(Reuters) - Potash Corp of Saskatchewan (POT.TO) (POT.N) said on Thursday it would cut production and trim its full-year earnings and sales forecasts, as volatile currencies and economic pressures weigh on demand for the crop nutrient potash.
The world’s biggest fertilizer company by capacity reported an 11 percent drop in quarterly profit, also hurt by weak nitrogen prices and increased phosphate costs.
Potash Corp shares fell 2 percent in New York and 3 percent in Toronto, and are down about one-third this year.
The company lowered its full-year profit forecast to $1.55-$1.65 per share from $1.75-$1.95. Analysts, on average, had estimated $1.74 per share, according to Thomson Reuters I/B/E/S.
Chief Executive Officer Jochen Tilk said the company would advance the planned closure of its Penobsquis, New Brunswick potash mine and temporarily shut production in December at three Saskatchewan mines.
Potash output in the fourth quarter will fall by nearly 500,000 tonnes, Tilk said, adding he did not expect to lay off employees.
It was unlikely Potash Corp will cut production further in 2016, but that depends on prices, Tilk said in an interview.
Potash Corp’s results and revised outlook point to a deeper-than-expected slump in the potash market, said Alta Corp Capital analyst Peter Prattas.
“The down trend continues as we enter a vacuum for the next couple of months as the next (supply) contract with China is negotiated,” he said. “Only then do we foresee the opportunity for a bottoming of price declines.”
Potash prices have sunk 20 percent year-over-year in the U.S. Corn Belt, according to Mosaic Co (MOS.N) data.
Demand has been stifled by a new Chinese tax that makes potash more expensive in that country, as well as by the strong U.S. dollar and dry Indian crop conditions.
Saskatoon, Saskatchewan-based Potash Corp expects to sell 9.0-9.2 million tonnes of potash this year. The company, which also makes phosphate and nitrogen fertilizers, had earlier forecast sales of 9.3-9.6 million tonnes.
Potash Corp’s average realized potash price fell 11 percent to $250 per ton in the third quarter.
The company said net income in the third quarter fell to $282 million, or 34 cents per share, from $317 million, or 38 cents per share.
Excluding non-cash charges, it earned 37 cents per share.
Revenue fell 6.8 percent to $1.53 billion.
Analysts were expecting profit of 37 cents per share on revenue of $1.45 billion.
Reporting by Rod Nickel in Winnipeg and Shubhankar Chakravorty in Bengaluru; Editing by Savio D'Souza, Bernadette Baum and David Gregorio