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 Canadian group, 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, its German peer, warned of "extraordinarily" weak sales - announcements which sent shares in the sector tumbling.

On Thursday, Terra Industries, the US nitrogen group, said it was mothballing 500,000 tonnes of ammonia capacity, while Akiva Mozes, the chief executive of Israel Chemicals has forecast "almost no demand" for potash in Europe, according to a Credit Suisse note published on Monday.

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 

The warning was released after the close of Toronto stocks on Thursday, when PotashCorp shares finished up Can$0.64 at Can$108.05.

Shares in European fertilizer groups, which were dented by Terra's announcement, remained largely unmoved on Friday.

Stock in K+S stood E0.31 lower at E40.69 in Frankfurt at 08:00 GMT, with shares in Yara, the Norwegian nitrogen group, losing NKr2.75 to NKr179.75 in Oslo.

Uralkali, the Russian potash giant, was 1.1% higher at 100.13 roubles in Moscow, although Israel Chemicals lost 5.1% in Tel Aviv.