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Potash Corp. Cuts Profit Forecast Amid ‘Market Uncertainty’ (1) 2013-10-11 07:49:36.234 GMT
(Adds analyst recommendations in fifth paragraph.)
By Simon Casey Oct. 11 (Bloomberg) -- Potash Corp of Saskatchewan Inc., North America’s largest producer, cut its profit forecast after customers deferred purchases amid predictions that prices for its main product will slump. Its shares dropped 2.1 percent in after-market trading. The global potash market was shaken at the end of July after OAO Uralkali, the world’s biggest producer, exited a trading joint venture with its Belarusian rival. The Russian company said it would boost output, a move that sent shares of fertilizer companies plunging around the world. Third-quarter earnings will be about 41 cents a share, Saskatoon, Saskatchewan-based Potash Corp. said yesterday in a statement. In July, it predicted profit of 45 cents to 60 cents. The average of 27 analysts’ estimates compiled by Bloomberg was for 47 cents, excluding one-time items. “The change primarily reflects lower-than-forecasted potash sales volumes late in the quarter as buyers continued to defer significant purchases amidst near-term market uncertainty,” the company said in the statement. Potash Corp. fell to $31.10 in after-market trading. It has dropped 22 percent this year in regular trading. The company is scheduled to report third-quarter earnings on Oct. 2. Eight analysts recommend buying Potash Corp., 18 rate it a hold and five recommend selling the stock, according to data compiled by Bloomberg.
Strengthen Roots
Uralkali Chief Executive Officer Vladislav Baumgertner said in July that the price of potash, which helps strengthen plant roots and improve resistance to drought, may fall to less than $300 a metric ton as his company moves to full production to gain market share. The last reported potash supply agreement between the Uralkali-Belarusian venture and China was at $400 a ton. Uralkali and former partner Belaruskali had controlled 40 percent of the global potash market through their Belarusian Potash Co. trading venture. The $20 billion market for the crop nutrient was “paralyzed” by Uralkali’s withdrawal from BPC, Potash Corp. Chief Financial Officer Wayne Brownlee said Sept. 18. The Russian company has ramped up to maximum output since quitting BPC, having run at an average 70 percent in 2012. Uralkali’s Baumgertner was arrested in Minsk on Aug. 26 following a meeting with the Belarusian prime minister. He was held in a Belarus KGB cell for a month before being moved to house arrest in a rented apartment, where he remains. Uralkali’s billionaire shareholder Suleiman Kerimov, who controls 33 percent of the Berezniki-based potash producer with two business partners, has held talks on selling his stake since Baumgertner’s detention. China gained a 12.5 percent stake in Uralkali last month after a unit of sovereign wealth fund China Investment Corp. exchanged bonds for shares in the potash producer.
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--Editors: Madelene Pearson, John Viljoen
To contact the reporter on this story: Simon Casey in New York at +1-212-617-3143 or scasey4@bloomberg.net
To contact the editor responsible for this story: Simon Casey at +1-212-617-3143 or scasey4@bloomberg.net