Potash Corp Q1 Profit Plunges, Lifts FY14 Earnings View

(RTTNews) - Potash Corp. of Saskatchewan Inc. (POT, POT.TO) reported Thursday a sharp decline in first-quarter profit hurt by charges as well as lower sales, despite an improving environment for both demand and pricing. Further, the company lifted the lower end of its fiscal 2014 earnings forecast range.

PotashCorp President and Chief Executive Officer Bill Doyle said, "After an especially challenging environment in the second half of 2013, greater demand and stability emerged early in the year. We saw strong customer engagement ahead of the spring planting season, particularly in potash. Despite weather-related issues that impacted our results, especially in phosphate, we were able to deliver earnings above our quarterly guidance range."

For the first quarter, net income was $340 million or $0.40 per share, down from $556 million or $0.63 per share in the same period last year.

The latest-quarter results included a $69 million or $0.06 per share special dividend from its investment in Israel Chemicals Ltd. as well as a $38 million or $0.04 per share non-cash impairment charge related to its investment in Sinofert Holdings Limited.

On average, 25 analysts polled by Thomson Reuters expected the company to report earnings of $0.35 per share for the quarter. Analysts' estimates typically exclude special items.

Quarterly sales fell to $1.68 billion from $2.10 billion last year. Wall Street expected revenues of $1.49 billion for the quarter. The company recorded lower net sales at Potash, Nitrogen and Phosphate segments.

Total Potash sales volumes for the quarter was 2.31 million tonnes, slightly above last year's 2.23 million tonnes with strong buyer engagement in key markets. In Nitrogen, sales volumes of 1.6 million tonnes exceeded the 1.5 million tonnes sold in 2013.

Adjusted earnings before interest, tax, depreciation and amortization or EBITDA fell 23 percent to $745 million. Adjusted EBITDA margin declined to 49 percent from prior year's 50 percent. Gross margin for the quarter declined as realizations in all three nutrient segments lagged behind those of last year and negatively impacted earnings.

Looking ahead for the second quarter, the company projects net income to be in the range of $0.40-$0.45 per share. Analysts project second-quarter earnings of $0.49 per share.

For full-year 2014, the company now expects earnings to be in the range of $1.50 to $1.80 per share. The company said in January that it expected earnings of $1.40 to $1.80 per share for 2014. Analysts project annual earnings per share of $1.65.

For the full year, the company also maintained its view that global potash shipments could be in the range of 55 to 57 million tonnes, and that total shipments to North America could approximate 9 to 9.5 million tonnes.

Doyle added, "We see steady improvements taking hold in the potash industry. These are encouraging trends and supportive of our long-term view for the business."

Potash Corp shares lost 1.29 percent in Wednesday's trading on the NYSE. In pre-market activity, shares gained $0.63 or 1.79 percent, and traded at $35.77.