Potash Corp. Profit Beats Estimates; Forecast Raised

Potash Corp. of Saskatchewan Inc., the target of a $40 billion hostile takeover offer from BHP Billiton Ltd., reported third-quarter profit that beat analysts’ estimates and raised its full-year earnings forecast.

Net income climbed to $402.7 million, or $1.32 a share, from $247.9 million, or 82 cents, a year earlier, Saskatoon, Saskatchewan-based Potash Corp. said today in a statement. Per- share profit topped the $1.16 average estimate of 25 analysts surveyed by Bloomberg. The company increased its forecast for full-year earnings to $5.75 to $6 a share from a previous prediction of $5 to $5.50.

Chief Executive Officer Bill Doyle is raising potash prices in the U.S. as demand rebounds from a slump last year. If Canada approves BHP’s hostile bid for Potash Corp., the Melbourne-based company will be under pressure to increase its $130-a-share offer price, said Mark Connelly, a New York-based analyst at Credit Agricole SA.

“What really matters is that fertilizer prices are rising,” Connelly said in a telephone interview before the results were released. “That means whatever investors thought Potash was worth in August when BHP first made its offer, they’re thinking it’s worth even more now.”

Potash Corp. has rejected BHP’s $40 billion offer as too low and said it was seeking alternative bids. The Canadian government is to decide by Nov. 3 whether to approve or reject the proposed deal based on a calculation of the transaction’s “net benefit” to the country.

Rising Sales

Potash Corp., the world’s largest fertilizer producer by market value, sold 1.9 million metric tons of potash in the quarter, up from 1.01 million tons a year earlier. That beat the 1.5 million-ton average of three estimates from Horst Hueniken, a Toronto-based analyst at Stifel Nicolaus & Co., and two other analysts.

“The process of replenishing nutrients accelerated quickly and tangibly in the third quarter,” Doyle said in the statement.

Potash Corp. raised its 2011 global forecast for industrywide potash demand next year to 55 million tons to 60 million tons from a previous prediction of 55 million.

Potash Corp. was unchanged at $147.32 at 7:14 a.m. before regular trading on the New York Stock Exchange. The shares gained 36 percent this year before today.

2011 Profit Forecast

The company, which also produces phosphate and nitrogen- based crop nutrients, said it expects full-year 2011 profit of $8 to $8.75 a share. Twenty-six analysts surveyed by Bloomberg estimated on average earnings of $7.83 next year.

Total sales in the third quarter rose 43 percent to $1.58 billion from $1.1 billion, more than the $1.34 billion estimated by 16 analysts surveyed.

The company’s average selling price for potash fell to $305.60 a ton in the three month period, from $308.64 in the previous quarter and $389.24 a year earlier.

(Potash scheduled a conference call for 1 p.m. New York time today at +1-877-881-1303.)

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

To contact the editor responsible for this story: Simon Casey at scasey4@bloomberg.net.

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