Potash Corp. Profit Trails Estimates as Nitrogen Prices Fall

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Potash Corp. of Saskatchewan Inc., the world’s largest fertilizer producer, reported quarterly profit that missed analysts’ estimates as prices for nitrogen-based fertilizers fell on increased global supply.

Second-quarter earnings slid to 50 cents a share from 56 cents a year earlier, the Saskatoon, Saskatchewan-based company said Thursday in a statement. The average of 20 estimates for profit excluding one-time items was 51 cents. Potash Corp. lowered the upper end of its full-year earnings forecast to $1.95 a share from $2.05 on April 30.

“Our earnings for the quarter hit the midpoint of our guidance range but trailed last year’s total, primarily due to weaker nitrogen prices,” Chief Executive Officer Jochen Tilk said in the statement. “While we have faced some near-term market headwinds, we are encouraged by the strength of global potash demand, especially in offshore markets.”

Sales dropped to $1.73 billion from $1.89 billion, exceeding the $1.68 billion average estimate. The company sold nitrogen-based fertilizer for $334 a metric ton, down from $393 a year earlier on increased global supply and record Chinese urea exports over the past 12 months.

K+S Interest

For potash crop nutrients, the average sale price was $273, below the $282 average of five analyst estimates, although it was up from $263 a year earlier.

“Higher prices in the quarter are a reflection of depressed prices last year when the market was adjusting to the breakup of the Russian potash cartel,” Spencer Churchill, a Toronto-based analyst at Paradigm Capital Inc., said before the second-quarter results were released.

Last year, sales of nitrogen-based crop nutrients generated 34 percent of Potash Corp.’s revenue, according to data compiled by Bloomberg. Potash accounted for 40 percent of sales and phosphate fertilizer 26 percent.

Potash Corp. is seeking to acquire German rival K+S AG, which earlier this month rejected a 7.85 billion-euro ($8.6 billion) all-cash offer.

Even so, Potash Corp. remains focused “on engaging with and having constructive discussions with K+S management that would include commitments to secure German locations and employment,” it said in Thursday’s statement. “Please bear in mind that we have not yet decided to make a formal offer.”

The shares rose 1.1 percent to C$35.17 in Toronto.

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