Potash Corp. Gets Hit on Lowered Forecast, EPS Miss

Potash Corp. of Saskatchewan Inc. (NYSE: POT) reported second-quarter adjusted EPS of $1.01, which excludes one-time charges of -$0.41, and $2.4 billion in revenue this morning. Adjusted EPS were down from $1.12 per share in the same period a year ago, while revenue was up from $2.33 billion. The results compare to the Thomson Reuters consensus estimates for $1.02 per share and $2.34 billion in revenue.

The fertilizer maker forecast third-quarter EPS of $0.70 to $0.90 and full-year EPS of $2.80 to $3.20. The consensus estimate for third-quarter EPS had been $0.95, and the full-year estimated EPS had been $3.47. Potash production is forecast to decline in the third quarter due to maintenance and “capital downtime,” which the company said leads it to “anticipate” a higher cost-of-goods-sold. Gross margins are forecast to rise, however.

The company’s president and CEO noted:

Although certain notable items reduced our reported earnings, the second quarter highlighted the underlying strength of our business. The acceleration in potash demand that took hold at the end of the first quarter allowed us to deploy our capacity, delivering strong results and creating value for our shareholders.

Sales volumes in North America for the second quarter fell by 9% year-over-year, but rose by 71% sequentially. Demand for nitrogen fertilizer was “robust” in the quarter; while phosphate sales were down slightly year-over-year. Nitrogen prices rose from $400 a metric ton a year ago to $436 a metric ton this quarter, while phosphate prices fell slightly, from $578 a metric ton in the same period last year to $552 a metric ton this year.

Shares are down 3.4% in premarket trading, at $43.00 in a 52-week range of $36.73 to $61.35. Thomson Reuters had a consensus analyst price target of $54.19 before today’s results were announced.

Paul Ausick