Potash Profit Exceeds Analysts' Estimates as Crop-Nutrient Demand Climbs
A file photo shows William Doyle, president and chief executive officer, Potash Corp. of Saskatchewan Inc., listening to a question during an interview in New York. Photographer: Andrew Harrer/Bloomberg
Potash Corp. of Saskatchewan Inc., the world’s largest fertilizer producer by market value, reported second-quarter profit that beat analysts’ estimates as demand rose for its namesake crop nutrient.
Profit excluding receipt of a special dividend was $1.38 a share, topping the $1.21 average estimate of 26 analysts surveyed by Bloomberg. Net income more than doubled to $472 million, or $1.55 a share, from $186.2 million, or 61 cents, the Saskatoon, Saskatchewan-based company said today in a statement. Sales rose 68 percent to $1.44 billion.
Demand for potash, a form of potassium used to boost crop yields, is rising as farmers recharge their fields with nutrients after deferring purchases in 2008 and 2009 amid record high fertilizer prices and the global economic slump.
“Farmers are eager to capture the economic benefits of their efforts and are making the necessary investment to protect the fertility of their soil,” Chief Executive Officer Bill Doyle said today on a conference call with investors and analysts.
The company, which also makes phosphate and nitrogen-based crop nutrients, raised its full-year profit forecast to $5 to $5.50 a share, from $4.50 to $5.25 previously.
The midpoint of the new forecast still is lower than the $5.17 estimated on average by 26 analysts after subtracting the 17-cent special dividend, which was received from Israel Chemicals Ltd., said Edlain Rodriguez, a New York-based analyst with Gleacher & Co.
Consensus Estimates
“They did better in the second quarter than expected, but consensus estimates will have to come down,” Rodriguez, who recommends buying the shares, said in a telephone interview.
Potash Corp. rose C$4.69, or 4.6 percent, to C$106.39 at 4:19 p.m. in Toronto Stock Exchange trading. The shares have declined 7 percent this year.
Sales volumes of potash rose to 1.9 million tons from 394,000 tons while the company sold the nutrient for an average of $309 a ton, about 35 percent less than a year earlier.
Global potash shipments probably will rise to about 50 million tons this year and 55 million tons in 2011, the company said. On July 22, competitor Mosaic Co. forecast 46 million to 48 million tons, up from about 32 million in 2009.
“Fertilizer buyers have re-engaged and consumption in most major potash markets -- the primary exception being China -- is forecast to return to levels near those prior to the global economic downturn,” the company said.
Potash consumption in China may rise 29 percent next year to 11 million metric tons, Doyle said.
Canpotex Inc., the offshore potash marketing arm of Potash Corp., Agrium Inc. and Mosaic Co., will likely sign a new potash supply contract with China by the end of the year, Doyle said.
To contact the reporter on this story: Christopher Donville in Vancouver at cjdonville@bloomberg.net
Rate These Stories
Rate this Page