Potash Corp. Forecasts 2010 Profit That Lags Estimates as Prices Decline

Potash Corp. of Saskatchewan Inc., the world’s largest producer of its namesake crop nutrient, forecast full-year and second-quarter profit that lagged analysts’ estimates as potash prices fell.

Earnings will be $4.50 to $5.25 a share this year, the Saskatoon, Saskatchewan-based company said today a statement. Analysts projected profit excluding some items of $5.49, the average of 24 estimates in a Bloomberg survey. Potash Corp. said earnings in the current period will be $1 to $1.30, lower than the $1.43 estimated on average by 21 analysts.

Global demand for the form of potassium fell last year as some farmers shunned the nutrient after corn, soybean and wheat futures dropped. Potash prices have languished this year even as producer inventories declined, disappointing some investors who expected prices to advance, Edlain Rodriguez, a New York-based analyst at Broadpoint AmTech, said in an interview.

“The company’s earnings forecasts imply that potash prices may not rebound this year as much as investors may have expected,” Rodriguez said today after the earnings release.

The company’s average selling price for potash fell 40 percent from a year earlier to $321.31 a ton, Potash Corp. said today in the statement. The price declined 4.3 percent since the previous period.

Quarterly Profit Rises

First-quarter net income rose to $449.2 million, or $1.47 a share, from $307.4 million, or $1.01, a year earlier, the company said. Analysts projected profit excluding some items of $1.32, the average of 24 estimates in a Bloomberg survey. Sales gained 86 percent to $1.71 billion.

Potash Corp., which also produces nitrogen- and phosphate- based fertilizers, rose C$1.49, or 1.4 percent, to C$111.23 at 4:15 p.m. in Toronto Stock Exchange trading. The shares have declined 2.8 percent this year.

“We had a sort of mania on potash a couple of years ago,” Ian Nakamoto, director of research at MacDougall, MacDougall and MacTier Inc. in Toronto, said in an interview before the earnings release. “Now the mentality is nobody seems to be in a hurry to rebuild distributor inventories.”

Company sales of potash in North America rose to a record 1.3 million metric tons in the first quarter, exceeding the previous high of 1.1 million tons from the second quarter of 2004, Potash Corp. said today.

“North American price increases announced for March were just beginning to be realized by the end of the quarter, while increases announced for Latin America, which typically buys more heavily in the second half of the calendar year, had not yet been realized,” Potash Corp. said in the statement.

The company forecast potash sales this year of 7.4 million to 8 million tons, up from a January projection of 7 to 8 million metric tons. Shipments in 2009 fell 65 percent to 2.99 million tons, Potash Corp. said in January.

To contact the reporter on this story: Christopher Donville in Vancouver at cjdonville@bloomberg.net.

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