(Adds Potash views on demand, analyst comment)
By Rod Nickel
July 24 Potash Corp of Saskatchewan
raised its full-year earnings outlook on Thursday after
second-quarter profit fell less than expected due to improving
global fertilizer demand.
Earnings have declined year over year for four straight
quarters as the price of the crop nutrient hit a six-year low
earlier this year. The breakup last year of global trading
partnership Belarusian Potash Co accelerated the price slide, as
it created more competition among producers.
Lower prices have recently rekindled demand, however, and
cost-cutting has also improved Potash Corp's bottom line.
Shares of Potash Corp jumped 4 percent to $37.62 in
"The key question is, 'Is this just pent-up (potash) demand
finally being satisfied, or is it going to continue into 2015,'"
said Peter Prattas, analyst at Cantor Fitzgerald. "Our view is
that demand has room to increase slightly in 2015, but we're not
going to continue with the momentum we've had to start the
The company said it has a strong potash order book from U.S.
buyers for the second half, and Canpotex Ltd - its offshore
trading partnership with Mosaic Co and Agrium Inc
- is fully committed through the third quarter.
China is driving some of the renewed potash demand. Potash
Corp said it expected Canpotex to ship 1.2 million tonnes for
the year factoring in optional tonnage arrangements in its
contract with Sinofert Holdings Ltd.
Potash shipments to India also look to exceed last year's
level despite weaker monsoon rains that have limited Indian crop
Second-quarter net earnings for the world's biggest
fertilizer company by market capitalization fell to $472
million, or 56 cents per share, from $643 million, or 73 cents
per share, a year earlier.
Analysts on average had expected a profit of 46 cents per
share, according to Thomson Reuters I/B/E/S. Potash Corp had
forecast 40 cents to 45 cents.
Revenue dropped 12 percent to $1.89 billion, beating
analysts' estimates of $1.68 billion.
Potash Corp raised its estimate of 2014 earnings to a range
of $1.70 to $1.90 per share from a prior forecast of $1.50 to
$1.80. Analysts on average had forecast $1.69.
Potash forecast third-quarter earnings of 35 cents to 45
cents per share, in line with Wall Street's average view of 40
"Although results were below those of the same period last
year, an improving price environment and - in the case of our
potash and nitrogen businesses - cost efficiencies contributed
to our bottom line," said Chief Executive Officer Jochen Tilk,
who replaced Bill Doyle this month.
In December, the company said it would slash its workforce
by 18 percent. It has since recalled nearly 100 workers.
The company's potash sales were flat at 2.5 million tonnes
in the second quarter, while its average realized price fell 26
percent to $263 per tonne.
Potash Corp increased its estimate for 2014 global potash
shipments by all companies to a range of 56.5 to 58 million
tonnes, from its previous forecast of 55 to 57 million tonnes.
(Reporting by Rod Nickel in Winnipeg, Manitoba; Editing by Lisa
Von Ahn and Chizu Nomiyama)