SASKATOON – Potash Corp of Saskatchewan Inc. (TSX:POT) plans to slash production and permanently close a mine in New Brunswick ahead of schedule. The Saskatoon-based company will also be shutting down production at three mines in Saskatchewan for a three-week period as it reported a drop in quarterly profits, sales and financial guidance.
The company said the fertilizer market has been weaker than expected in the second half of this year and it’s taking measures to reduce inventory and output.
It will permanently close its Penobsquis mine in New Brunswick at the end of next month, instead of next year, affecting 140 contract workers employed by Vic Progressive Diamond Drilling.
PotashCorp is also planning three-week temporary shutdowns at three of its mines in Saskatchewan in December as part of the plan to reduce production by 500,000 tonnes in the fourth quarter.
The Penobsquis has about 800,000 tonnes of capacity but the mine was to be shut down and be replaced by the newer Picadilly operation in the same area of New Brunswick.
The company says it expects demand for potash – a major crop nutrient – to pick up next year.
“Despite challenges over recent months, we are seeing signs of a shift in focus by distributors and farmers to 2016,” PotashCorp chief executive Jochen Tilk said in a statement.
“We believe the need for increased global agricultural production – coupled with supportive crop prices – provides a compelling opportunity for farmers.”
In its financial report for the three months ended Sept. 30, PotashCorp said its net income dropped to US$282 million or 34 cents per share – down from US$317 million or 38 cents per share in the third quarter of 2014.
Revenue from sales of potash, nitrogen and phosphates and related fertilizer products or services fell to US$1.53 billion from US$1.64 billion.
In its outlook, the company said it now expects earnings for the full year of $1.55 to $1.65 per share, down from earlier expectations for between $1.75 and $1.95.
PotashCorp also cut its forecast for potash sales volumes to between 9.0 and 9.2 million tonnes and gross potash margins of $1.4 billion to $1.5 billion. That compared with its guidance in July for potash sales volumes between $9.3 million tonnes and $9.6 million tonnes and gross potash margins between $1.5 billion and $1.7 billion.
Shares in the company were down $1.11 or about four per cent at $27.04 in trading on the Toronto Stock Exchange.
Earlier this month, PotashCorp dropped its attempt to buy German fertilizer company K+S AG.
The company had offered 41 euros a share for the company, valuing it at about 7.9 billion euros, however the bid failed to win widespread support and was rejected by K+S.
Earlier this month, Mosiac announced it would be laying off 46 employees at its Colonsay mine because of weak market conditions.
With files from Global News