October 23, 2014 / 11:25 AM / 4 years ago

UPDATE 3-Potash Corp hurt by fall in income from overseas investments

* Cuts top end of 2014 profit forecast range

* Third-quarter profit $0.38/share vs est. $0.42

* Revenue up 8 pct at $1.64 bln

* Raises estimate for 2014 global potash shipments (Updates with CEO comment on 2015, analyst comment)

By Swetha Gopinath and Rod Nickel

Oct 23 (Reuters) - Potash Corp of Saskatchewan narrowed its full-year earnings forecast range and the company reported a lower-than-expected quarterly profit as income fell from its overseas investments.

The price of the crop nutrient potash has plunged year over year, triggered by the breakup last year of trading partnership Belarusian Potash Co that created more competition among producers.

Potash Corp, the world’s biggest fertilizer company by market value, said the average realized price for potash fell 8.5 percent to $281 per tonne in the third quarter from a year earlier.

Potash prices rose 7 percent from the second quarter, however, and sales volume jumped 29 percent from a year earlier.

The company’s shares eased by 0.3 percent in afternoon trading in New York and Toronto.

Potash Corp said the global potash industry was now expected to ship 58 to 60 million tonnes in 2014, more than the 56.5-58 million it had estimated earlier.

Global potash demand in 2015 looked to reach similar levels, despite a drop in crop prices, said Chief Executive Jochen Tilk.

“While we expect lower farm profitability still has the potential to impact demand in certain regions, we also believe crop pricing remains within the band that is supportive of farmer economics and fertilization,” he said.

U.S. farmers have used less fertilizer this autumn due to lower crop prices and a delay in harvest.

Even so, fundamentals are improving, said Jeffrey Nelson, analyst at Edward Jones.

“It’s a slow slog through. They’re still digesting what happened (with BPC) last summer, but fundamentals are getting better for sure.”

Potash Corp, which also makes phosphate and nitrogen fertilizers, narrowed its 2014 forecast profit to $1.75-$1.85 per share from $1.70-$1.90, citing a reduction in estimated income from offshore investments and a higher tax rate.

The company’s investments in Israel Chemicals Ltd, Arab Potash Co PLC and Chile’s SQM accounted for 8 percent of its profit in the third quarter, down from 24 percent a year earlier.

The company cut its forecast for full-year income from offshore investments to $205 million-$215 million from $230 million-$240 million. It also raised its effective tax rate for the year ending December to 27-29 percent from 26-28 percent, citing a tax change in Chile.

Potash Corp’s net income fell 11 percent to $317 million, or 38 cents per share, in the third quarter. The company’s profit was hurt also by a 34 percent rise in tax expenses.

Revenue increased 8 percent to $1.64 billion.

Analysts on average had expected a profit of 42 cents per share and revenue of $1.52 billion, according to Thomson Reuters I/B/E/S. (Reporting by Swetha Gopinath in Bangalore and Rod Nickel in Winnipeg, Manitoba; Editing by Don Sebastian, Kirti Pandey and Andrea Ricci)

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