(Reuters) - Canada’s Potash Corp of Saskatchewan reported bigger-than-expected revenue on Thursday as it sold more potash at higher prices compared with a year earlier, marking a slow recovery in the oversupplied market.
Potash prices have rebounded modestly since last year but remain low, under pressure from bloated global capacity and soft crop prices.
The Saskatoon, Saskatchewan-based fertilizer producer’s revenue rose 6.4 percent to $1.11 billion, beating the average estimate of $1.09 billion.
Potash Corp’s results were mostly in line with expectations, but the company’s second-half prospects may not be bolstered by improving potash market conditions, disappointing some investors, Citi analyst P.J. Juvekar said.
The company left unchanged its guidance for full-year profits of 45 cents to 65 cents per share.
U.S.-listed shares of the company rose 1.7 percent in pre-market trading to $18.
Potash demand this year has been robust, helped by low prices and brisk offshore sales by Canpotex Ltd, the export company owned by Potash, Agrium Inc and Mosaic Co. Canpotex signed supply contracts this month with Chinese buyers at a higher price.
Potash Corp, the world’s third-largest potash producer, forecast global demand of 62 million to 65 million tonnes this year, up from an earlier forecast of 61 million to 64 million tonnes.
It said potash sales jumped 11 percent to 2.4 million tonnes in the second quarter.
The average realized price for potash rose to $174 per tonne from $154 per tonne a year ago. The company is also whittling down its costs selling the crop nutrient, as it has ramped up production at its expanded lowest-cost mine at Rocanville, Saskatchewan.
Potash said it expects its merger with rival Agrium to close late in the third quarter. The deal, which still requires U.S. and Canadian regulatory approval among others, would combine Potash Corp’s fertilizer capacity, the world’s largest, with Agrium’s farm retail network, North America’s biggest.
The new company would be known as Nutrien.
Potash’s net earnings rose to $201 million, or 24 cents per share, from $121 million, or 14 cents per share, a year earlier.
On an adjusted basis, it earned 16 cents per share, missing analysts’ average estimate by 2 cents, according to Thomson Reuters I/B/E/S. Weaker prices for nitrogen and phosphate fertilizers weighed on results.
Reporting by Ahmed Farhatha in Bangalore and Rod Nickel in Winnipeg, Manitoba; Editing by Amrutha Gayathri and Paul Simao