Potash Corporation of Saskatchewan Inc. (NYSE: POT) scored a win with earnings.

The potash and fertilizer giant posted $1.74 EPS, a gain of 181% year over year and a gain of 50% sequentially.  Revenues came in at $1.89 Billion for the quarter.  First Call had estimates pegged at $1.52 EPS on $1.67 Billion in revenues.

Potash noted that the pressure to increase global food production has continued to drive demand for potash, phosphate and nitrogen.  It also noted that this pushed prices for all three nutrients to new highs.  Each segment contributed record gross margin, and cash from operating activities prior to working capital changes in Q1 reached a record $625.5 million. 

It has also shown price increases across the board and it is significantly hiking its guidance (with assumed parity of Canada/US Dollar).  Its prior Q2 guidance is now $2.20 to $2.50, while First Call estimates are $2.27.  Its old target of $6.25 to $7.25 for the full year is now in a range of $9.50 to $10.50 EPS, while First Call is at $8.62 EPS.

CEO Bill Doyle’s comments here show the belief that this is a not just a fad, but on that will be a norm:

• "The global need to increase food production is real and immediate, and it will be a part of our world for the foreseeable future…… It took nearly a decade to empty the global grain cupboard and we can’t refill it overnight…"

We had noted in our full preview that the company would have to orchestrate another "beat and raise" to keep everyone happy after this exponential share growth.  This looks like that and then some.  So far shares are indicated up about 3% or 4% pre-market after closing at $204.12 yesterday and the 52-week trading range is %58.87 to $215.97.

The only issue we’d bring up is that shares are currently trading at or above many of the official stated price targets from Wall Street analysts.  They will have to play catch-up one way or another.

Jon C. Ogg
April 24, 2008

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