PotashCorp, Mosaic profits climb less than expected

Reuters — North America’s two biggest potash producers, PotashCorp and Mosaic Co., reported larger first-quarter profits on Thursday, but results missed expectations.

Saskatoon-based PotashCorp, the world’s biggest fertilizer maker by market capitalization, cut its full-year profit forecast, and both companies warned potash prices could slide.

Prices are yet to recover after a collapse in 2013, which was triggered by Russia’s Uralkali exiting a trading venture with Belarus. Prices have since improved but are under pressure from increased competition and a surplus of production capacity.

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Weaker prices may stimulate demand later this year. Mosaic and PotashCorp nudged higher their forecasts for 2015 global potash shipments, which they say could reach 60 million tonnes.

“With a strong second half to refill and meet the growing demand we’re seeing in India and China, we think we’re going into a tight potash market in the second half,” Mosaic CEO Jim Prokopanko said.

Potash cut its full-year profit outlook to $1.75-$2.05 per share from $1.90-$2.20 per share, factoring in higher taxes in Saskatchewan and the disappointing quarter (all figures US$).

The change sent Potash shares down two per cent in New York and one per cent in Toronto. Mosaic shares rose slightly.

Potash forecast second-quarter profit of 45-55 cents per share, lower than analysts’ average estimate of 56 cents, according to Thomson Reuters I/B/E/S.

Potash reported first-quarter profit of $370 million, or 44 cents per share, up from last year’s $340 million, or 40 cents, but missing the average estimate of 49 cents.

Mosaic earned $295 million, or 80 cents, up from $218 million and 54 cents. On an adjusted basis, the company earned 70 cents per share, missing analysts’ estimate of 74 cents.

For the second quarter, Mosaic expects to sell 2.3 million to 2.7 million tonnes of phosphates, compared with 2.6 million a year earlier, at $425 to $450 per tonne for diammonium phosphate, the most widely used phosphorus fertilizer. It sees sales of 2 million to 2.4 million tonnes of potash during the quarter, down from 2.5 million, at $265 to $290 per tonne.

Phosphates and potash are two of the most important crop nutrients.

Prokopanko said Canpotex, the offshore potash seller for Mosaic, Potash and Agrium, expects to sign a contract with Indian buyers in May.

Potash’s revenue slipped marginally to $1.67 billion, Mosaic’s revenue rose 7.7 per cent to $2.14 billion.

Reporting for Reuters by Anannya Pramanick and Shubhankar Chakravorty in Bangalore and Rod Nickel in Winnipeg.

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