Potash Corp. of Saskatchewan Inc. (NYSE: POT) reported third-quarter 2013 results before markets opened Thursday morning. The fertilizer maker posted diluted earnings per share (EPS) of $0.41 on revenue of $1.5 billion. In the same period a year ago, PotashCorp reported diluted EPS of $0.74 on revenue of $2.14 billion. Third-quarter results also compare to the Thomson Reuters consensus estimates for EPS of $0.53 and $1.69 billion in revenue.

The break-up of the Russian-Belarus cartel Belarusian Potash Company has sent the fertilizer market into a tailspin. The Russian firm Uralkali left the cartel and announced that it would go after market share, leading potash buyers to sit on their wallets as they wait for prices to fall. That uncertainty killed both sales volumes and margins for PotashCorp.

The company’s gross profit on potash fertilizer fell from $554 million in the third quarter of 2012 to $228 million this year. Price per metric ton fell from $429 a year ago to $307. Potash production in the third quarter was down 27% to 1.2 million metric tons. Sales volumes fell by nearly 500,000 metric tons year-over-year.

PotashCorp’s nitrogen fertilizers fared little better. Gross profit fell from $251 million a year ago to $178 million. Sales volume rose from 1.15 million metric tons to 1.37 million, but the realized price fell from $458 per metric ton a year ago to $327 this year.

The company’s phosphate sales volume fell only slightly, but net sales were down from $513 million a year ago to $432 million this year, and the realized price per ton fell from $537 per metric ton to $467.

The company’s CEO said:

The most recent quarter can best be characterized as a predictable response to an unpredicted event. As we have seen in the past, fertilizer customers faced with uncertainty act with extreme caution.

The company also lowered full-year EPS guidance to $2.00 to $2.20, well below the consensus estimate of $2.51. How much of this bad news is already priced into the shares will determine how badly the stock gets hammered Thursday. The upheaval in the potash markets is old news, but it could be that investors did not quite understand how much disruption it caused. Even worse, it is not settled yet and the drama could continue well into next year.

PotashCorp shares were down about 1.4% in premarket trading this morning, at $31.25 in a 52-week range of $28.55 to $44.13. Thomson Reuters had a consensus analyst price target of around $32.20 before the report.

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