PotashCorp took the worst-case scenario for full-year
earnings off the table, citing a "slightly improved" outlook for potash prices
and demand, with a windfall from its investment in Israel Chemicals supporting
The Canada-based fertilizer giant nudged higher to
$1.50-1.80 a share, from $1.40-1.80 a share, its forecast for full-year
earnings, if still representing a drop from the $2.04 a share achieved in 2013.
The revision reflected in part an upgrade to $230m-240m, from
$160m-180m, in its income from foreign shareholdings, after taking $69m from a
special dividend by Israel Chemicals in the January-to-March period.
However, the group was also more sanguine on expectations for
its key potash market, seeing full-year sales volumes at 8.3m-8.7m tonnes, an upgrade
of 100,000 tonnes at both ends of the range, and potash gross margin at
$1.1bn-1.3bn, nudged up from $1.0bn-1.3bn.
Bill Doyle, the PotashCorp chief executive, said that after "an
especially challenging environment in the second half of 2013", when the
break-up of the Belarusian Potash Company cartel sent prices tumbling across
fertilizer markets, "greater demand and stability emerged early in the year".
The company had noted "strong customer engagement, particularly
in potash" ahead of the spring planting season in the northern hemisphere, with
both demand and spot prices rising.
In North America in particular demand had grown, soaring 48%
year on year during the first quarter, although foreign sales were slowed by
logistical hiccups, as Canada's rail operators battled against a harsh winter
which forced them to run shorter and slower trains.
"We see steady improvements taking hold in the potash
industry," Mr Doyle said.
Nonetheless, PotashCorp failed to raise from 55m-57m tonnes
its forecast for world industry potash shipments in 2014, and the group nudged
lower to 3.5m-4.0m tonnes, from 3.7m-4.2m tonnes, its forecast for Indian
In India, the second ranked importing country after China, "fertilizer
subsidies continue to remain a near-term challenge in achieving more robust
demand levels", the group said.
And it highlighted some continued logistical hiccups in
North America too.
"While we are beginning to see an improvement in rail
deliveries help address the backlog of orders from the first quarter,
significant product demands are expected to keep pressure on North American carriers,"
PotashCorp said, adding that it was working "closely with our transportation
partners to minimise disruptions".
The comments came as PotashCorp unveiled earnings down 39%
at $340m for the January-to-March quarter, on revenues down 20% at $1.68bn.
In potash itself, sales dropped 28% to $585m as a 31% plunge
in prices to $250 a tonne more than offset a rise in volumes.
"Potash prices began to trend upward in key markets as the
quarter progressed, but the sharp decline during the second half of 2013
weighed on realisations."
The group earnings came in at $0.40 a share, slightly higher
than the $0.30-0.35 a share that the group had guided to, and the $0.35 a share
that Wall Street had forecast.
However, the result included a $0.06-a-share boost from the
Israel Chemicals payout, besides a $0.04-a-share dent as PotashCorp, again, marked
down the value of its stake in China's Sinofert.
PotashCorp shares stood 0.8% higher at Can$38.64 in morning deals in Toronto.