April 24, 2014 / 11:09 AM / 3 years ago

UPDATE 2-Potash Corp profit falls, sees weaker second quarter

(Adds share activity, analyst comment, sales and price details)

By Rod Nickel

April 24, (Reuters) - Potash Corp of Saskatchewan, the world's biggest fertilizer company, forecast on Thursday a weaker than expected second quarter after reporting a fall in first-quarter profit that wasn't as steep as the Street anticipated.

Potash Corp saw profits shrink last year as potash prices retreated due to softening grain values and the breakup last summer of Belarusian Potash Company, which was one of two dominant global potash traders.

Potash demand and spot market prices picked up during the first quarter, Potash Corp said, but its average realized price remained nearly one-third lower than a year ago.

Shares of Potash Corp gained 1.8 percent in pre-market activity in New York to $35.77, reacting to better than expected first quarter results, said Cantor Fitzgerald analyst Peter Prattas. The stock is up nearly 7 percent on the year.

For the second quarter, Potash said it expected earnings of 40 to 45 cents per share, falling short of the average Street view of 49 cents per share, according to Thomson Reuters I/B/E/S.

"The takeaway for Q2 is that the guidance is below the Street view, but people may think (Potash Corp is) lowballing it since they beat on Q1," Prattas said.

Potash Corp raised the bottom end of its full year 2014 guidance to a range of $1.50 to $1.80 per share from the previous forecast of $1.40 to $1.80. Analysts were expecting full-year earnings of $1.65 per share.

Potash Corp reaffirmed its estimate for 2014 global potash shipments by all companies of 55 to 57 million tonnes.

"After an especially challenging environment in the second half of 2013, greater demand and stability emerged early in the year," said Chief Executive Bill Doyle, in a statement. On April 7, Potash Corp said former Inmet Mining chief executive Jochen Tilk would take over as CEO from Doyle in July.

First-quarter net earnings fell by nearly 39 percent year on year to $340 million, or 40 cents per share. Those results included a $69 million special dividend from the company's stake in ICL Israel Chemicals Ltd and a $38 million impairment charge related to its investment in China's Sinofert Holdings Ltd.

Potash Corp had guided to a range of 30 to 35 cents per share. First quarter sales dropped 20 percent to $1.68 billion.

Analysts expected, on average, first quarter earnings of 35 cents per share and revenue of $1.488 billion.

The company's potash sales rose 4.5 percent to 2.3 million tonnes in the first quarter, but its average realized price of potash plunged 31 percent to $250 per tonne, reflecting a sharp decline during the last half of 2013.

Demand from Brazil and Southeast Asian countries strengthened, but logistical challenges constrained North American producers from satisfying it, Potash Corp said. A frigid winter and record-large grain harvest in Western Canada overwhelmed Canadian railways, which miners rely on to move potash from the province of Saskatchewan to the West Coast.

Sales of phosphate amounted to 800,000 tonnes in the first quarter, down 11 percent, and Potash Corp's average realized price dropped 12 percent year over year to $484 per tonne.

Nitrogen sales rose nearly 7 percent to 1.6 million tonnes, but Potash Corp's average realized price sagged 21 percent to $344 per tonne. (Reporting by Rod Nickel in Winnipeg, Manitoba; Editing by David Goodman, Sofina Mirza-Reid and Chizu Nomiyama)

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