PotashCorp Reports Third-Quarter Earnings of $0.06 per Share

Market Conditions
Global potash prices improved for the fifth consecutive quarter as agronomic need and affordability led to strong demand in all major markets. Shipments to China and India accelerated following contract settlements early in the third quarter while deliveries to Latin America continued at a record pace. In North America, dealers worked to position product in anticipation of a strong fall application season, leading to elevated shipment levels.

In nitrogen, tighter market fundamentals late in the quarter supported a recovery in prices from multi-year lows. This was most evident in urea markets, where seasonally strong demand and lower Chinese exports led to higher prices. Ammonia and UAN prices also strengthened, but remained volatile and well below 2016's third quarter levels, as new expansions began to ramp up, most notably in the US.

Phosphate fertilizer markets witnessed moderate appreciation during the quarter, supported by stronger engagement from India and weather-related supply outages that offset the impact of competition from increased Chinese exports. While prices for industrial products were relatively flat during the quarter, feed prices remained under pressure due to the impact of increased supply from offshore producers, keeping them well below prior-year levels.

Potash
Potash gross margin of $254 million for the third quarter and $627 million for the first nine months of 2017 surpassed the respective totals of $106 million and $317 million generated in 2016, predominantly due to higher prices, reduced per-tonne costs and increased offshore sales volumes.

Sales volumes for the quarter reached a record 2.9 million tonnes, increasing our total for the first nine months to 7.4 million tonnes. In North America, shipments were 10 percent higher than in 2016's record third quarter, while offshore shipments were up 14 percent. The majority of Canpotex's volumes for the quarter were sold to Latin America (30 percent) and Other Asian markets outside of China and India (26 percent), while China and India accounted for 23 percent and 14 percent, respectively.

Our average realized potash price of $179 per tonne in the third quarter exceeded the $150 per tonne realized in the same period last year as prices in all markets continued to strengthen from the lows in 2016.

Manufactured cost of goods sold for the quarter averaged $89 per tonne, down from $106 per tonne in the same period last year, primarily due to increased production and the benefits of optimizing to our lower-cost mines.

Nitrogen
In nitrogen, weaker prices resulted in gross margin of $21 million for the quarter and $186 million for the first nine months, down from $69 million and $306 million, respectively, in 2016. Our Trinidad operations accounted for 60 percent of our quarterly nitrogen gross margin, with our US operations providing the remainder.

Sales volumes of 1.6 million tonnes for the quarter and 4.7 million tonnes for the first nine months were flat compared to the respective periods in 2016.

Our average realized price of $168 per tonne for the third quarter was down from $200 per tonne in the same period last year due to lower realizations for ammonia and nitrogen solutions.

Cost of goods sold for the quarter averaged $157 per tonne, relatively flat compared to third-quarter 2016, as lower natural gas costs in Trinidad were partially offset by increased natural gas costs in the US.

Phosphate
Third-quarter phosphate gross margin of negative $45 million was below the $15 million earned during the same period last year, primarily due to weaker prices and a non-cash impairment charge of $29 million. Negative gross margin of $60 million for the first nine months trailed the $44 million generated in the same period of 2016 when prices for all our phosphate products were higher.

Sales volumes of 0.8 million tonnes for the quarter and 2.0 million tonnes for the first nine months were modest increases from the same periods last year (5 percent and 2 percent, respectively).

Our average realized price for the third quarter was $365 per tonne, below the $385 per tonne realized in the same period last year, largely due to lower prices for feed and industrial products.

Cost of goods sold of $420 per tonne for the quarter exceeded the $366 per tonne in the same period of 2016, mainly due to an impairment of property, plant and equipment at Aurora related to a feed product that we will no longer produce.

Financial
Provincial mining and other taxes for the quarter totaled $47 million, exceeding the $31 million in last year's corresponding period, primarily due to higher potash prices.

Other expenses of $30 million for the third quarter were principally impacted by foreign exchange losses and transaction costs related to the proposed merger with Agrium. This compared to other income of $5 million in 2016's third quarter.

Income tax expense of $22 million for the quarter increased from $2 million in the same period last year predominantly due to discrete tax adjustments related to prior years' provisions.

Potash Market Outlook
We continue to see strong customer engagement in all key potash markets and expect robust demand to continue into 2018. We have maintained our anticipated global shipment range for 2017 at 62-65 million tonnes and, with Canpotex now fully committed for the remainder of the year, we expect this year's demand to eclipse the previous record.

In North America, demand continues to be robust as growers address nutrient needs and capitalize on strong affordability. We expect total shipments to this market to approach the upper end of our 9.3-9.8 million tonnes range.

With its substantial agronomic need and favorable crop economics, we anticipate deliveries to Latin America will remain on pace to surpass those of 2016, with our full-year shipment total unchanged at 12.0-12.5 million tonnes.

In China, we expect nutrient affordability will continue to drive strong consumption. We maintain our 2017 shipment estimate in the range of 15.5-16.5 million tonnes, a potential record for this market.

We continue to see an improving demand environment in India, supported by significant agronomic need, higher minimum support prices and a favorable monsoon. We now expect deliveries for 2017 near the upper end of our guidance range of 4.0-4.5 million tonnes, an increase from 2016 levels.

In Other Asian markets, we expect supportive palm oil prices and improved moisture conditions will support demand for the remainder of the year and are maintaining our estimated shipment range of 9.0-9.5 million tonnes for the full year, above the 2016 total.

Financial Outlook
With greater clarity on potash markets through the balance of the year, we have narrowed our guidance range for potash sales volumes, to 9.1-9.3 million tonnes, and for gross margin, to $750-$800 million.

In nitrogen, we expect markets to remain volatile in the fourth quarter and anticipate full-year gross margin will be significantly weaker than in 2016. In phosphate, we expect challenging market fundamentals will continue to weigh on our realizations. With these factors in mind, and taking into consideration the third-quarter phosphate impairment charge, we have lowered our combined nitrogen and phosphate gross margin range and now estimate $140-$190 million in 2017, trailing last year's combined total.

We now anticipate our effective income tax rate to be in a negative range of 2-4 percent, primarily due to discrete tax adjustments.

We have lowered the upper end of our estimates for provincial mining and other taxes and now expect a range of 19-21 percent of potash gross margin for 2017. Further, we have lowered our range for selling and administrative expenses to $215-$225 million and increased our range for finance costs to $230-$240 million.

We have raised the bottom end of our range for income from equity investments and now expect $180-$190 million, primarily due to the strength of SQM earnings.

Due to the recent strength of the Canadian dollar, we have revised our full-year foreign exchange rate assumption to CDN $1.30 per US dollar.

Based on these factors, we have narrowed our full-year 2017 earnings guidance and now estimate $0.48-$0.54 per share. Merger-related costs are now anticipated to be $0.08 per share, with $0.05 per share expected in the fourth quarter.

All annual guidance numbers – including those noted above – are outlined in the table below.

Notes

1. All references to per-share amounts pertain to diluted net income per share.
2. Canpotex Limited (Canpotex), the offshore marketing company for PotashCorp and two other Saskatchewan potash producers.
3. Agrium Inc. (Agrium)
4. See reconciliation and description of non-IFRS measures in the attached section titled "Selected Non-IFRS Financial Measures and Reconciliations and Supplemental Information."
5. Market value of PotashCorp's investment in Sociedad Quimica y Minera de Chile S.A. calculated using last traded price of B shares.

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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 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.

This release contains "forward-looking statements" (within the meaning of the US Private Securities Litigation Reform Act of 1995) or "forward-looking information" (within the meaning of applicable Canadian securities legislation) that relate to future events or our future performance. These statements can be identified by expressions of belief, expectation or intention, as well as those statements that are not historical fact. These statements often contain words such as "should," "could," "expect," "forecast," "may," "anticipate," "believe," "intend," "estimates," "plans" and similar expressions. These statements are based on certain factors and assumptions as set forth in this document, including with respect to: foreign exchange rates, expected growth, results of operations, performance, business prospects and opportunities, including the completion of the proposed merger of equals with Agrium, and effective tax rates. While we consider these factors and assumptions to be reasonable based on information currently available, they may prove to be incorrect. Forward-looking statements are subject to risks and uncertainties that are difficult to predict. The results or events set forth in forward-looking statements may differ materially from actual results or events. Several factors could cause our actual results or events to differ materially from those expressed in forward-looking statements including, but not limited to, the following: our proposed merger of equals transaction with Agrium, including the failure to satisfy all required conditions, including required regulatory approvals, or to satisfy or obtain waivers with respect to all other closing conditions in a timely manner and on favorable terms or at all; the occurrence of any event, change or other circumstances that could give rise to the termination of the arrangement agreement; certain costs that we may incur in connection with the proposed merger of equals; certain restrictions in the arrangement agreement on our ability to take action outside the ordinary course of business without the consent of Agrium; the effect of the announcement of the proposed merger of equals on our ability to retain customers, suppliers and personnel and on our operating future business and operations generally; risks related to diversion of management time from ongoing business operations due to the proposed merger of equals; failure to realize the anticipated benefits of the proposed merger of equals and to successfully integrate Agrium and PotashCorp; the risk that our credit ratings may be downgraded or there may be adverse conditions in the credit markets; any significant impairment of the carrying value of certain assets; variations from our assumptions with respect to foreign exchange rates, expected growth, results of operations, performance, business prospects and opportunities, and effective tax rates; fluctuations in supply and demand in the fertilizer, sulfur and petrochemical markets; changes in competitive pressures, including pricing pressures; risks and uncertainties related to any operating and workforce changes made in response to our industry and the markets we serve, including mine and inventory shutdowns; adverse or uncertain economic conditions and changes in credit and financial markets; economic and political uncertainty around the world; changes in capital markets; the results of sales contract negotiations within major markets; unexpected or adverse weather conditions; risks related to reputational loss; the occurrence of a major safety incident; inadequate insurance coverage for a significant liability; our inability to obtain relevant permits for our operations; catastrophic events or malicious acts, including terrorism; certain complications that may arise in our mining process, including water inflows; risks and uncertainties related to our international operations and assets; our ownership of non-controlling equity interests in other companies; our prospects to reinvest capital in strategic opportunities and acquisitions; risks associated with natural gas and other hedging activities; security risks related to our information technology systems; imprecision in reserve estimates; costs and availability of transportation and distribution for our raw materials and products, including railcars and ocean freight; changes in, and the effects of, government policies and regulations; earnings and the decisions of taxing authorities which could affect our effective tax rates; increases in the price or reduced availability of the raw materials that we use; our ability to attract, develop, engage and retain skilled employees; strikes or other forms of work stoppage or slowdowns; rates of return on, and the risks associated with, our investments and capital expenditures; timing and impact of capital expenditures; the impact of further innovation; adverse developments in pending or future legal proceedings or government investigations; and violations of our governance and compliance policies. These risks and uncertainties are discussed in more detail under the headings "Risk Factors" and "Management's Discussion and Analysis of Results and Operations and Financial Condition" in our Annual Report on Form 10-K for the fiscal year ended December 31, 2016 and in other documents and reports subsequently filed by us with the US Securities and Exchange Commission and the Canadian provincial securities commissions. Forward-looking statements are given only as of the date hereof and we disclaim any obligation to update or revise any forward-looking statements in this release, whether as a result of new information, future events or otherwise, except as required by law.

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PotashCorp will host a Conference Call on Thursday, October 26, 2017 at 1:00 pm Eastern Time.

Potash Corporation of Saskatchewan Inc.
Condensed Consolidated Statements of Income
(in millions of US dollars except as otherwise noted)
(unaudited)
		Three Months Ended				Nine Months Ended
		September 30				September 30
		2017		2016		2017		2016
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