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Potash Profit Misses Estimates On Weak Demand; Sees Q1, FY13 Earnings Below View

Potash Profit Misses Estimates On Weak Demand; Sees Q1, FY13 Earnings Below View
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1/31/2013 7:32 AM ET

Agricultural nutrient maker Potash Corp of Saskatchewan Inc. (POT: Quote, POT.TO) reported Wednesday a sharp decline in fourth-quarter profit below Wall Street estimates, reflecting weak demand and lower prices in all three nutrients. The company also issued earnings forecast for first quarter and fiscal 2013, both below analysts' view.

President and Chief Executive Officer Bill Doyle said, "Our fourth-quarter results were adversely affected by weaker performance in all three nutrients as global fertilizer markets paused in the absence of significant immediate needs and amid lack of direction, particularly in phosphate and potash."

"Despite these temporary challenges, we operated with a consistent approach - temporarily slowing potash production and leveraging our diversified product mix in our other nutrients - to best position our company for the expected rebound in fertilizer demand in 2013," Doyle added.

In its just concluded fourth quarter, the company's net earnings were $421 million or $0.48 per share, down from $683 million or $0.78 per share in the same period last year. The latest quarter results included $41 million or $0.04 per share provision for the settlement of antitrust claims in the US.

On average, 28 analysts polled by Thomson Reuters expected the company to report earnings of $0.58 per share for the quarter. Analysts' estimates typically exclude special items.

Sales for the quarter declined to $1.64 billion from $1.87 billion last year. Fifteen analysts had consensus revenue estimate of $1.74 billion for the quarter.

In the quarter, total potash sales volumes declined 17 percent to 1.3 million tonnes. Average realized potash price was $387 per tonne, lower than prior year's $431 per tonne reflecting the heightened competitive pressure in most major spot markets.

According to the firm, the typical late-season slowdown in global potash demand was more pronounced in the quarter. In North America, shipments to offshore markets declined 43 percent, while in contrast, domestic shipments from North American producers climbed 38 percent.

In Phosphate, US producer sales of solid phosphate to the North American market grew 33 percent, but was offset by weak demand in offshore markets, primarily India, which led to lower prices for most phosphate fertilizer products.

Looking ahead, Potash Corp said it forecasts first-quarter net income per share in the range of $0.50 to $0.65. Analysts expect the company to report earnings of $0.68 per share for the quarter.

The company expects net income for fiscal 2013 between $2.75 and $3.25 per share, while analysts expect earnings of $3.18 per share.

Potash Corp expects demand to accelerate in 2013 and anticipate global potash shipments for the year to be between 55 million and 57 million tonnes, well above the approximately 51 million tonnes shipped in 2012.

The company estimates 2013 potash segment shipments between 8.5 million and 9.2 million tonnes.

On the NYSE, Potash Corp shares closed Wednesday's trading at $43.02, up $0.15 or 0.35 percent.

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by RTT Staff Writer

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