Potash Corp. Posts Profit Decline

Potash Corp. of Saskatchewan Inc. on Thursday reported an 11% decline in its third-quarter profit and cut its annual earnings guidance as a result of weaker market conditions for potash.

The Canadian fertilizer company also moved forward the planned closure of a New Brunswick potash mine to the end of November and said it would take three-week inventory shutdowns at three mines in its home province of Saskatchewan.

Potash Corp. said it expects the moves to lower potash production in the fourth quarter by almost 500,000 metric tons, but it doesn't expect any layoffs related to the changes.

"While this will reduce available production levels until our new Picadilly mine is fully ramped up, it is expected to improve our cost profile and help manage inventories," the company said in its earnings statement. Potash is building the 2-million-ton Picadilly expansion project in New Brunswick to replace the closing Penobsquis mine.

Potash Corp. said earnings for the quarter fell to $282 million, or 34 cents a share, from $317 million, or 38 cents a year earlier. Excluding a 3-cent charge largely related to its phosphate business, results were in line with the 37 cents analysts polled by Thomson Reuters expected.

Sales for the quarter fell to $1.53 billion from $1.64 billion, but came in ahead of the $1.45 billion analysts were expecting.

The company, a major producer of the key fertilizer ingredients of potash, nitrogen and phosphate, said global potash demand remained strong during the quarter, but as a result of economic headwinds and currency volatility, prices were lower in most key potash markets.

It lowered its potash sales volume guidance for the year to between 9 million and 9.2 million tons and now expects potash gross margin of $1.4 billion to $1.5 billion due to weaker volumes and pricing. It previously guided for sales volumes of 9.3 million to 9.6 million and gross margin of $1.5 billion to $1.7 billion.

Potash Corp. said it now expects earnings of between $1.55 and $1.65 a share for the year, down from previous guidance of $1.75 to $1.95 a share.

Earlier this month, Potash Corp. ended its pursuit to take over German rival K+S AG for about $8.8 billion, derailed by slumping commodity prices and the refusal of K+S to engage in talks. A tie-up of the two would have created a business with the potential to control up to 30% of the global potash market.

Write to Judy McKinnon at [e-mail]

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(END) Dow Jones Newswires

October 29, 2015 09:15 ET (13:15 GMT)

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