BUSINESS

Potash Corp. cuts Q3 earnings guidance to 41 cents per share; cites lower sales

10/11/2013 11:56 EDT | Updated 01/23/2014 06:58 EST
SASKATOON - Stock in Potash Corp. of Saskatchewan (TSX:POT) was down just over two per cent Friday, a day after the company warned that third-quarter earnings would come in lower than previously expected as farmers delay buying fertilizer in an uncertain market.

The Saskatoon-based fertilizer giant said earnings per share are now expected to come in at about 41 cents, down from the 45 to 60 cents per share it predicted back in July.

"The change primarily reflects lower than forecasted potash sales volumes late in the quarter as buyers continued to defer significant purchases amidst near-term market uncertainty," the company said in a release.

The company will report its full third-quarter results on Oct. 24. At that time, it will also discuss its full-year earnings guidance, which in July was lowered to a range between $2.45 and $2.70 per share from $2.75-$3.25 per share.

On the Toronto Stock Exchange, Potash shares were down 69 cents, or 2.09 per cent, at $32.28 near midday Friday.

The global potash market has been rattled since late July when Russian rival Uralkali said it would pull out of a European cartel that markets the key crop nutrient, Belarusian Potash Company.

BPC accounts for about 43 per cent of the global potash market and competes with Canpotex, a Vancouver-based cartel that sells potash abroad on behalf of three Saskatchewan producers: PotashCorp., Mosaic Co. and Agrium Inc. (TSX:AGU).

There have been suggestions that Uralkali's move could lead to a 25 per cent drop in the price of potash, but PotashCorp CEO Bill Doyle told an investor webcast in August that he doubted the market impact would be that dire.

In a research note Friday, CIBC World Markets lowered its 2013 global potash demand estimate to 53 million tonnes from 54 million tonnes as "demand in India and China has been materially softer than expected following BPC breakup."

China has still not signed a contract for the second half of the year, noted CIBC analyst Jacob Bout.

CIBC lowered its third-quarter earnings estimates to 41 cents per share from 45 cents. On a full year basis, it is expecting $2.13 per share, down from a previous estimate of $2.26.

PotashCorp is the world's largest crop nutrient company, including the largest producer by capacity of potash and third-largest producer of nitrogen and phosphate.

Another major Canadian fertilizer producer, Calgary-based Agrium, has also warned that its sales volumes will be lower in the third quarter.

Last month, it said it expected nitrogen and phosphate sales volumes to be down by 20 per cent and 30 per cent respectively compared with last year, while potash volumes were anticipated to be about 30 per cent lower.

Agrium reports its third-quarter earnings Nov. 6.