(Reuters) - Potash Corp of Saskatchewan Inc POT.TO, the world’s largest fertilizer maker, reported a 33 percent profit drop on Thursday due to lower sales and production volumes, which in turn led to higher costs.
The company also trimmed its view on global potash demand for 2012 and lowered forecasts on its own shipments and profit margins from the business, sending its shares down nearly 3 percent in premarket trading.
Saskatoon, Saskatchewan-based Potash said its first-quarter profit slid to $491 million, or 56 cents a share, from $732 million, or 84 cents a share, a year earlier.
Although the decline was anticipated, earnings failed to meet Wall Street’s expectations of 63 cents a share, according to Thomson Reuters I/B/E/S
“Fertilizer buyers continued to move cautiously at the beginning of the year, especially with potash purchases,” Chief Executive Officer 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 the acceleration in potash demand to continue through the rest of the year.
The company said that while potash prices had escaped the pricing volatility seen in products made from other nutrients like phosphate and nitrogen in recent months, they had pulled back slightly on limited demand and increased competitive pressures during the quarter.
Potash Corp said it now expects total global potash demand to be in the 53 million to 56 million tonne range this year, with its own sales volumes in the range of 8.8 million to 9.2 million tonnes. In January, it had forecast global sales of 55 million to 58 million tonnes, with its own shipments in the 9.2 million to 10 million tonne range.
The company also said it expects 2012 gross margins from its key potash business to be $2.6 billion to $2.9 billion. It had previously expected gross margins to be in the $2.9 billion to $3.3 billion range.
Following the announcement, Potash Corp’s shares fell $1.28 to $43 in trading before the morning bell in the United States.
Reporting By Euan Rocha in Toronto; Editing by Lisa Von Ahn and Maureen Bavdek