PotashCorp To Cut Workforce In Canada, U.S., Trinidad By 18% Amid Realignment

(RTTNews) - Canadian fertilizer giant Potash Corp. of Saskatchewan, Inc. (POT, POT.TO) announced Tuesday that it will slash workforce by about 18 percent in Canada, the U.S. and Trinidad as part of an operational realignment. The move follows a comprehensive review of business and operational needs in order to respond to current market conditions.

The actions will also help the company to enhance the global competitive position by optimizing its lowest-cost operations to reducing costs and maintain operational flexibility to meet anticipated future demand growth.

"This is a difficult day for our employees and our company. While these are steps we must take to run a sustainable business and protect the long-term interests of all our stakeholders, these decisions are never easy," President and CEO Bill Doyle said in a statement.

The world's largest maker of crop nutrients expects to cut about 1,045 jobs, including 570 permanent jobs in Canada.

In a region-wise breakup of the workforce reduction, about 440 jobs will be cut in Saskatchewan, about 130 jobs in New Brunswick, about 350 jobs in Florida, about 85 jobs in North Carolina and about 40 jobs in other US locations and Trinidad.

The Saskatoon-based company noted that all three business operating segments nitrogen, phosphate and potash), as well as corporate services, will be impacted by these reductions. Meanwhile, the company added that affected employees will be offered voluntary severance packages prior to any involuntary reductions, where feasible.

The company expects to complete the majority of changes in 2013 itself, while maintaining certain operational positions over a period for a smooth transition.

The realignment and workforce reductions will enable the company to overcome the challenging market conditions amid the sluggish environment primarily in the potash and phosphate businesses.

The realignment will see the suspension of production at one of the two Lanigan mills and reduction of production at the Cory facility by year end. Production will also cease at the Penobsquis, NB facility at the end of the first quarter 2014.

It will also see the closure of the Suwannee River chemical plant in the second half of 2014, but the granulation plants at this facility will continue to operate.

The actions are expected to result in lower per-tonne operating costs, primarily in the potash and phosphate segments, that will lead to enhanced competitive position of each nutrient on a global basis.

The company anticipates potash cost savings of $15 to $20 per tonne in 2014 with a targeted reduction of $20 to $30 per tonne by 2016 from 2013 base levels. Further, annualized gross margin improvement in phosphate is seen at about $10 to $15 per tonne.

Meanwhile, the company said it expects to incur one-time costs of about $70 million associated with these changes as severance charges. The company added that its is also currently reviewing the carrying value of the affected assets and a write-down could be incorporated into the 2013 fourth quarter results.

"While these are difficult decisions, we know that they help ensure our company remains positioned for the future and able to grow long-term value for those who depend on our sustainability and success," Doyle added.

POT closed Monday's regular trading session at $31.71, up $0.21 on a volume of 5.56 million shares, and POT.TO closed on the TSX at C$33.71, up C$0.34 on a volume of 1.44 million shares.