Potash Corp. of Saskatchewan Inc., the largest North American producer of its namesake fertilizer, posted better-than-expected first-quarter earnings and sales as the market for the commodity began to recover following last year’s price plunge.
Profit excluding a writedown on a Chinese investment was 44 cents a share, the Saskatoon, Saskatchewan-based company said today in a statement, surpassing the 35-cent average of 26 estimates compiled by Bloomberg. Sales dropped 20 percent to $1.68 billion, exceeding the $1.58 billion average estimate.
“The market tone has been relatively better in recent months and that’s evident in these results,” Jeff Nelson, a St. Louis-based analyst at Edward Jones, said today by telephone. “It’s hard not to like the setup for 2014 with prices stabilizing and producer inventories falling.”
The company raised the lower end of its full-year earnings forecast to $1.50 to $1.80 a share, from $1.40 to $1.80 previously.
Buyers are returning to the market this year after a slump in prices that followed a move in July by Russia’s OAO Uralkali, the largest producer, to abandon a sales pact and boost sales. Since then, Potash Corp. has cut its capacity, and North American stockpiles have fallen, while China and India have signed long-term sales accords.
First-quarter net income dropped to $340 million, or 40 cents a share, from $556 million, or 63 cents.
Potash Corp. said its average potash sales price in the first quarter was $250 a ton, down from $363 a year earlier. Still, it managed to sell 2.3 million metric tons in the period, up from 2.2 million tons.
The company reiterated its full-year forecast for industrywide potash shipments of 55 million to 57 million tons in 2014. The shares rose 1.5 percent to C$39.02 at the close in Toronto.
North American potash stockpiles declined 9.9 percent in the first quarter to 2.87 million tons, data compiled by Bloomberg Industries show.
“After an especially challenging environment in the second half of 2013, greater demand and stability emerged early in the year,” Potash Corp. Chief Executive Officer Bill Doyle said in today’s statement.
The company said earlier this month that Doyle will step down in July and be succeeded by Jochen Tilk, the former CEO of Inmet Mining Corp.
Potash is a form of potassium used by farmers to strengthen plant roots and boost resistance to drought. Potash Corp. also produces crop nutrients made from phosphates and nitrogen.