July 30, 2015 / 6:28 PM / 4 years ago

Potash Corp keeps sights on buying K+S, vows to protect jobs

(Reuters) - Canada’s Potash Corp of Saskatchewan Inc POT.TO POT.N remains focused on acquiring German salt and fertilizer company K+S (SDFGn.DE), the company said on Thursday, and is prepared to make “binding commitments” to maintain jobs and keep mines running to get a deal.

Chris McKay, PotashCorp load-out supervisor at the Cory Mine, examines potash inside one of the storage facilities near Saskatoon, Saskatchewan October 10, 2013. REUTERS/David Stobbe

If it acquires K+S, Potash Corp, the world’s biggest fertilizer producer, would finish building K+S’s Saskatchewan mine and sell its potash offshore through Canpotex, Chief Executive Jochen Tilk said during a conference call. Canpotex is a sales partnership with Mosaic Co (MOS.N) and Agrium Inc AGU.TO.

“This combination would create a more efficient, integrated company able to prosper in an increasingly competitive global marketplace with expanding global capacity,” Tilk said.

Potash Corp said it intends to talk with K+S management, despite K+S’s rejection this month of Potash Corp’s 7.9 billion euro ($8.65 billion) bid of 41 euros per share.

Tilk’s comments are “nothing new,” and provide no basis for talks, K+S spokesman Michael Wudonig said.

K+S has suggested Potash plans to shrink the company. Analysts have speculated Potash wants to acquire K+S, a higher-cost producer, to shut some production to support prices.

Tilk said reducing operating costs remains his goal.

Potash Corp stock edged up 0.8 percent to $27.06 in New York, paring earlier gains, after hitting a 52-week low Wednesday.

The company reduced the top end of its full-year earnings forecast Thursday and reported a 12 percent drop in quarterly profit, mainly due to weak nitrogen earnings.

The top end of the full-year profit forecast is now $1.95 per share, down from $2.05. The low end remains $1.75.

Analysts, on average, had expected earnings of $1.86 per share, near the midpoint of Potash’s revised guidance, according to Thomson Reuters I/B/E/S.

For the third quarter, Potash expects to earn 35 to 45 cents per share. Analysts had expected 43 cents.

Net income fell to $417 million, or 50 cents per share, in the second quarter, from $472 million, or 56 cents, a year earlier.

That was below the average estimate of 51 cents.

Revenue fell 8.5 percent to $1.73 billion, below analysts’ estimate of $1.89 billion.

Increased global supply and record Chinese urea exports weakened nitrogen prices, the company said.

Potash Corp’s potash production was flat at 2.5 million tonnes, while the average realized price rose 4 percent to $273 per tonne.

The company narrowed its 2015 potash sales forecast to 9.3 million to 9.6 million tonnes from 9.2 million to 9.7 million.

Reporting by Shubhankar Chakravorty in Bengaluru and Rod Nickel in Winnipeg; Editing by Maju Samuel, Alden Bentley and Peter Galloway

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