Bloomberg News

Potash Third-Quarter Profit Doubles as Nutrient Prices Rise

October 27, 2011

(Updates with closing share price in last paragraph.)

Oct. 27 (Bloomberg) -- Potash Corp. of Saskatchewan Inc., the world’s largest fertilizer producer by market value, reported third-quarter profit that more than doubled as crop- nutrient prices and sales volumes climbed.

Net income rose to $826 million, or 94 cents a share, from $343 million, or 38 cents, a year earlier, the company said today in a statement. That matched the 94-cent-a-share average of 21 analysts’ estimates compiled by Bloomberg. Sales increased 47 percent to $2.32 billion from $1.58 billion, beating the $2.17 billion average estimate.

Prices for potash, the company’s biggest product, increased in the U.S. because of rising demand for the form of potassium used by farmers to make plants more resistant to drought. Prices averaged 27 percent higher in the third quarter compared with a year earlier, according to figures compiled by Bloomberg Industries.

“Global potash prices have surged in 2011, driven by a tight global supply/demand balance, and with producers heavily committed through year-end, we view current price levels as being sustainable,” Don Carson, a New York-based analyst at Susquehanna Financial Group, said in an Oct. 25 note to clients.

Record third-quarter potash sales volumes and higher prices helped lift the company’s gross margin on sales of the nutrient to $700 million, more than double the year-earlier performance, the company said. Potash production reached a third-quarter record of 1.9 million metric tons, the company said.

Global Potash Forecast

Potash released its earnings before regular trading began on North American Markets. Potash rose 5 percent to $52 at 7:07 a.m. in New York. The shares declined 4 percent this year before today.

Potash, which also makes phosphate- and nitrogen-based fertilizers, said total shipments from the global industry of its namesake crop nutrient will rise to 58 million to 60 million tons in 2012, up from its forecast of 57 million for this year.

“Our third-quarter performance reflected the unrelenting pressure on global food production -- and the strength of our growing fertilizer enterprise,” Chief Executive Officer Bill Doyle said today in the statement.

Potash reduced its guidance range for its potash shipments this year to 9.5 million to 9.7 million tons from the 9.6 to 10 million forecast in July because of weather-related downtime at a mine in Saskatchewan and capacity constraints at another operation in the Canadian province.

The company reiterated its full-year earnings forecast of $3.40 to $3.80 a share.

Potash rose 1.4 percent to C$50.46 in Toronto.

--Editors: Steven Frank, Jessica Resnick-Ault.

To contact the reporter on this story: Christopher Donville in Vancouver at cjdonville@bloomberg.net.

To contact the editor responsible for this story: Simon Casey at scasey4@bloomberg.net.


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