PotashCorp cuts profit forecast again

Low prices hit PotashCorp’s projections

Record sales were not enough to offset weak prices for Potash Corp. of Saskatchewan Inc. this quarter, leading the Saskatoon-based company to cut its annual profit forecast for the third time this year.

The fertilizer giant said that prices averaged US$150 per tonne in the third quarter, and that it expects to earn between US$0.40 and $0.45 per share this year — down from its end-of-2015 prediction of between US$0.90 and US$1.20 per share.

On Thursday, it reported quarterly earnings of US$0.10 per share, or US$81 million, bringing its yearto-date total to US$0.33 per share, or US$277 million.

PotashCorp earned US$1.28 per share, or $1.1 billion, in the same period last year.

However, the company does not expect current conditions to persist much longer.

“We anticipate a continued recovery in potash,” PotashCorp President and CEO Jochen Tilk told reporters and analysts on a conference call Thursday morning.

Tilk said the company expects “a more constructive potash environment as we approach 2017” due to factors including growing consumption in China and a general rise in demand following later-than-normal sales contract settlements.

PotashCorp has long maintained that demand for potash will increase as farmers work to feed a growing global population. Tilk reiterated that view Thursday, and said the ramp-up of PotashCorp’s Rocanville mine should help reduce its costs.

On Sept. 13, PotashCorp and Agrium Inc. — an integrated crop nutrient supplier headquartered in Calgary — announced plans to merge, forming a US$26billion company with more than 20,000 employees around the world.

Tilk and Agrium president and CEO Charles (Chuck) Magro, who will lead the still-unnamed company, said that the merger was a response to “fierce” market conditions, which have wreaked havoc among Saskatchewan’s natural resource companies.

The companies said the deal will lead to US$500 million in savings. Some industry analysts have predicted mine closures in the province, while others say it could solve short-term problems for PotashCorp and longer-term ones for Agrium.

Tilk declined to answer questions about the merger on the conference call, but said he has spoken with many PotashCorp shareholders about the deal, and that the reception has been “overwhelmingly supportive.”