August 11, 2009 / 12:32 PM / 8 years ago

UPDATE 2-Migao profit misses Street, outlook weak; shares down

3 Min Read

* Q1 EPS C$0.20 vs est C$0.22

* Q1 rev up 19 pct

* Sees FY 2010 rev of C$290-C$320 mln

* Sees FY 2010 gross profit margin of 22-24 pct

* Shares down 10 pct (Recasts, adds background, conference call details)

Aug 11 (Reuters) - Specialty potash fertilizer producer Migao Corp MGO.TO posted first-quarter profit that missed market expectations, hurt by a drop in fertilizer prices, and guided lower revenue for 2010, sending its shares down 10 percent.

China-based Migao said in a conference call it expects 2010 revenue of C$290 million to C$320 million.

Analysts were expecting the company to report revenue of C$340.9 million, according to Reuters Estimates.

The company also forecast gross margins of 22 percent to 24 percent for 2010.

"In the first half of the year, like all companies related to the potash industry, we saw demand and prices decline from the very high levels experienced in 2008," Chief Executive Liu Guocai said in a statement.

Fertilizer companies posted record results a year ago, but the credit crunch, coupled with a collapse in commodity prices and a slump in fertilizer demand, has led to a drastic change in conditions for the industry over the past year.

Potash, nitrogen and phosphate are the three main macro nutrients used by farmers across the globe.

q1 Misses Mark

For the first quarter ended June 30, the company's net income was C$9.6 million, or 20 Canadian cents a share, compared with C$6.8 million, or 15 Canadian cents a share, a year ago.

Sales were up 19 percent to C$58.9 million.

Analysts on average were expecting the company to earn 22 Canadian cents a share, excluding items, on revenue of C$66.2 million, according to Reuters Estimates.

However, the company said its revenue dropped 30 percent from the previous quarter due to maintenance shutdowns, slightly lower selling prices and a stronger Canadian dollar.

Migao said in the conference call that it does not plan any major maintenance shutdowns for the year and has sufficient resources to meet demand and mid-term expansion projects.

Shares of the company were trading down 77 Canadian cents at C$7.00 in afternoon trade on the Toronto Stock Exchange. (Reporting by Sakshi A Mattoo in Bangalore; Editing by Aradhana Aravindan and Anil D'Silva)

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