Key Highlights

• Earnings of $0.38 per share¹ for third-quarter 2014; nine-month total of $1.33 per share
• Third-quarter cash provided by operating activities of $574 million
• Higher potash sales volumes for both the quarter and first nine months
• Improved potash realizations (up $18 per tonne from second-quarter 2014)
• Record nine-month nitrogen gross margin of $776 million
• Full-year guidance now $1.75-$1.85 per share; previous range $1.70-$1.90 per share

Saskatoon, Saskatchewan – Potash Corporation of Saskatchewan Inc. (PotashCorp) reported third-quarter earnings of $0.38 per share ($317 million), bringing our total for the first nine months of 2014 to $1.33 per share ($1.1 billion). Although potash and nitrogen performance improved over last year’s third quarter, higher tax expenses and weaker contributions from offshore equity investments weighed on results. On a comparative basis, both the quarterly and nine-month amounts trailed last year’s totals of $0.41 per share ($356 million) and $1.77 per share ($1.6 billion), respectively.

Gross margin increased to $589 million, significantly exceeding the $484 million generated during third-quarter 2013. For the first nine months, gross margin of $1.9 billion trailed the $2.3 billion earned in the same period last year – largely the result of lower potash prices and weaker phosphate performance.

Cash from operating activities for both the quarter ($574 million) and first nine months ($1.9 billion) were below last year’s comparative period amounts ($616 million and $2.6 billion). With declining capital expenditures, free cash flow² for both periods surpassed 2013 totals.

Lower contributions from our offshore investments were the result of reduced potash earnings at these companies. Our investments in Arab Potash Company (APC) in Jordan, Israel Chemicals Ltd. (ICL) in Israel and Sociedad Quimica y Minera de Chile S.A. (SQM) in Chile contributed $24 million to our third-quarter earnings and brought the nine-month total to $179 million. These amounts were well below the 2013 comparative period totals of $85 million and $251 million, respectively – with the nine-month total including a dividend from Sinofert Holdings Limited (Sinofert) in China. The market value of our investments in all four of these publicly traded companies equated to approximately $4 billion, or $5 per PotashCorp share, at market close on October 22, 2014.

“We continue to see encouraging signs in each of our major potash markets with a renewal of demand translating into higher sales volumes,” said PotashCorp President and Chief Executive Officer Jochen Tilk. “Furthermore, we experienced another quarter of improved potash pricing trends, which strengthened our earnings. Combined with internal efforts to optimize our operations, these positive developments mark important steps toward a stronger performance for our company.”

Market Conditions

Unlike 2013, when global potash demand stalled due to market uncertainty, this year’s third quarter saw all key markets engaged. This shift was most significant offshore, with greater demand in Asian and Latin American markets leading to higher shipments from North American producers. Purchasing activity in North America remained healthy as dealers worked to position product in advance of anticipated fall requirements.

Global potash shipments through the first nine months of 2014 were at all-time highs. During the third quarter, typical maintenance downtime further tightened market fundamentals and resulted in prices moving higher in all major spot markets.

In nitrogen, strong global demand and supply constraints in key exporting countries led to higher prices for ammonia. Improved fundamentals contributed to higher prices for urea and UAN products compared to the prior year, although greater supply availability in urea caused prices to show signs of seasonal softness as the quarter came to a close. Similarly, phosphate prices for third-quarter 2014 were stronger relative to the previous year, given healthier demand and the influence of higher input and production costs.

Potash

Increased sales volumes raised our third-quarter potash gross margin to $295 million, above the $228 million earned in 2013’s same period. Given that realized prices were higher through the first six months of 2013, our nine-month gross margin total of $990 million trailed the $1.3 billion earned during the comparative period last year.

Our sales volumes continued to outpace prior-year levels, with total shipments of 2.0 million tonnes for the quarter and 6.8 million tonnes for the first nine months exceeding the comparative periods by 29 percent and 8 percent, respectively. For the quarter, the rebound was most pronounced offshore where sales volumes were up 45 percent as the comparative period in 2013 saw significantly more volatility and uncertainty there than in the North American market. The majority of Canpotex³ shipments were to Other Asian countries (38 percent) and Latin America (32 percent), while India and China accounted for 14 percent and 9 percent respectively. In North America, sales volumes increased 9 percent from last year’s comparative period as customers took deliveries in anticipation of strong farmer demand to replenish crop nutrients following an expected record harvest.

Our average realized potash price for the quarter was $281 per tonne, trailing the $307 per tonne realized in last year’s third quarter. This decrease was the result of lower offshore prices as the sharp decline through the final half of 2013 had yet to be fully reflected in prior-period results. A greater proportion of sales to lower-priced offshore markets also had a negative impact.

Improved operational efficiencies from our workforce realignment, as well as higher production levels and a weaker Canadian dollar, contributed to lower per-tonne cost of goods sold. While costs reflected the usual seasonal increase due to our maintenance turnarounds, they improved by $28 per tonne relative to the comparative period in 2013 and $16 per tonne through the first nine months of 2014.

Nitrogen

In nitrogen, higher sales volumes and strong price realizations raised gross margin for the quarter to $233 million. This surpassed the $178 million generated during the same period last year, raising our total for the first nine months of 2014 to $776 million – the highest in our history.

Improved production levels across all nitrogen facilities more than offset losses from gas curtailments in Trinidad and raised third-quarter sales volumes to 1.5 million tonnes, 8 percent above third-quarter 2013. Nine-month totals reached 4.8 million tonnes, exceeding the comparable period last year by 10 percent.

With key benchmark pricing at higher levels, our average realized price for this year’s third quarter ($356 per tonne) increased 6 percent relative to the same period in 2013.

Cost of goods sold for the quarter was $209 per tonne, relatively flat compared to the same period last year, as efficiencies from increased production more than offset higher natural gas costs.

Phosphate

In phosphate, third-quarter and nine-month gross margin totals of $61 million and $135 million trailed the $78 million and $260 million earned during the respective periods in 2013. Reduced production and increased costs (including approximately $20 million in notable charges during this year’s third quarter) weighed on our results in this nutrient.

The closure in July of our Suwannee River chemical plant, combined with mechanical challenges at our White Springs facility, constrained the number of tonnes available for sale. Our total third-quarter sales volumes were 0.7 million tonnes, 21 percent below the comparative period total in 2013, with production largely shifting away from certain lower-margin fertilizer products. For the first nine months, sales volumes of 2.3 million tonnes were below the 2.7 million tonnes sold in 2013.

Our average realized phosphate price for third-quarter 2014 was $517 per tonne, exceeding the $467 per tonne in last year’s same period. This increase was largely due to a greater proportion of our production being allocated to higher-netback feed and industrial products, in addition to improved prices for our fertilizer products because of better market fundamentals.

Third-quarter cost of goods sold of $437 per tonne was higher than the $384 per tonne during 2013’s same period. Lower production levels coupled with unfavorable adjustments to asset retirement obligations ($4 million), higher water treatment costs due to excessive rainfall ($8 million) and accelerated depreciation charges related to the closure of Suwannee River ($5 million) were the primary factors.

Financial

Provincial mining and other taxes for the quarter totaled $52 million, well above the $10 million recorded in third-quarter 2013, which reflected significant adjustments to forecasted annual potash production tax accruals given the rapidly changing market environment.

With a higher effective tax rate related to different income weightings between jurisdictions and certain discrete tax adjustments, the $156 million income tax expense for the quarter significantly exceeded the $116 million recognized in 2013’s comparable period.

Market Outlook

As we move into the fourth quarter, we continue to see strong customer engagement in all key potash markets. We anticipate global shipments will surpass the upper end of our previous guidance, and now forecast totals for 2014 to be in the range of 58-60 million tonnes. While recent weakness in crop prices is expected to result in some reduction to global crop acreage, we believe potash remains an affordable and necessary investment for growers as they look to offset lower prices by enhancing yields.

In North America, the fall application season is underway and product demand remains strong. Given what we believe are especially low potash inventories throughout the North American supply chain, distributors are actively positioning product in advance of anticipated needs. Even though dealers are taking these steps, we forecast that sales volumes will slow through the fourth quarter, with the majority of PotashCorp’s shipments fulfilling previously committed summer-fill tonnes.

In Latin America, product for the key planting season is now largely in place and we believe buyers have shifted their focus to Safrinha crop requirements. Although customers continue to secure potash tonnage, we expect shipments to this region will begin to reflect the typical seasonal slowdown as the end of the year approaches. Even with this expected slowdown, we believe annual Latin American demand will again establish a record.

In both China and India we have seen encouraging potash consumption trends, including increased demand for compound fertilizers with higher potassium content. Canpotex continues to deliver product to both markets under previous commitments and we anticipate shipments will remain strong during the final quarter of 2014.

Potash demand in Other Asian countries (outside of China and India) remains healthy. Stronger demand for standard product through the second half of 2014 has translated into higher transacted prices in recent tenders and is expected to be reflected in our realized prices in early 2015.

Financial Outlook

As a result of these market conditions, we have increased our estimate for potash annual sales volumes to 9.0-9.2 million tonnes. Fourth-quarter shipments are expected to be heavily weighted towards offshore contract markets and to result in lower average realizations. We now anticipate potash gross margin will approximate $1.3-$1.4 billion.

We expect robust nitrogen fundamentals, especially for ammonia, will continue through the balance of the year. While gas supply restrictions at our Trinidad facility are now anticipated to exceed our previous estimates, sales volumes are expected to outpace previous-year levels and result in record nitrogen gross margin in 2014. In phosphate, we anticipate relatively stable markets through the balance of the year. Our sales volumes are expected to remain below those of fourth-quarter 2013 with the closure of our Suwannee River chemical plant. Given these considerations, we now forecast our 2014 combined nitrogen and phosphate gross margin will be in the range of $1.2-$1.3 billion.

We have revised our annual estimate for income from offshore investments to a range of $205-$215 million to better align with projected earnings and associated tax changes in Chile and Israel. The Chilean tax change is also expected to impact our annual effective tax rate, which is now anticipated to be in the range of 27-29 percent.

Based on these factors, we now expect our annual earnings range to be $1.75-$1.85 per share. Other guidance numbers remain unchanged and are outlined in the table below along with those noted above.

2014 Annual Guidance
Potash sales volumes	9.0-9.2 million tonnes
Potash gross margin	$1.3-$1.4 billion
Nitrogen and phosphate gross margin	$1.2-$1.3 billion
Capital expenditures	~$1.1 billion
Effective tax rate	27-29 percent
Provincial mining and other taxes*	16-18 percent
Selling and administrative expenses	$235-$245 million
Finance costs	$175-$185 million
Income from offshore investments**	$205-$215 million
Earnings per share	$1.75-$1.85
* As a percentage of potash gross margin ** Includes income from dividends and share of equity earnings

Conclusion

“The potash market has exhibited strong growth this year, challenging global supply and logistics,” said Tilk. “We are working to ensure we have the flexibility to respond to potash demand in 2015 – which we expect to be another strong year. As we look ahead, our management team is focused on enhancing the position and potential of PotashCorp for the many stakeholders depending on our ongoing success.”

Notes

PotashCorp is the world’s largest crop nutrient company and plays an integral role in global food production. The company produces the three essential nutrients required to help farmers grow healthier, more abundant crops. With the global population rising and diets improving in developing countries, these nutrients offer a responsible and practical solution to meeting the long-term demand for food. PotashCorp is the largest producer, by capacity, of potash and one of the largest producers of nitrogen and phosphate. While agriculture is its primary market, the company also produces products for animal nutrition and industrial uses. Common shares of Potash Corporation of Saskatchewan Inc. are listed on the Toronto Stock Exchange and the New York Stock Exchange.

For further information please contact:

Investors	Media
Denita Stann Vice President, Investor and Public Relations Phone: (306) 933-8521 Fax: (306) 933-8844 E-mail Denita	Bill Johnson Senior Director, Public Affairs Phone: (306) 933-8849 Fax: (306) 933-8844 E-mail Bill

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