Potash Corp. of Saskatchewan Inc., the largest fertilizer producer by market value, cut its earnings forecast and reported profit that missed analysts’ estimates after a drop in prices for its namesake crop nutrient.
Profit will be $2.45 to $2.70 a share this year, the Saskatoon, Saskatchewan-based company said today in a statement. That’s less than the $2.75 to $3.25 forecast in April and the $2.84 average of 30 estimates compiled by Bloomberg.
“The magnitude of the cut was a little bit worse than we were thinking,” Jeff Nelson, a St. Louis-based analyst at Edward Jones & Co., who had estimated full-year profit of $3.20 a share, said today in a telephone interview. “Nutrient pricing is under pressure and the company is getting hurt by production curtailments.”
Second-quarter net income rose to $643 million, or 73 cents a share, from $522 million, or 60 cents, a year earlier. That missed the 80-cent average of 29 estimates.
Prices for potash, a crop nutrient that helps strengthen plant roots and improve resistance to drought, are down because of plentiful producer inventories and historically low import volumes in India. Potash Corp. is reducing output from mines in Canada to help balance global supply and demand.
Potash Corp. fell 2.1 percent to C$38.35 at the close in Toronto. The company plans to buy back as much as $2 billion of stock over a one-year period, the company said yesterday in a separate statement.
Second-quarter revenue dropped 11 percent to $2.14 billion, less than the $2.17 billion average estimate.
The company said it sold potash for an average price of $356 a metric ton in the period, compared with $433 a ton a year earlier. Talks toward a new potash supply agreement with China are continuing, though Potash Corp. said it expects shipments to the country in the current quarter will be “minimal.”
Potash Corp. also produces phosphate- and nitrogen-based fertilizers. Prices for those commodities dropped amid heightened competition and late spring planting in the U.S., the company said.
“Global phosphate markets continued to be impacted by the lack of substantive engagement from buyers in India, the world’s largest phosphate importer,” it said.
Potash Corp. forecast third-quarter profit of 45 cents to 60 cents a share. That compares an average estimate of 71 cents.
In April, the company scrapped a proposed bid for Israel Chemicals Ltd., the sixth-largest potash producer, after Israeli workers and politicians opposed the deal.