The company said its second-quarter profit amounted to 56 cents per diluted share, compared with $643 million, or 73 cents per share, in the same quarter of 2013.
However, despite the drop, the results were better than PotashCorp's guidance in April for a profit of 40 to 45 cents per share for the quarter.
The average analyst estimate had been for a profit of 46 cents per share, according to Thomson Reuters.
Sales for the global crop nutrient company were $1.89 billion versus $2.14 billion year-over-year.
In its new outlook for the year, the company said it expected a profit for the full year of $1.70 to $1.90 per share, up from guidance in April for a profit of $1.50 to $1.80 per share.
The new forecast is based on a third-quarter profit of 35 to 45 cents per share and annual potash sales of 8.9 million to 9.2 million tonnes.
PotashCorp president and chief executive Jochen Tilk said robust global fertilizer demand helped the company's results for the quarter.
"Performance in all three nutrient segments improved from the beginning of the year and resulted in our second-quarter earnings exceeding the upper end of our guidance range," Tilk said in a statement.
"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."
The price of potash was hit hard last year due to uncertainty caused by the collapse of a Russia-Belarus marketing cartel last August and lower customer demand amid China's economic slowdown.
PotashCorp said Thursday that its average realized potash price for the quarter was $263 per tonne, down from $356 per tonne in the same period last year.
However, the company noted due to improving market fundamentals through the first half of this year the average realized price was up $13 per tonne relative to first-quarter 2014.