(Adds share activity, analyst comment, sales and price details)
By Rod Nickel
April 24, Potash Corp of Saskatchewan,
the world's biggest fertilizer company, forecast on Thursday a
weaker than expected second quarter after reporting a fall in
first-quarter profit that wasn't as steep as the Street
Potash Corp saw profits shrink last year as potash prices
retreated due to softening grain values and the breakup last
summer of Belarusian Potash Company, which was one of two
dominant global potash traders.
Potash demand and spot market prices picked up during the
first quarter, Potash Corp said, but its average realized price
remained nearly one-third lower than a year ago.
Shares of Potash Corp gained 1.8 percent in pre-market
activity in New York to $35.77, reacting to better than expected
first quarter results, said Cantor Fitzgerald analyst Peter
Prattas. The stock is up nearly 7 percent on the year.
For the second quarter, Potash said it expected earnings of
40 to 45 cents per share, falling short of the average Street
view of 49 cents per share, according to Thomson Reuters
"The takeaway for Q2 is that the guidance is below the
Street view, but people may think (Potash Corp is) lowballing it
since they beat on Q1," Prattas said.
Potash Corp raised the bottom end of its full year 2014
guidance to a range of $1.50 to $1.80 per share from the
previous forecast of $1.40 to $1.80. Analysts were expecting
full-year earnings of $1.65 per share.
Potash Corp reaffirmed its estimate for 2014 global potash
shipments by all companies of 55 to 57 million tonnes.
"After an especially challenging environment in the second
half of 2013, greater demand and stability emerged early in the
year," said Chief Executive Bill Doyle, in a statement. On April
7, Potash Corp said former Inmet Mining chief executive Jochen
Tilk would take over as CEO from Doyle in July.
First-quarter net earnings fell by nearly 39 percent year on
year to $340 million, or 40 cents per share. Those results
included a $69 million special dividend from the company's stake
in ICL Israel Chemicals Ltd and a $38 million
impairment charge related to its investment in China's Sinofert
Potash Corp had guided to a range of 30 to 35 cents per
share. First quarter sales dropped 20 percent to $1.68 billion.
Analysts expected, on average, first quarter earnings of 35
cents per share and revenue of $1.488 billion.
The company's potash sales rose 4.5 percent to 2.3 million
tonnes in the first quarter, but its average realized price of
potash plunged 31 percent to $250 per tonne, reflecting a sharp
decline during the last half of 2013.
Demand from Brazil and Southeast Asian countries
strengthened, but logistical challenges constrained North
American producers from satisfying it, Potash Corp said. A
frigid winter and record-large grain harvest in Western Canada
overwhelmed Canadian railways, which miners rely on to move
potash from the province of Saskatchewan to the West Coast.
Sales of phosphate amounted to 800,000 tonnes in the first
quarter, down 11 percent, and Potash Corp's average realized
price dropped 12 percent year over year to $484 per tonne.
Nitrogen sales rose nearly 7 percent to 1.6 million tonnes,
but Potash Corp's average realized price sagged 21 percent to
$344 per tonne.
(Reporting by Rod Nickel in Winnipeg, Manitoba; Editing by
David Goodman, Sofina Mirza-Reid and Chizu Nomiyama)