Denita C. StannThank you, Brock. Good afternoon. Thank you for joining us, and welcome to our first quarter earnings call. In the room with us today, we have Bill Doyle, our President and CEO; Wayne Brownlee, our Executive Vice President and Chief Financial Officer; David Delaney, Executive Vice President and Chief Operating Officer; Joe Podwika, Senior Vice President and General Counsel; Garth Moore, President of PCS Potash; Brent Heimann, President of PCS Phosphate and PCS Nitrogen; and Stephen Dowdle, President of PCS Sales. I'd like to welcome the media, who are listening in and remind people that we are live on our website. This morning, we posted an investor presentation on our website. And during Bill's remarks, we will be highlighting some information from this presentation. I would also like to remind everyone that today's call may include forward-looking statements. Such statements are given as of the date of this call and involve risks and uncertainties. A number of factors and assumptions were applied in the formulation of such statements, and actual results could differ materially. For additional information with respect to forward-looking statements, factors and assumptions, we direct you to our news release and our most recent Form 10-K. Also, today's news release, which is posted on our website, includes a reconciliation of certain non-IFRS financial measures to their most directly comparable IFRS measures. I'll now turn the call over to Bill Doyle for some comments, and then we'll go to questions. William J. Doyle All right. Thank you, Denita, and good afternoon, everyone. And thank you for joining us for this discussion of PotashCorp's first quarter results and our outlook for the remainder of 2012. Despite a slow start to the year, fertilizer markets have now fully engaged. We appreciate this opportunity to share our views on how this transition will shape our performance in the months ahead.
We came into the year facing the same challenging conditions we saw at the close of 2011 with fertilizer buyers around the world moving cautiously, choosing to defer purchases rather than positioning inventory. While we anticipated this delay as we entered the quarter, we did not expect it would take until near the very end of the quarter for potash and phosphate demand to increase.North American dealers worked down inventories and purchased only to meet immediate needs of farmers, who delayed their own buying decisions to the last possible minute before the planting season arrived. First half potash contracts with China were not settled until late in the quarter. As a result, Canpotex shipped minimal quantities to this important offshore market other than industrial grade products. In India, reduced potash subsidy levels and higher retail pricing slowed demand. As a result, customers deferred shipments for most of the remaining tonnage on existing contracts into the second quarter. Even in markets like Latin America and Southeast Asia, where potash consumption remained very strong, dealers met demand by drawing down inventories built in 2011. Our average realized potash price increased slightly from the trailing quarter as a lower percentage of sales were delivered to offshore contract markets. Given the gains made in 2011, potash prices for the quarter were up 19% from the same period last year. Nitrogen buyers purchased more aggressively. And product pricing strengthened as the quarter progressed. Combined with lower natural gas costs, we generated record first quarter gross margin in our Nitrogen segment. Still our first quarter earnings of $0.56 per share were at the low end of our guidance range, largely because of the reduction in potash sales volumes and higher per tonne costs that came with much lower production levels. Despite some bumps on the road over recent months, the reality of our business is that a void created today must be filled tomorrow. Dealers who defer purchases must eventually restock to meet the needs of their customers.
That reality began to take hold late in the first quarter and has carried into the second quarter as demand in all major markets has increased. Farmers are planting more acres this season, and crop prices remains supportive. So the agronomic need and economic incentive to apply fertilizer is there.Read the rest of this transcript for free on seekingalpha.com