Potash Corporation of Saskatchewan extended the string of bad news from the fertilizer sector by slashing its forecast for second-quarter profits to well below analysts' estimates, blaming sagging global demand.

The warning from the Canada-based group prompted further declines in fertilizer shares, which were hurt last week by a profits warning from German potash group K+S and on Thursday by an announcement of production curtailments by US-based Terra Industries.

PotashCorp, the world's biggest fertilizer company, said earnings for the April-to-June quarter would come in at about $0.70 per share, compared with a previous target of $1.10-1.50 a share.

Analysts had been forecasting a $1.03-a-share result, according to estimates compiled by Reuters, the news agency.

PotashCorp added that any changes needed to annual guidance would be made when the results are released on July 23.

Sales miss forecasts

The company blamed the revision on "substantially lower than forecasted" sales of potash, its core product, and weak prices for phosphate.

The warning comes a week after PotashCorp revealed it was cutting further potash capacity, just as K+S warned of "extraordinarily" weak sales.

On Thursday, Terra Industries said it was mothballing 500,000 tonnes of ammonia capacity.

And earlier this week, Akiva Mozes, the chief executive of Israel Chemicals was quoted in Credit Suisse analysts' note as foreseeing "almost no demand" for potash in Europe.

Fertilizer demand has been badly dented by farmers cutting back on spending in response to the tumble in crop prices in the second half of 2008, with PotashCorp estimating North American potash demand at its lowest since 1983.

However, while Mr Mozes said he remained optimistic about prospects in developing countries, PotashCorp said that customers "around the world" had been deferring potash purchases.

Market reaction

PotashCorp shares dropped more than Can$4 in early deals in Toronto before recovering to stand $0.69 lower at Can$107.36 at 19:15 GMT.

In Europe, K+S closed down 2.4% at E40.01 in Frankfurt, with shares in Yara, the Norwegian nitrogen group, ending off NKr5.75 at NKr176.75 in Oslo.

In Moscow, stock in Russian potash giant Uralkali lost 1.0% to 98.00 roubles, with Israel Chemicals finishing 5.1% lower in Tel Aviv.