Potash Corp. of Saskatchewan Posts Stronger 2nd Profit Despite Weaker Sales, As Tax Rate Falls
Potash Corp. of Saskatchewan Inc. on Thursday posted higher second-quarter profit as sharply lower taxes offset falling sales of its nitrogen, phosphate and potash fertilizers.
The Canada-based fertilizer company said net income increased to $175.1 million, or $1.65 per share, from $164.2 million, or $1.46 per share, in the prior-year period.
A strong Canadian dollar weighed on quarterly results, leading to 14 cents per share in foreign exchange losses and 5 cents per share in higher potash production costs. Stock compensation costs totaled 15 cents per share, and mine shutdowns added another 5 cents per share in costs.
The company did see a strong performance in its nitrogen and phosphate segments, and gains from offshore investments and favorable changes to Canadian tax rates contributed to the overall earnings improvement. Tax refunds led the company to record a $1.1 million tax benefit this year compared with an $81 million payout a year ago. However, a shortfall in potash sales volume hurt gross margin, which shrank to $253.4 million from $344.8 million.
Unresolved pricing issues in China and India constricted potash shipments, and several large markets in Southeast Asia and Latin America also delayed purchases to watch price negotiations. Total sales fell to $928.7 million from $1.06 billion a year earlier, as offshore potash volume slid 33 percent. Sales of nitrogen and phosphate also declined.
Analysts polled by Thomson Financial forecast earnings of $1.03 per share and sales of $843.4 million in the second quarter.
The company sees third-quarter profit of $1.25 to $1.50 per share and net income for the full year in a range of $5.25 to $6.25. Analysts expect third-quarter profit of $1.47 and full-year earnings of $5.13.
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