The theme of our Sustainability Report,
Yesterday Today Tomorrow, could not be more appropriate for PotashCorp. It looks back to our roots and stretches forward into our future.
In 1990, our first full year as a publicly traded Canadian potash company, our 1,242 employees achieved sales of $197 million and net income of $18 million (according to the accounting principles we were then using). In 2007, as a global company with all three primary nutrients and 5,003 employees, our sales topped $5.2 billion with net income of $1.1 billion. Already a world leader in our industry, we are expanding to ensure we will be an equally strong and sustainable company tomorrow. More than ever, our core mission is aligned with sustainable business practices because we are determined to meet the needs and expectations of our stakeholders.
Today, it's a much different world we are preparing for, a world of surging population, rising incomes in developing countries and shifting appetites. By 2050, the world's population is expected to reach 9.2 billion people compared to 6.7 billion in 2007. This dramatic growth makes increased food production imperative – and that is what is driving the rising demand for our products.
Helping the World's Farmers Feed the World
A fundamental shift is occurring, particularly among the growing populations in China, India and other Asian countries. The strengthening economies in these regions mean many people have higher incomes that enable them to improve their quality of life, starting with the quality of their diets. Millions of people can now afford more and better food, especially meat, and are switching from starch- to protein-based diets.
As a result, the world's farmers need to produce not only more food for people but more grain to feed livestock, while fast-growing cities and necessary infrastructure are shrinking the available farmland per capita.
The only way to achieve the necessary sustainable increases in food production is to apply fertilizers that replenish soil nutrients. That is where PotashCorp comes in. Now and over the long term, we are doing our part to help feed the world.
Planning Today for Tomorrow
To keep pace with rising global demand for potash, we will spend $4.5 billion over the next five years to expand our operating capacity, from 10.8 million tonnes in 2007 to 15.7 million tonnes by the end of 2012, and potentially more by 2015. We are uniquely able to deliver such an expansion, and the industry needs it, as world demand is expected to grow by more than 2 million tonnes annually over the next several years.
Not Just Feeding the World, Protecting It
At the same time, we have not lost sight of our other responsibilities. They are part and parcel of our mission to help feed the world.
Protecting the environment is an important part of our sustainability story. Without fertilizers to maximize soil productivity, the world's farmers would need millions more acres of farmland to produce the same amount of food. That would mean destroying more grasslands and forests, the greatest offset to greenhouse gas emissions.
Over the last five years, we have increased environmental spending by more than 100 percent to monitor and reduce water discharges, air emissions and waste accumulation. We are continuing to look to the future, and this year we set a five-year target to reduce greenhouse gas emissions by 10 percent per tonne of product.
Do No Harm
Not only do we strive to do no damage to the environment, we also work daily toward our goal of no harm to people, with no accidents at our offices and operations.
Our commitment to and success at protecting our workforce are reflected in our lost-time injury frequency rate, which in 2007 fell to its lowest level ever.
Success, Shared
In 2007, as a result of rising demand for our fertilizer products, PotashCorp achieved a fourth consecutive year of record earnings. We are using this financial strength to expand our production capacity to help us meet the world's growing demand for food.
We also recognize that our company's success is largely attributable to the collective efforts of our dedicated employees. To enable them to share in PotashCorp's prosperity, we again expanded our short-term incentive program so that all employees now participate in an annual bonus program beginning in 2008. This represents an increase in the number of eligible participants in this performance-based program from 218 in 2005 to more than 5,000 for 2008.
The economic, environmental and social targets we set reflect our strategies for long-term growth and sustainability by protecting the environment, supporting healthy communities and operating a business enterprise that provides value to employees, investors, customers, suppliers and our neighbors.
With foresight, hindsight and insight, we will use our resources and strategic planning to help meet the challenges the world faces today and tomorrow.
In the pages ahead, you will read more about our performance and how we measure up to the expectations of our stakeholders. Learning from the past, we are building a company today that will play an important role in the changing world of tomorrow.
William J. Doyle
President and CEO
PotashCorp
June 9, 2008
