Potash Corp profit hit by weak demand; outlook cut
By Euan Rocha
(Reuters) - Potash Corp of Saskatchewan Inc (POT.TO: Quote) reported a 33 percent drop in quarterly profit on Thursday and it lowered expectations for the rest of the year, pushing down the shares of the world's top fertilizer maker.
A nearly 60 percent decline in shipments of the crop nutrient potash led to a much bigger decline in Potash Corp's first-quarter profit than analysts had expected. The industry giant also trimmed its estimate of global potash demand for 2012 and lowered forecasts for its shipments and profits.
"Buyers continued to move cautiously at the beginning of the year, especially with potash purchases," Chief Executive Bill Doyle said in a statement. "Although we anticipated that an increase in global fertilizer purchasing would not take hold until the latter half of the first quarter, it took longer than we expected for demand to emerge."
Doyle said he expected demand for potash - the common name for potassium chloride - to strengthen through the rest of the year.
Some analysts remained skeptical, however. The results prompted National Bank analyst Robert Winslow to cut his rating on Potash Corp shares to "underperform" from "sector perform".
"We too expect robust spring-buying but suggest there is more downside risk than up for grain prices, which in our view signals the prospects for further fertilizer demand weakness later in the year," wrote Winslow, who also trimmed his price target on the company's stock to $42 from $45.
Shares of Potash Corp closed 3.2 percent lower at $42.87 on the New York Stock Exchange on Thursday, while its Toronto-listed shares fell by the same margin to C$42.25.
OUTLOOK DISAPPOINTS Continued...