TORONTO (miningweekly.com) – The world’s largest producer of the crop nutrient potash, Canada’s Potash Corp of Saskatchewan, on Thursday announced earnings that, despite being up 23% year-on-year, came in below analyst expectations as the company dealt with lower nutrient prices and reduced potash sales volumes. It also slashed its full-year outlook.
The Saskatoon-based fertiliser giant had earned $643-million, or $0.73c a share, in the second quarter ended June 30, compared with $522-million in the same period of 2012. By comparison, analysts estimated earnings of $0.81 a share.
Potash Corp slashed its 2013 earnings outlook to between $2.45 and $2.70 a share, which was significantly lower than the $2.75 to $3.25 previously expected.
“Global fertiliser demand was strong during the quarter, but highly competitive markets around the world had an impact on our results. Despite some weakening of prices in each of our nutrients, the continued engagement of buyers in our key markets was a positive sign,” CEO Bill Doyle said in an analyst conference call.
The company’s TSX- and NYSE-listed stock gave back 5% in early morning trade on Thursday, wiping out Wednesday’s gains, when it announced plans to buy back up to $2-billion of stock over a one-year period, subject to regulatory approval. If the maximum number of shares were bought, it would equal 5% of the company’s total outstanding shares.
Potash Corp reported an 18% year-on-year decline in the company’s realised price for potash in the quarter, earning $356/t, compared with $433/t in the second quarter of 2012.
Production also declined as the company operated its Lanigan facility at reduced rates to try to match supply with demand.
Shipments by Canpotex, the market cartel of Canada’s biggest potash miners – Potash Corp, Mosaic and Agrium, to offshore markets maintained a record pace, with the majority of this quarter's volumes directed to Latin America (26%), China (15%), India (12%) and other Asian countries (44%).
The company maintained a positive outlook on the sector. It expected global potash shipments in 2013 to be similar to the 56-million tonnes shipped in the record year of 2011.
Potash Corp pointed to India as having problems, where a subsidy programme had distorted demand and affected potash shipments.
“Rising global demand for all three crop nutrients continues to reflect the underlying reality that farmers and fertiliser buyers around the world are working to improve soil fertility and food production.
“As this need for crop nutrients, especially potash, continues to grow, we believe it translates into significant opportunities for our company. As we have seen throughout our history, the timing of increases in demand and prices is not perfectly predictable, but we are confident that a commitment to running our business responsibly and with patience will be rewarded,” Doyle said.
Potash Corp’s shares listed on the TSXon Thursday afternoon traded 2.04% lower at C$38.37 apiece.