Item 1A - Risk Factors" and in our other filings with the US Securities and Exchange Commission and Canadian provincial securities commissions. Forward-looking statements are given only as at the date of this release 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.

PotashCorp will host a Conference Call on Thursday, April 28, 2011 at 1:00 pm Eastern Time.

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    Telephone Conference:
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    Dial-in numbers:
      - From Canada and the US: 1-877-881-1303
      - From Elsewhere: 1-412-902-6510

    Live Webcast:
    -------------
    Visit www.potashcorp.com
      - Webcast participants can submit questions to management online from
        their audio player pop-up window.
    >>
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                   Potash Corporation of Saskatchewan Inc.
           Condensed Consolidated Statements of Financial Position
               (in millions of US dollars except share amounts)
                                 (unaudited)

                                                    March 31,   December 31,
                                                       2011          2010
    -------------------------------------------------------------------------

    Assets
     Current assets
      Cash and cash equivalents                    $       473   $       412
      Receivables                                        1,256         1,059
      Inventories                                          597           570
      Prepaid expenses and other current assets             55            54
    -------------------------------------------------------------------------
                                                         2,381         2,095

     Non-current assets
      Property, plant and equipment                      8,494         8,141
      Investments in equity-accounted investees          1,100         1,051
      Available-for-sale investments                     3,571         3,842
      Other assets                                         305           303
      Intangible assets                                    114           115
    -------------------------------------------------------------------------
    Total Assets                                   $    15,965   $    15,547
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Liabilities
     Current liabilities
      Short-term debt and current portion of
       long-term debt                              $     1,694   $     1,871
      Payables and accrued charges                       1,261         1,198
      Current portion of derivative instrument
       liabilities                                          61            75
    -------------------------------------------------------------------------
                                                         3,016         3,144
     Non-current liabilities
      Long-term debt                                     3,707         3,707
      Derivative instrument liabilities                    175           204
      Deferred income tax liabilities                      799           737
      Accrued pension and other post-retirement
       benefits                                            474           468
      Asset retirement obligations and accrued
       environmental costs                                 488           455
      Other non-current liabilities and deferred
       credits                                             126           147
    -------------------------------------------------------------------------
    Total Liabilities                                    8,785         8,862
    -------------------------------------------------------------------------

    Shareholders' Equity
     Share capital                                       1,449         1,431
      Unlimited authorization of common shares
      without par value; issued and outstanding
      854,762,383 and 853,122,693 at March 31, 2011
      and December 31, 2010, respectively
     Contributed surplus                                   359           308
     Accumulated other comprehensive income              2,148         2,394
     Retained earnings                                   3,224         2,552
    -------------------------------------------------------------------------
    Total Shareholders' Equity                           7,180         6,685
    -------------------------------------------------------------------------
    Total Liabilities and Shareholders' Equity     $    15,965   $    15,547
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (See Notes to the Condensed Consolidated Financial Statements)



                   Potash Corporation of Saskatchewan Inc.
                 Condensed Consolidated Statements of Income
             (in millions of US dollars except per-share amounts)
                                 (unaudited)

                                                         Three Months Ended
                                                              March 31
                                                          2011          2010
    -------------------------------------------------------------------------

    Sales (Note 2)                                 $     2,204   $     1,714
    Freight, transportation and distribution              (149)         (155)
    Cost of goods sold                                    (959)         (830)
    -------------------------------------------------------------------------
    Gross Margin                                         1,096           729
    Selling and administrative                             (75)          (60)
    Provincial mining and other taxes                      (34)          (23)
    Foreign exchange loss                                   (8)           (8)
    Share of earnings of equity-accounted investees         51            26
    Other (expenses) income                                 (5)            2
    -------------------------------------------------------------------------
    Operating Income                                     1,025           666
    Finance Costs (Note 3)                                 (50)          (31)
    -------------------------------------------------------------------------
    Income Before Income Taxes                             975           635
    Income Taxes (Note 4)                                 (243)         (191)
    -------------------------------------------------------------------------
    Net Income                                     $       732   $       444
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Net Income per Share (Note 5)
      Basic                                        $      0.86   $      0.50
      Diluted                                      $      0.84   $      0.49
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Dividends per Share                            $      0.07   $      0.03
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (See Notes to the Condensed Consolidated Financial Statements)



                   Potash Corporation of Saskatchewan Inc.
          Condensed Consolidated Statements of Comprehensive Income
                         (in millions of US dollars)
                                 (unaudited)

                                                         Three Months Ended
                                                              March 31
    (Net of related income taxes)                         2011          2010
    -------------------------------------------------------------------------

    Net Income                                     $       732   $       444
    -------------------------------------------------------------------------
    Other comprehensive (loss) income
     Net (decrease) increase in unrealized
      gains on available-for-sale investments(1)          (271)          126
     Net gains (losses) on derivatives designated
      as cash flow hedges(2)                                13           (53)
     Reclassification to income of net losses on
      cash flow hedges(3)                                   14             9
     Other                                                  (2)           (1)
    -------------------------------------------------------------------------
    Other Comprehensive (Loss) Income                     (246)           81
    -------------------------------------------------------------------------
    Comprehensive Income                           $       486   $       525
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (1) Available-for-sale investments are comprised of shares in Israel
        Chemicals Ltd. and Sinofert Holdings Limited.
    (2) Cash flow hedges are comprised of natural gas derivative instruments,
        and are net of income taxes of $8 (2010 - $(32)).
    (3) Net of income taxes of $8 (2010 - $6).
    (See Notes to the Condensed Consolidated Financial Statements)



                   Potash Corporation of Saskatchewan Inc.
           Condensed Consolidated Statement of Changes in Equity
                         (in millions of US dollars)
                                 (unaudited)

                                                          Accumulated Other
                                                        Comprehensive Income
                                                      -----------------------
                                                                      Net
                                                                  unrealized
                                                      Unrealized   losses on
                                                       gains on   derivatives
                                                      available-  designated
                                    Share Contributed  for-sale     as cash
                                   Capital  Surplus   investments flow hedges
    -------------------------------------------------------------------------

    Balance - January 1, 2011      $  1,431   $    308   $  2,563   $   (177)
    Net income                            -          -          -          -
    Other comprehensive
     (loss) income                        -          -       (271)        27
    Effect of share-based
     compensation                         -         51          -          -
    Dividends declared                    -          -          -          -
    Issuance of common shares            18          -          -          -
    -------------------------------------------------------------------------
    Balance - March 31, 2011       $  1,449   $    359   $  2,292   $   (150)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

                                     Accumulated Other
                                    Comprehensive Income
                                    ---------------------
                                                 Total
                                              Accumulated
                                                 Other
                                             Comprehensive  Retained   Total
    (continued)                       Other      Income     Earnings  Equity
    -------------------------------------------------------------------------

    Balance - January 1, 2011      $      8   $  2,394   $  2,552   $  6,685
    Net income                            -          -        732        732
    Other comprehensive
     (loss) income                       (2)      (246)         -       (246)
    Effect of share-based
     compensation                         -          -          -         51
    Dividends declared                    -          -        (60)       (60)
    Issuance of common shares             -          -          -         18
    -------------------------------------------------------------------------
    Balance - March 31, 2011       $      6   $  2,148  $   3,224   $  7,180
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (See Notes to the Condensed Consolidated Financial Statements)



                   Potash Corporation of Saskatchewan Inc.
               Condensed Consolidated Statements of Cash Flow
                         (in millions of US dollars)
                                 (unaudited)

                                                         Three Months Ended
                                                              March 31
                                                          2011          2010
    -------------------------------------------------------------------------

    Operating Activities
    Net income                                     $       732   $       444
    -------------------------------------------------------------------------

    Adjustments to reconcile net income to cash
     provided by operating activities
      Depreciation and amortization                        124           110
      Share-based compensation                              14            15
      Excess tax benefit related to share-based
       compensation                                         12             7
      Provision for deferred income tax                     75            58
      Undistributed earnings of equity-accounted
       investees                                           (51)          (26)
      Other                                                 (7)           25
    -------------------------------------------------------------------------
      Subtotal of adjustments                              167           189
    -------------------------------------------------------------------------

      Changes in non-cash operating working capital
      Receivables                                         (213)           94
      Inventories                                          (27)           42
      Prepaid expenses and other current assets              -             6
      Payables and accrued charges                          31            36
    -------------------------------------------------------------------------
      Subtotal of changes in non-cash operating
       working capital                                    (209)          178
    -------------------------------------------------------------------------
    Cash provided by operating activities                  690           811
    -------------------------------------------------------------------------

    Investing Activities
    Additions to property, plant and equipment            (441)         (457)
    Purchase of long-term investments                        -          (422)
    Other assets and intangible assets                       -           (34)
    -------------------------------------------------------------------------
    Cash used in investing activities                     (441)         (913)
    -------------------------------------------------------------------------
    Cash before financing activities                       249          (102)
    -------------------------------------------------------------------------

    Financing Activities
    Proceeds from long-term debt obligations                 -           400
    Repayment of long-term debt obligations                  -          (150)
    Repayments of short-term debt obligations             (253)         (215)
    Dividends                                              (28)          (29)
    Issuance of common shares                               18            10
    -------------------------------------------------------------------------
    Cash (used in) provided by financing activities       (263)           16
    -------------------------------------------------------------------------
    Decrease in Cash Position                              (14)          (86)
    Cash Position, Beginning of Period                     412           385
    -------------------------------------------------------------------------
    Cash Position, End of Period                   $       398   $       299
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Cash position comprised of:
      Cash                                         $        82   $        51
      Short-term investments                               391           248
    -------------------------------------------------------------------------
      Cash and cash equivalents                            473           299
      Bank overdraft (included in short-term debt)         (75)            -
    -------------------------------------------------------------------------
                                                   $       398   $       299
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Supplemental cash flow disclosure
      Interest paid                                $        41   $        42
      Income taxes paid                            $       175   $        22
    -------------------------------------------------------------------------
    (See Notes to the Condensed Consolidated Financial Statements)



                   Potash Corporation of Saskatchewan Inc.
           Notes to the Condensed Consolidated Financial Statements
                  For the Three Months Ended March 31, 2011
       (in millions of US dollars except share and per-share amounts)
                                 (unaudited)

    1. Significant Accounting Policies

    With its subsidiaries, Potash Corporation of Saskatchewan Inc. ("PCS") -
    together known as "PotashCorp" or "the company" except to the extent the
    context otherwise requires - forms an integrated fertilizer and related
    industrial and feed products company.

    The company previously prepared its financial statements in accordance
    with Canadian generally accepted accounting principles ("Canadian GAAP")
    as set out in the Handbook of the Canadian Institute of Chartered
    Accountants ("CICA Handbook"). The company adopted International
    Financial Reporting Standards ("IFRS"), which were incorporated into the
    CICA Handbook, on January 1, 2011 with effect from January 1, 2010.
    Accordingly, these unaudited interim condensed consolidated financial
    statements are based on IFRS, as issued by the International Accounting
    Standards Board ("IASB"). In these unaudited interim condensed
    consolidated financial statements, the term "Canadian GAAP" refers to
    Canadian GAAP before the company's adoption of IFRS.

    These unaudited interim condensed consolidated financial statements
    include the accounts of PCS and its wholly owned subsidiaries; however,
    they do not include all disclosures normally provided in annual
    consolidated financial statements. Further, while the financial figures
    included in this preliminary interim results announcement have been
    computed in accordance with IFRS applicable to interim periods, this
    announcement does not contain sufficient information to constitute an
    interim financial report as that term is defined in International
    Accounting Standard ("IAS") 34, "Interim Financial Reporting". The
    company expects to publish an interim financial report that complies with
    IAS 34, "Interim Financial Reporting", and will include additional
    information under IFRS 1, "First-time Adoption of International Financial
    Reporting Standards", in its Quarterly Report on Form 10-Q in May 2011.

    These unaudited interim condensed consolidated financial statements
    should be read in conjunction with the following sources:

            -  2010 annual consolidated financial statements, for
               additional annual disclosures presented under Canadian GAAP;

            -  2010 annual Management's Discussion and Analysis, for a more
               detailed description of significant differences in the
               company's IFRS and Canadian GAAP policies; and

            -  Note 6 to these unaudited interim condensed consolidated
               financial statements, for the transition impact between
               IFRS and Canadian GAAP.

    In management's opinion, the unaudited interim condensed consolidated
    financial statements include all adjustments (consisting solely of normal
    recurring adjustments) necessary to fairly present such information.
    Interim results are not necessarily indicative of the results expected
    for the fiscal year.

    2. Segment Information

    The company has three reportable operating segments: potash, phosphate
    and nitrogen. These operating segments are differentiated by the chemical
    nutrient contained in the product that each produces. Inter-segment sales
    are made under terms that approximate market value. The accounting
    policies of the segments are the same as those described in Note 1.

                                 Three Months Ended March 31, 2011
    -------------------------------------------------------------------------
                        Potash  Phosphate   Nitrogen  All Others Consolidated
    -------------------------------------------------------------------------
    Sales            $   1,109  $     549  $     546  $       -    $   2,204
    Freight,
     transportation
     and distribution      (83)       (43)       (23)         -         (149)
    Net sales -
     third party         1,026        506        523          -
    Cost of goods
     sold                 (283)      (356)      (320)         -         (959)
    Gross margin           743        150        203          -        1,096
    Depreciation and
     amortization          (42)       (47)       (33)        (2)        (124)
    Inter-segment sales      -          -         38          -            -


                                 Three Months Ended March 31, 2010
    -------------------------------------------------------------------------
                        Potash  Phosphate   Nitrogen  All Others Consolidated
    -------------------------------------------------------------------------
    Sales            $     892  $     401  $     421  $       -    $   1,714
    Freight,
     transportation
     and distribution      (96)       (35)       (24)         -         (155)
    Net sales -
     third party           796        366        397          -
    Cost of goods
     sold                 (266)      (302)      (262)         -         (830)
    Gross margin           530         64        135          -          729
    Depreciation and
     amortization          (30)       (48)       (30)        (2)        (110)
    Inter-segment
     sales                   -          -         26          -            -


                                 Three Months Ended June 30, 2010
    -------------------------------------------------------------------------
                        Potash  Phosphate   Nitrogen  All Others Consolidated
    -------------------------------------------------------------------------
    Sales            $     641 $      364  $     432  $       -    $   1,437
    Freight,
     transportation
     and distribution      (51)       (28)       (20)         -          (99)
    Net sales -
     third party           590        336        412          -
    Cost of goods
     sold                 (179)      (287)      (287)         -         (753)
    Gross margin           411         49        125          -          585
    Depreciation and
     amortization          (29)       (48)       (30)        (2)        (109)
    Inter-segment
     sales                    -         -         28          -            -


                                 Three Months Ended September 30, 2010
    -------------------------------------------------------------------------
                        Potash  Phosphate   Nitrogen  All Others Consolidated
    -------------------------------------------------------------------------
    Sales            $     637  $     536  $     402  $       -    $   1,575
    Freight,
     transportation
     and distribution      (55)       (44)       (20)         -         (119)
    Net sales -
     third party           582        492        382          -
    Cost of goods
     sold                 (243)      (396)      (267)         -         (906)
    Gross margin           339         96        115          -          550
    Depreciation and
     amortization          (28)       (49)       (27)        (2)        (106)
    Inter-segment sales      -          -         28          -            -


                                 Three Months Ended December 31, 2010
    -------------------------------------------------------------------------
                        Potash  Phosphate   Nitrogen  All Others Consolidated
    -------------------------------------------------------------------------
    Sales            $     830  $     521  $     462  $       -    $   1,813
    Freight,
     transportation
     and distribution      (56)       (37)       (22)         -         (115)
    Net sales -
     third party            774       484        440          -
    Cost of goods
     sold                  (238)     (347)      (287)         -         (872)
    Gross margin            536       137        153          -          826
    Depreciation and
     amortization           (38)      (52)       (32)        (2)        (124)
    Inter-segment sales       -         -         38          -            -


    3. Finance Costs

                                                         Three Months Ended
                                                              March 31
                                                           2011         2010
    -------------------------------------------------------------------------
    Interest expense on debt
      Short-term                                    $        (5) $        (1)
      Long-term                                             (64)         (54)
    Unwinding of discount on asset retirement
     obligations                                             (4)          (3)
    Borrowing costs capitalized to property, plant
     and equipment                                           19           18
    Interest income                                           4            9
    -------------------------------------------------------------------------
                                                    $       (50) $       (31)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    4. Income Taxes

    A separate estimated average annual effective tax rate is determined for
    each taxing jurisdiction and applied individually to the interim period
    pre-tax income of each jurisdiction.

    For the three months ended March 31, 2011, the company's income tax
    expense was $243. This compared to an expense of $191 for the same period
    last year. The actual effective tax rate including discrete items for the
    three months ended March 31, 2011 was 25 percent compared to 30 percent
    for the first three months of 2010. Total discrete tax adjustments that
    impacted the rate in the first quarter resulted in an income tax recovery
    of $23 compared to an income tax expense of $11 in the same period last
    year.

    Significant items recorded included the following:

            -  In first-quarter 2011, a current tax recovery of $21 for
               previously paid withholding taxes.

            -  In first-quarter 2010, a current tax expense of $18 to
               adjust the 2009 income tax provision to the income tax
               return filed that quarter.

            -  In first-quarter 2010, a current tax recovery of $10 for an
               anticipated refund of taxes paid related to forward exchange
               contracts.

    5. Net Income Per Share

    Basic net income per share for the quarter is calculated on the weighted
    average shares issued and outstanding for the three months ended March
    31, 2011 of 854,033,000 (2010 - 888,357,000).

    Diluted net income per share is calculated based on the weighted average
    number of shares issued and outstanding during the period. The
    denominator is: (1) increased by the total of the additional common
    shares that would have been issued assuming exercise of all stock options
    with exercise prices at or below the average market price for the period;
    and (2) decreased by the number of shares that the company could have
    repurchased if it had used the assumed proceeds from the exercise of
    stock options to repurchase them on the open market at the average share
    price for the period. For performance-based stock option plans, the
    number of contingently issuable common shares included in the calculation
    is based on the number of shares, if any, that would be issuable if the
    end of the reporting period were the end of the performance period and
    the effect is dilutive. The weighted average number of shares outstanding
    for the diluted net income per share calculation for the three months
    ended March 31, 2011 was 876,467,000 (2010 - 914,112,000).

    6. Transition to IFRS

    The company adopted IFRS on January 1, 2011 with effect from January 1,
    2010. The company's financial statements for the year ending December 31,
    2011 will be the first annual consolidated financial statements that
    comply with IFRS and these unaudited interim condensed consolidated
    financial statements were prepared as described in Note 1.

    Reconciliations from Canadian GAAP to IFRS
    -------------------------------------------

    Reconciliation of Net Income

                                                   Year to Date Period Ended
                                                   December 31,    March 31,
                                                       2010          2010
    -------------------------------------------------------------------------
    Net Income - Canadian GAAP                     $     1,806   $       449
    IFRS adjustments to net income:
     Policy choices
      Employee benefits - Actuarial gains and
       losses                                               26             6
     Other
      Provisions - Changes in asset retirement
       obligations                                         (13)           (1)
      Property, plant and equipment                         34             -
      Borrowing costs                                      (11)           (2)
      Employee benefits - Past service costs                (2)            -
      Impairment of assets                                  (3)            1
      Constructive obligations                              (3)            -
      Share-based payments                                  (2)          (15)
      Manufacturing cost variance at interim
       periods                                               -             9
      Income taxes - Tax effect of above
       differences                                         (10)            -
      Income tax-related differences                       (47)           (3)
    -------------------------------------------------------------------------
    Net Income - IFRS                              $     1,775   $       444
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    Reconciliation of Shareholders' Equity

                                                   December 31,     March 31,
                                                       2010           2010
    -------------------------------------------------------------------------
    Shareholders' Equity - Canadian GAAP           $     6,804   $     6,952
    IFRS adjustments to shareholders' equity:
     Policy choices
      Employee benefits - Actuarial gains and
       losses                                             (375)         (358)
     Other
      Provisions - Changes in asset retirement
       obligations                                         (79)          (67)
      Property, plant and equipment                         52            18
      Investments (Equity investee adoption of
       IFRS earlier than PotashCorp)                       (45)          (45)
      Borrowing costs                                      (25)          (16)
      Employee benefits - Past service costs
       and Canadian GAAP transition amounts                 10            12
      Impairment of assets                                   5             9
      Constructive obligations                              (5)           (2)
      Share-based payments                                   1             1
      Manufacturing cost variance at interim
       periods                                               -             9
      Income taxes - Tax effect of above
       differences                                         154           152
      Income tax-related differences                       188           178
    -------------------------------------------------------------------------
    Shareholders' Equity - IFRS                    $     6,685   $     6,843
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    Adjusted Financial Statements
    -----------------------------

    The following tables show the unaudited adjustments to the company's
    consolidated statements of financial position and consolidated statements
    of income.

    Adjustments to Consolidated Statement of Financial Position - as at
    December 31, 2010

                                IFRS      IFRS
    Canadian GAAP   Canadian   Adjust-  Reclassi-
     Accounts          GAAP     ments   fications   IFRS   IFRS Accounts
    -------------------------------------------------------------------------
    Assets                                                 Assets
    Current assets                                         Current assets
     Cash and cash                                          Cash and cash
      equivalents    $   412   $     -   $      -  $   412   equivalents
     Receivables       1,044        15          -    1,059  Receivables
     Inventories         570         -          -      570  Inventories
     Prepaid expenses                                       Prepaid expenses
      and other current                                      and other
      assets             114       (60)         -       54   current assets
    -------------------------------------------------------------------------
                       2,140       (45)         -    2,095
                                                           Non-current assets
    Property, plant                                         Property, plant
     and equipment     8,063        78          -    8,141   and equipment
    Investments        4,938       (45)    (4,893)       -
                                                            Investments in
                                                             equity-accounted
                           -         -      1,051    1,051   investees
                                                            Available-for-
                           -         -      3,842    3,842   sale investments
    Other assets         363       (60)         -      303  Other assets
    Intangible assets     18         -         97      115  Intangible assets
    Goodwill              97         -        (97)       -
    -------------------------------------------------------------------------
                     $15,619   $   (72)  $      -  $15,547 Total Assets
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Liabilities                                            Liabilities
    Current liabilities                                    Current
                                                            liabilities
     Short-term debt                                         Short-term debt
      and current                                             and current
      portion of                                              portion of
      long-term debt $ 1,871   $     -   $      -  $ 1,871    long-term debt
     Payables and                                            Payables and
      accrued charges  1,246       (48)         -    1,198    accrued charges
     Current portion                                         Current portion
      of derivative                                           of derivative
      instrument                                              instrument
      liabilities         75         -          -       75    liabilities
    -------------------------------------------------------------------------
                       3,192       (48)         -    3,144
                                                           Non-current
                                                            liabilities
    Long-term debt     3,707         -          -    3,707   Long-term debt
    Derivative                                               Derivative
     instrument                                               instrument
     liabilities         204         -          -      204    liabilities
    Future income                                            Deferred income
     tax liabilities   1,078      (341)         -      737    tax liabilities
    Accrued pension                                          Accrued pension
     and other                                                and other post-
     post-retirement                                          retirement
     benefits            299       169          -      468    benefits
    Accrued                                                  Asset retirement
     environmental                                            obligations and
     costs and asset                                          accrued
     retirement                                               environmental
     obligations         330       125          -      455    costs
    Other non-current                                        Other non-
     liabilities                                              current liab-
     and deferred                                             ilities and de-
     credits               5       142          -      147    ferred credits
    -------------------------------------------------------------------------
                       8,815        47          -    8,862 Total Liabilities
    -------------------------------------------------------------------------
    Shareholders'                                          Shareholders'
     Equity                                                 Equity
    Share capital      1,431         -          -    1,431 Share capital
    Contributed                                            Contributed
     surplus             160       148          -      308  surplus
    Accumulated other                                      Accumulated other
     comprehensive                                          comprehensive
     income            2,244       150          -    2,394  income
    Retained earnings  2,969      (417)         -    2,552 Retained earnings
    -------------------------------------------------------------------------
                                                           Total Share-
                       6,804      (119)         -    6,685  holders' Equity
    -------------------------------------------------------------------------
                                                           Total Liabilities
                                                            and Shareholders'
                     $15,619   $   (72)  $      -  $15,547  Equity
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    Adjustments to Consolidated Statement of Income -
    Year Ended December 31, 2010

                                IFRS       IFRS
    Canadian GAAP   Canadian   Adjust-   Reclass-
     Accounts          GAAP     ments  ifications   IFRS    IFRS Accounts
    -------------------------------------------------------------------------

    Sales            $ 6,539   $    -    $     -   $ 6,539  Sales
    Freight                                                 Freight,
                                                             transportation
                        (336)       -       (152)     (488)  and distribution
    Transportation
     and
     distribution       (152)        -       152         -
    Cost of goods                                           Cost of goods
     sold             (3,426)       65         -    (3,361)  sold
    -------------------------------------------------------------------------
    Gross Margin       2,625        65         -     2,690  Gross Margin
    Selling and                                             Selling and
     administrative     (228)        -         -      (228)  administrative
    Provincial mining                                       Provincial mining
     and other taxes     (77)        -         -       (77)  and other taxes
    Foreign                                                 Foreign
     exchange loss       (17)        -         -       (17)  exchange loss
                                                            Share of earnings
                                                             of equity-
                                                             accounted
                           -         -       174       174   investees
                           -         -       163       163  Dividend income
    Other income         245       (16)     (211)       18  Other income
                           -         -      (126)     (126) Other expenses
    -------------------------------------------------------------------------
    Operating Income   2,548        49         -     2,597  Operating Income
    Interest Expense     (99)      (42)        -      (141) Finance Costs
    -------------------------------------------------------------------------
    Income Before                                           Income Before
     Income Taxes      2,449         7         -     2,456   Income Taxes
    Income Taxes        (643)      (38)        -      (681) Income Taxes
    -------------------------------------------------------------------------
    Net Income       $ 1,806   $   (31)  $     -   $ 1,775  Net Income
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Net Income per                                          Net Income per
     Share                                                   Share
      Basic          $  2.04   $ (0.04)  $     -   $  2.00    Basic
      Diluted        $  1.98   $ (0.03)  $     -   $  1.95    Diluted
    -------------------------------------------------------------------------
    Dividends per                                           Dividends per
     Share           $  0.13   $     -   $     -   $  0.13   Share
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    Adjusted Quarterly Statements of Income
    ---------------------------------------

    The following table shows the company's unaudited consolidated statements
    of income on a quarterly basis:

                                                                     Twelve
                                      Three Months Ended             Months
                       -------------------------------------------    Ended
                          March      June     September  December   December
                           31,        30,        30,        31,        31,
                          2010       2010       2010       2010       2010
    -------------------------------------------------------------------------
    Sales               $  1,714   $  1,437   $  1,575   $  1,813   $ 6,539
    Freight,
     transportation and
     distribution           (155)       (99)      (119)      (115)     (488)
    Cost of goods sold      (830)      (753)      (906)      (872)   (3,361)
    -------------------------------------------------------------------------
    Gross Margin             729        585        550        826     2,690
    Selling and
     administrative          (60)       (33)       (71)       (64)     (228)
    Provincial mining
     and other taxes         (23)       (17)       (16)       (21)      (77)
    Foreign exchange
     (loss) gain              (8)        (1)         2        (10)      (17)
    Share of earnings
     of equity-
     accounted investees      26         45         51         52       174
    Dividend income            -        114         25         24       163
    Other income               7          5          1          5        18
    Other expenses            (5)       (19)       (25)       (77)     (126)
    -------------------------------------------------------------------------
    Operating Income         666        679        517        735     2,597
    Finance Costs            (31)       (40)       (28)       (42)     (141)
    -------------------------------------------------------------------------
    Income Before Income
     Taxes                   635        639        489        693     2,456
    Income Taxes            (191)      (159)      (146)      (185)     (681)
    -------------------------------------------------------------------------
    Net Income          $    444   $    480   $    343   $    508   $ 1,775
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Net Income per Share
      Basic             $   0.50   $   0.54   $   0.39   $   0.58   $  2.00
      Diluted           $   0.49   $   0.53   $   0.38   $   0.56   $  1.95
    -------------------------------------------------------------------------
    Dividends per Share $   0.03   $   0.03   $   0.03   $   0.03   $  0.13
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



                   Potash Corporation of Saskatchewan Inc.
                     Selected Operating and Revenue Data
                                 (unaudited)

                                                          Three Months Ended
                                                               March 31
                                                          2011          2010
    -------------------------------------------------------------------------
    Potash Operating Data
    Production (KCl Tonnes - thousands)                  2,592         1,955
    Shutdown weeks(1)                                        -          13.4
    Sales (tonnes - thousands)
      Manufactured Product
        North America                                    1,092         1,266
        Offshore                                         1,696         1,198
    -------------------------------------------------------------------------
      Manufactured Product                               2,788         2,464
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Potash Net Sales
      (US $ millions)
        Sales                                      $     1,109   $       892
        Freight, transportation and distribution           (83)          (96)
    -------------------------------------------------------------------------
        Net Sales                                  $     1,026   $       796
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

      Manufactured Product
        North America                              $       466   $       450
        Offshore                                           555           342
      Other miscellaneous and purchased product              5             4
    -------------------------------------------------------------------------
      Net Sales                                    $     1,026   $       796
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Potash Average Price per MT
        North America                              $       427   $       355
        Offshore                                   $       327   $       285
    -------------------------------------------------------------------------
      Manufactured Product                         $       366   $       321
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (1) Excludes planned routine annual maintenance shutdowns.


                   Potash Corporation of Saskatchewan Inc.
                     Selected Operating and Revenue Data
                                 (unaudited)

                                                          Three Months Ended
                                                               March 31
                                                          2011          2010
    -------------------------------------------------------------------------
    Phosphate Operating Data
    Production (P2O5 Tonnes - thousands)                   532           448
    P2O5 Operating Rate                                    90%           76%
    Sales (tonnes - thousands)
      Manufactured Product
        Fertilizer - Liquid phosphates                     349           248
        Fertilizer - Solid phosphates                      255           293
        Feed                                               135           167
        Industrial                                         154           152
    -------------------------------------------------------------------------
      Manufactured Product                                 893           860
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Phosphate Net Sales
      (US $ millions)
        Sales                                      $       549   $       401
        Freight, transportation and distribution           (43)          (35)
    -------------------------------------------------------------------------
        Net Sales                                  $       506   $       366
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

      Manufactured Product
        Fertilizer - Liquid phosphates             $       170   $        81
        Fertilizer - Solid phosphates                      157           126
        Feed                                                71            71
        Industrial                                         101            82
      Other miscellaneous and purchased product              7             6
    -------------------------------------------------------------------------
      Net Sales                                    $       506   $       366
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Phosphate Average Price per MT
        Fertilizer - Liquid phosphates             $       488   $       328
        Fertilizer - Solid phosphates              $       616   $       428
        Feed                                       $       525   $       426
        Industrial                                 $       654   $       540
    -------------------------------------------------------------------------
      Manufactured Product                         $       559   $       419
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


                   Potash Corporation of Saskatchewan Inc.
                     Selected Operating and Revenue Data
                                 (unaudited)

                                                          Three Months Ended
                                                               March 31
                                                          2011          2010
    -------------------------------------------------------------------------
    Nitrogen Operating Data
    Production (N Tonnes - thousands)                      686           738
    Average Natural Gas Production Cost per MMBtu  $      5.84   $      4.92
    Sales (tonnes - thousands)
      Manufactured Product
        Ammonia                                            514           430
        Urea                                               331           344
        Nitrogen solutions/Nitric acid/Ammonium
         nitrate                                           495           548
    -------------------------------------------------------------------------
      Manufactured Product                               1,340         1,322
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

      Fertilizer sales tonnes                              388           498
      Industrial/Feed sales tonnes                         952           824
    -------------------------------------------------------------------------
      Manufactured Product                               1,340         1,322
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Nitrogen Net Sales
      (US $ millions)
        Sales                                      $       546   $       421
        Freight, transportation and distribution           (23)          (24)
    -------------------------------------------------------------------------
        Net Sales                                  $       523   $       397
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

      Manufactured Product
        Ammonia                                    $       244   $       147
        Urea                                               138           121
        Nitrogen solutions/Nitric acid/Ammonium
         nitrate                                           112            99
      Other miscellaneous and purchased product             29            30
    -------------------------------------------------------------------------
      Net Sales                                    $       523   $       397
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

      Fertilizer net sales                         $       144   $       129
      Industrial/Feed net sales                            350           238
      Other miscellaneous and purchased product             29            30
    -------------------------------------------------------------------------
      Net Sales                                    $       523   $       397
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Nitrogen Average Price per MT
        Ammonia                                    $       474   $       343
        Urea                                       $       416   $       351
        Nitrogen solutions/Nitric acid/Ammonium
         nitrate                                   $       226   $       180
    -------------------------------------------------------------------------
      Manufactured Product                         $       368   $       278
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

      Fertilizer average price per MT              $       371   $       259
      Industrial/Feed average price per MT         $       367   $       289
    -------------------------------------------------------------------------
      Manufactured Product                         $       368   $       278
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Exchange Rate (Cdn$/US$)
                                                          2011          2010
    -------------------------------------------------------------------------

    December 31                                                       0.9946
    March 31                                            0.9718        1.0156
    First-quarter average conversion rate               0.9964        1.0514



                   Potash Corporation of Saskatchewan Inc.
           Selected Non-IFRS Financial Measures and Reconciliations
            (in millions of US dollars except percentage amounts)
                                 (unaudited)

    The following information is included for convenience only. Generally, a
    non-IFRS financial measure is a numerical measure of a company's
    performance, financial position or cash flows that either excludes or
    includes amounts that are not normally excluded or included in the most
    directly comparable measure calculated and presented in accordance with
    IFRS. EBITDA, EBITDA margin, cash flow prior to working capital changes
    and free cash flow are not measures of financial performance (nor do they
    have standardized meanings) under either IFRS or United States Generally
    Accepted Accounting Principles. In evaluating these measures, investors
    should consider that the methodology applied in calculating such measures
    may differ among companies and analysts.

    The company uses both IFRS and certain non-IFRS measures to assess
    performance. Management believes these non-IFRS measures provide useful
    supplemental information to investors in order that they may evaluate
    PotashCorp's financial performance using the same measures as management.
    Management believes that, as a result, the investor is afforded greater
    transparency in assessing the financial performance of the company. These
    non-IFRS financial measures should not be considered as a substitute
    for, nor superior to, measures of financial performance prepared in
    accordance with IFRS.

    A. EBITDA AND EBITDA MARGIN
       ------------------------

    Set forth below is a reconciliation of "EBITDA" to net income and "EBITDA
    margin" to net income as a percentage of sales, the most directly
    comparable financial measures calculated and presented in accordance with
    IFRS.

                                                          Three Months Ended
                                                               March 31
                                                          2011          2010
    -------------------------------------------------------------------------
    Net income                                     $       732   $       444
    Finance costs                                           50            31
    Income taxes                                           243           191
    Depreciation and amortization                          124           110
    -------------------------------------------------------------------------
    EBITDA                                         $     1,149   $       776
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    EBITDA is calculated as earnings before finance costs, income taxes and
    depreciation and amortization. PotashCorp uses EBITDA as a supplemental
    financial measure of its operational performance. Management believes
    EBITDA to be an important measure as it excludes the effects of items
    which primarily reflect the impact of long-term investment decisions,
    rather than the performance of the company's day-to-day operations. As
    compared to net income according to IFRS, this measure is limited in
    that it does not reflect the periodic costs of certain capitalized
    tangible and intangible assets used in generating revenues in the
    company's business. Management evaluates such items through other
    financial measures such as capital expenditures and cash flow provided by
    operating activities. The company believes that these measurements are
    useful to measure a company's ability to service debt and to meet other
    payment obligations or as a valuation measurement.

                                                          Three Months Ended
                                                               March 31
                                                          2011          2010
    -------------------------------------------------------------------------
    Sales                                          $     2,204   $     1,714
    Freight, transportation and distribution              (149)         (155)
    -------------------------------------------------------------------------
    Net sales                                      $     2,055   $     1,559
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Net income as a percentage of sales                    33%           26%
    EBITDA margin                                          56%           50%

    EBITDA margin is calculated as EBITDA divided by net sales (sales less
    freight, transportation and distribution). Management believes comparing
    the company's operations (excluding the impact of long-term investment
    decisions) to net sales earned (net of costs to deliver product) is an
    important indicator of efficiency. In addition to the limitations given
    above in using EBITDA as compared to net income, EBITDA margin as
    compared to net income as a percentage of sales is also limited in that
    freight, transportation and distribution costs are incurred and valued
    independently of sales. Management evaluates these expenses individually
    on the consolidated statements of income.



                   Potash Corporation of Saskatchewan Inc.
           Selected Non-IFRS Financial Measures and Reconciliations
            (in millions of US dollars except percentage amounts)
                                 (unaudited)

    B. CASH FLOW
       ---------

    Set forth below is a reconciliation of "cash flow prior to working
    capital changes" and "free cash flow" to cash provided by operating
    activities, the most directly comparable financial measure calculated and
    presented in accordance with IFRS.

                                                          Three Months Ended
                                                               March 31
                                                          2011          2010
    -------------------------------------------------------------------------
    Cash flow prior to working capital changes     $       899   $       633
    -------------------------------------------------------------------------
    Changes in non-cash operating working capital
      Receivables                                         (213)           94
      Inventories                                          (27)           42
      Prepaid expenses and other current assets              -             6
      Payables and accrued charges                          31            36
    -------------------------------------------------------------------------
    Changes in non-cash operating working capital         (209)          178
    -------------------------------------------------------------------------
    Cash provided by operating activities          $       690   $       811
    Additions to property, plant and equipment            (441)         (457)
    Other assets and intangible assets                       -           (34)
    Changes in non-cash operating working capital          209          (178)
    -------------------------------------------------------------------------
    Free cash flow                                 $       458   $       142
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    The company uses cash flow prior to working capital changes as a
    supplemental financial measure in its evaluation of liquidity. Management
    believes that adjusting principally for the swings in non-cash working
    capital items due to seasonality or other timing issues assists
    management in making long-term liquidity assessments. The company also
    believes that this measurement is useful as a measure of liquidity or as
    a valuation measurement.

    The company uses free cash flow as a supplemental financial measure in
    its evaluation of liquidity and financial strength. Management believes
    that adjusting principally for the swings in non-cash operating working
    capital items due to seasonality or other timing issues, additions to
    property, plant and equipment, and changes to other assets assists
    management in the long-term assessment of liquidity and financial
    strength. The company also believes that this measurement is useful as an
    indicator of the company's ability to service its debt, meet other
    payment obligations and make strategic investments. Readers should be
    aware that free cash flow does not represent residual cash flow available
    for discretionary expenditures.
    >>

SOURCE Potash Corporation of Saskatchewan Inc.

For further information: Investors, Denita Stann, Vice President, Investor and Public Relations, Phone: (306) 933-8521, Fax: (306) 933-8844, Email: ir@potashcorp.com; Media Bill Johnson, Senior Director, Public Affairs, Phone: (306) 933-8849, Fax: (306) 933-8844, Email: pr@potashcorp.com; Web Site: www.potashcorp.com


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