Potash Profit Tops Analyst Estimates as Demand RisPotash Profit Tops Analyst Estimates as Demand Rises
July 29, 2010, 8:48 AM EDT
By Christopher Donville
July 29 (Bloomberg) -- Potash Corp. of Saskatchewan Inc., the world’s largest fertilizer producer by market value, reported second-quarter profit that beat analysts’ estimates as demand rose for its namesake crop nutrient.
Profit excluding receipt of a special dividend was $1.38 a share, topping the $1.21 average estimate of 26 analysts surveyed by Bloomberg. Second-quarter net income more than doubled to $472 million, or $1.55 a share, from $186.2 million, or 61 cents, the Saskatoon, Saskatchewan-based company said today in a statement. Sales rose 68 percent to $1.44 billion.
Demand for potash, a form of potassium used to boost crop yields, is rising as farmers recharge their fields with nutrients after deferring purchases in 2008 and 2009 amid record high fertilizer prices and the global economic slump.
“With growing demand for food and supportive crop economics, farmers have been motivated to begin addressing nutrient deficiencies in their soils,” Chief Executive Officer Bill Doyle said in the statement.
The company raised its full-year profit forecast to $5 to $5.50 a share, from a previous projection of $4.50 to $5.25.
The midpoint of the new forecast still is lower than the $5.17 estimated on average by 26 analysts after subtracting the 17-cent special dividend, which was received from Israel Chemicals Ltd., said Edlain Rodriguez, a New York-based analyst with Gleacher & Co.
Consensus Estimates
“They did better in the second quarter than expected, but consensus estimates will have to come down,” Rodriguez, who recommends investors buy the shares, said today in a telephone interview.
The company, which also makes phosphate and nitrogen-based crop nutrients, rose $1.17, or 1.2 percent, to $98.88 at 8:18 a.m. before the open of regular New York Stock Exchange trading. The shares declined 9.9 percent this year before today, giving the company a market capitalization of $29 billion.
Sales volumes of potash rose to 1.9 million tons from 394,000 tons while the company sold the nutrient for an average of $309 a ton, about 35 percent less than a year earlier.
Global potash shipments will likely rise to about 50 million tons this year, the company said. On July 22, competitor Mosaic Co. forecast 46 million to 48 million tons.
“Fertilizer buyers have re-engaged and consumption in most major potash markets - the primary exception being China - is forecast to return to levels near those prior to the global economic downturn,” Potash said in the statement.
https://www.businessweek.com/news/2010-07-29/potash-profit-tops-analyst-estimates-as-demand-rises.html