29 April 2010 21:30 [Source: ICIS news]
PotashCorp posted a 46% increase in first-quarter net income as fertilizer demand recovered from last year’s unprecedented decline and buyers returned to the market, the Canadian company said.
PotashCorp said first-quarter earnings rose to $449.2m (€341.4m) - the second highest first-quarter result in its history – from $307.4m earned in the same period last year.
“This is a recovery year in the fertilizer business and we think we are setting up for very good markets in the coming years,” the company’s president and chief executive Bill Doyle said.
Doyle noted that the world population was predicted to grow by 800m over the coming decade, twice the population of North America. Their need for food would continue to increase the market for fertilizers.
PotashCorp estimated its 2010 potash segment gross margin would be within the range of $1.5-1.8bn.
“With operational capability of 11.2m tonnes in 2010, we will continue to follow our strategy of matching supply to market demand, and expect to initiate production curtailments for inventory control purposes over the course of the year,” it added.
In phosphate and nitrogen, the company said it expected to generate a combined gross margin of $500m-700m in 2010.
Overall, PotashCorp said it saw 2010 net income per share in the range of $4.50-5.25 per diluted share, including $1.00-1.30 in the second quarter, it said.
“We believe the higher demand we are seeing today is a precursor to a longer-term rebound as farmers strive to catch up on applications missed in 2009 and work to meet the increasing need for food production in the years ahead,” said Doyle.
PotashCorp expects China and India to take greater amounts of potash in the months ahead as greater needs for food are required for their growing populations.
The company estimated that China will need to import about 5m tonnes of potash in 2010 and already has imported 2.5m tonnes so far this year.
PotashCorp was negotiating short-term contracts with China for potash. Longer-term contracts would be sought with India and China for phosphates.
Going forward, PotashCorp would continue to match potash supply with demand, Doyle said.
The company would produce more in the coming months because the market would call for more potash.
In Brazil and Argentina, for example, growers recently completed historically large harvests of soybeans and were expected to plant big crops for the 2010-2011 season, and they would need additional fertilizer supply, Doyle said.
($1 = €0.76)
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