* Q1 EPS $1.47 vs $1.01 a year earlier
* Sees FY2010 EPS of $4.50 to $5.25; Wall St view $5.52
* Sees Q2 EPS of $1 to $1.30; Wall St view $1.46
* Shares up 1.4 pct in morning trade on strong corn price
(Recasts, adds outlook, analyst comment, updates share price.
In U.S. dollars unless noted)
By Euan Rocha
TORONTO, April 29 Potash Corp of Saskatchewan
(POT.TO) reported stronger than expected quarterly earnings on
Thursday and raised its earnings forecast due to a sharp
rebound in potash demand, and its shares rose 1.4 percent.
Shares of Potash, the world's biggest fertilizer producer,
were buoyed by talk that China's first imports of corn from the
United States in nearly four years could be followed by more
"The fact that the slide in corn prices has probably
stopped for now with China in the market, that is definitely
helping (market/farmer) psychology," said Broadpoint AmTech
analyst Edlain Rodriguez. "As there is a high co-relation
between corn prices and fertilizer stocks."
Chicago Board of Trade corn for May delivery Cc1 rose
almost 2.5 percent to $3.66 per bushel by 11 a.m. (1500 GMT)
after surging nearly 3 percent on Wednesday on news of China's
purchases. The reversal of a negative trend in price of corn
helped boost shares of Potash Corp and those of its North
Potash Corp's shares were up $1.49 at $110.5 on the New
York Stock Exchange. Shares of rivals Mosaic Co (MOS.N), Agrium
Inc (AGU.TO) and CF Industries (CF.N) also rose in early trade
Potash Corp's shares had fallen more than 4 percent in
pre-market trade on Thursday due to initial market
disappointment with the company's outlook.
OUTLOOK FALLS SHORT
The company raised its full-year earnings forecast to a
range of $4.50 to $5.25 a share. Its previous forecast was
$4.00 to $5.00 a share..
The revised range still fell short of Wall Street's current
consensus forecast of $5.52 a share, according to Thomson
The company's second-quarter forecast of earnings of $1.00
a share to $1.30 a share was also shy of Wall Street's average
forecast of $1.46.
"The quarter itself was fine and (results were) great. It's
just the guidance that is not robust enough for people right
now," said Broadpoint AmTech analyst Edlain Rodriguez.
"But again it depends on how aggressive or conservative
they (Potash Corp) want to be. I think they would rather
surprise on the upside than disappoint," he added.
Potash Corp has stayed cautious with its forecasts this
year, after it was forced to repeatedly cut its 2009 outlook in
the face of weak potash demand. [ID:nN28182339]
Net income for the quarter ended March 31 rose to $449.2
million, or $1.47 a share, up from a year-earlier profit of
$307.4 million, or $1.01 a share. The results beat Wall
Street's average forecast of $1.32 a share.
"We believe the higher demand we are seeing today is a
precursor to a longer-term rebound as farmers strive to catch
up on applications missed in 2009," said Chief Executive Bill
Doyle, in a statement.
Quarterly revenue rose 86 percent to $1.71 billion, driven
primarily by a jump in potash sales volumes.
Potash -- the common name used to describe compounds
containing potassium -- emerged into market consciousness a few
years ago when high grain prices, tight supplies and strong
demand drove the nutrient to above $1,000 a tonne from less
The price gradually retreated last year, as farmers, hit by
the credit crisis and falling grain prices, reined in their
applications of the nutrient. But demand has begun to pick up
again, as the spot price has fallen to about the $400 a tonne
North American potash producers shipped record volumes to
domestic customers during the first quarter of 2010, more than
quadruple the total shipped in the same period last year and 34
percent above the five-year average, prior to the global
economic downturn. [ID:nN16227683] [ID:nN16249612]
Furthermore, offshore shipments from North American
producers improved significantly as buyers purchased nearly
triple the total of last year's first quarter.
Potash Corp expects that global potash shipments in 2010
will be about 50 million tonnes, or more than 50 percent above
year-earlier levels. The sharp increase is being driven by
strong potash demand in both Asia and the Americas.
Despite recent inventory drawdowns at the producer level,
North American producers have been unable to implement a spring
price increase of $30 per ton, however. At the same time,
profit margin on DAP, or diammonium phosphate -- a key
phosphate-based fertilizer -- has been hurt by rising sulphur
"We don't think an anticipated rally in the potash price
will unfold and we think higher raw material costs in DAP will
pressure gross margin," said Soleil Securities analyst Mark
Potash Corp expects its 2010 potash segment gross margin
will be within the range of $1.5 billion to $1.8 billion. It
expects its total potash sales to range between 7.4 million and
8.0 million tonnes.
In phosphate and nitrogen, the company expects to generate
combined gross margins of about $500 million to $700 million in
($1= $1.003 Canadian)
(Reporting by Euan Rocha; editing by Peter Galloway)