Potash Corp. Of Saskatchewan Inc. (POT: Quote,POT.TO: Quote) on Thursday reported a 38 percent decline in profit for the second quarter, as a one-time impairment charge related to the company's investment in Chinese fertilizer maker Sinofert Holdings Ltd. offset higher revenues and margins.
Looking ahead, the world's major crop nutrient company forecast earnings for the third quarter below analysts' estimates, and lowered its earnings outlook for fiscal 2012 to reflect the Sinofert charge.
Potash sales volumes for the quarter rose to 2.60 million tonnes from 2.52 million tonnes sold in the same period last year. Offshore shipments totaled 2 million tonnes, a new quarterly record, and up from 1.7 million tonnes in the prior-year period.
The company's average realized potash price of $433 per tonne was 4 percent higher than the same period last year.
Accelerating potash demand and strong contribution from the company's Nitrogen operations resulted in gross margin of $1.2 billion for the quarter, the third-best quarterly total in the company's history, and slightly exceeded that of the same period last year.
Meanwhile, the Phosphate segment saw a decline in gross margin and sales volumes in addition to lower realized prices. The Nitrogen business recorded higher gross margin and average realized prices, while sales volumes were relatively flat with last year.
Potash Corp.'s net income for the second quarter was $522 million or $0.60 per share, down from $840 million or $0.96 per share in the year-ago period.
On average, 25 analysts polled by Thomson Reuters expected the company to report earnings of $1.02 per share. Analysts' estimates typically exclude one-time items.
The results for the latest quarter were impacted by notable items, including a $341 million impairment recorded on the company's investment in Sinofert and $29 million in items related to its Phosphate segment.
Sales for the quarter rose 3 percent to $2.40 billion from $2.33 billion in the year-ago period. Analysts had a consensus revenue estimate of $2.34 billion.
Looking ahead to the third quarter, Potash Corp. forecasts earnings in a range of $0.70 to $0.90 per share. Analysts expect the company to earn $0.95 per share.
For fiscal 2012, Potash Corp. lowered its earnings outlook to a range of $2.80 to $3.20 per share, reflecting the adjustment for the second-quarter Sinofert impairment charge and other factors.
Earlier, the company had forecast earnings in a range of $3.20 to $3.60 per share. Analysts anticipate earnings of $3.47 per share.
The company also revised its full-year gross margin outlook for the potash segment to a range of $2.6 billion to $2.8 billion from the prior range of $2.6 billion to $2.9 billion, citing higher production costs along with slightly lower realizations in the second half.
In Thursday's regular session, POT is trading at $43.89, down $0.60 or 1.35 percent on a volume of 716,376 shares.
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by RTT Staff Writer
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