SASKATOON – Potash Corp. of Saskatchewan Inc. (TSX:POT) is reporting an improved first quarter profit, with $556 million or 63 cents per share of net income that beat analyst estimates.
However the company’s guidance for the second quarter is estimated at 70-85 cents per share – which was below the consensus estimate of 89 cents per share – its 2013 guidance remains unchanged at between $275 and $3.25 per share.
That suggests the first quarter included a bit of catch-up for some potash buyers. The global economic slowdown had caused some buyers to delay purchases or draw down inventories but PotashCorp has said it expects demand to return.
“With farmers around the world motivated to capitalize on the link between fertility and profitability, the first quarter gave us an opportunity to demonstrate our ability to deliver,” PotashCorp president and CEO Bill Doyle said Thursday
“We had significant growth in our potash performance as global buyers returned to the market in earnest after taking a brief pause late in 2012. This environment enabled us to deliver earnings near the top end of our guidance and laid the foundation for what we believe will be a successful year.”
The company also indicated it has set aside any plan to increase its stake in Israel Chemicals Ltd. (ICL), which has been a controversial and politically divisive issue in Israel.
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“Over recent months, we have been exploring the possibility of expanding our ownership interests in ICL. While we continue to believe that such a transaction would be of tremendous benefit to stakeholders of both companies and the State of Israel, there must be receptivity to foreign investment and certainty in the rules that govern such investment. We have therefore concluded that now is not the time to pursue this opportunity and will focus our energies on other options to maximize shareholder value,” PotashCorp said in the quarterly statement.
PotashCorp had itself been the target of a foreign takeover by BHP Billiton, which later withdrew after the federal government moved to block the deal amid intense political lobbying by Saskatchewan’s premiuer and others.
On the operations front, Potash Corp. says earnings before finance costs, income taxes and other expenses reached $1 billion and potash sales volumes increased 78 per cent from the first quarter of 2012.
Potash shipments to all major markets accelerated during the first quarter. Domestic shipments from North American potash producers rose 56 per cent above those of the same period last year.
Offshore shipments from North American producers were 74 per cent above last year’s first quarter.
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