PotashCorp cut forecasts for the world potash sector as it admitted underestimating a market downturn which had cut sales of all three major nutrients in late 2011, leaving its profits below investors' expectations.

However, shares in the Canada-based group, the world's top potash producer by capacity, avoided the poor opening that many investors had expected, and closed 1.2% higher at $45.81 in New York.

"The drag of global economic concerns shook the confidence of fertilizer buyers and caused a greater decline in fourth-quarter demand than we had anticipated," Bill Doyle, the PotashCorp chief executive, said.

The demand slowdown, which PotashCorp said was "not easily predictable as we entered the fourth quarter of 2011", had landed the group with lower sales, by volume, of nitrogen, phosphate and potash in the period.

Potash sales slumped by one-third year on year to 1.6m tonnes, with North American buyers proving "especially cautious" and halving purchases to 400,000 tonnes.

Targets cut 

The "lull in purchasing" prompted the group to cut by 2m tonnes to 55m tonnes its estimate for worldwide industry potash sales last year.

The forecast for 2012 sales was cut to 55m-58m tonnes, from 58m-60m tonnes, albeit a range still enough to leave the sector likely looking at a record.

Imports by India, a major buyer which failed a few weeks ago to renegotiate potash contracts, were likely to be limited to about 4m-5m tonnes compared with more than 6m tonnes in 2010, as uncertainty over government subsidies, a weak rupee and higher retail prices of the fertilizer "limit near-term growth".

The slowdown underlined decisions by PotashCorp to idle some operations, meeting a company strategy of matching output to demand.

Earnings miss 

PotashCorp reported a 13.6% decline, to $718m, in sales of potash during the October-to-December period, compared with the same period a year before, reflecting the lower volumes.

Compared with the July-to-September period, selling prices fell too, by $20 a tonne to $431 a tonne.

However, higher sales, by revenue, in nitrogen and phosphate helped group takings rise 2.9% to $1.87bn.

Earnings rose 34% to $683m, equivalent to $0.78 a share, a figure within the group's target range but below the $0.88 a share that analysts had forecast.

'Greater demand ahead'

The group forecast earnings per share coming in at $0.50-0.70 a share for the current quarter, and 3.40-4.00 a share for the full year, also figures below those analysts have predicted.