Potash Corp of Saskatchewan Inc. (POT, POT.TO) reported Thursday a higher profit in its first quarter, above market estimates, as sales were boosted by improved performance in Potash and Nitrogen. Further, the Canadian agricultural nutrient maker issued second-quarter earnings view, which is below Street estimates, and maintained fiscal 2013 forecast.
President and Chief Executive Officer Bill Doyle said, "We had significant growth in our potash performance as global buyers returned to the market in earnest after taking a brief pause late in 2012. This environment enabled us to deliver earnings near the top end of our guidance and laid the foundation for what we believe will be a successful year."
PotashCorp's first-quarter net earnings grew to $556 million $0.63 per share from $491 million or $0.56 per share last year. On average, 27 analysts polled by Thomson Reuters expected the company to report earnings of $0.59 per share. Analysts' estimates typically exclude special items.
Sales climbed to $2.10 billion from $1.75 billion in the prior year quarter. Analysts had consensus revenue estimate of $1.82 billion.
In the quarter, Potash sales volumes increased 78 percent to 2.2 million tonnes as shipments to all major markets accelerated with increased demand. Meanwhile, average realized potash price plunged as prices in all key regions were reset late in the year following a weak market.
In Nitrogen, higher prices and increased volumes boosted sales. The slow start to the spring season in North America delayed demand, while prices for nitrogen products, mainly Ammonia, remained at historically high levels as a result of strong demand coupled with supply challenges in key producing regions.
In Phosphate, a rebound in North American demand and strong US producer exports to Latin America partially offset the absence of significant Indian demand, while total US shipments declined, resulting in lower prices of phosphate fertilizer products.
Gross margin improved 24 percent, fueled by improved global potash demand and record first-quarter Nitrogen contributions.
Looking ahead for the second quarter, Potash Corp expects earnings to be in the range of $0.70 to $0.85 per share. Analysts expect earnings of $0.89 per share for the quarter.
For full-year 2013, the company expects net income guidance in a range of $2.75 to $3.25 per share, while analysts project earnings of $3.01 per share. Estimates for potash gross margin is in the range of $1.9 billion to $2.4 billion and shipments between 8.5 million and 9.2 million tonnes.
Potash Corp also forecasts full-year combined Nitrogen and Phosphate gross margin of between $1.4 billion and $1.7 billion, but near-term uncertainty could produce results toward the low end of range.
Doyle added, "All three nutrients are essential for food production, but the anticipation of growth in potash demand represents a unique opportunity to showcase the strength of our company."
On the NYSE, Potash Corp shares edged up $0.26 or 0.66% in pre-market activity, to trade currently at $39.89.
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