26 April 2012 12:02 [Source: ICIS news]
LONDON (ICIS)--Potash Corporation of Saskatchewan’s (PotashCorp) first-quarter net income fell by 33% year on year to $491m, following lower potash sales and production volumes, which resulted in higher costs, the Canadian producer said on Thursday.
Sales during the three months ended 31 March 2012 fell by 21% year on year to $1.75bn (€1.33bn), while the company’s gross margin for the quarter fell to $698m from $1.10bn in the same period the year before.
The company said that potash buyers had entered the year with the same cautious mindset they had when 2011 ended and were slow to commit to new purchases through most of the first quarter.
“Fertilizer buyers continued to move cautiously at the beginning of the year, especially with potash purchases, which impacted our performance during the quarter,” said PotashCorp president and CEO Bill Doyle.
“Although we anticipated that an increase in global fertilizer purchasing would not take hold until the latter half of the first quarter, it took longer than we expected for demand to emerge,” he added.
The company reported that lower potash sales volumes offset the positive impact of higher prices and resulted in a potash gross margin of $327m for the first quarter, well below the first-quarter record of $743m generated in 2011, it said.
PotashCorp’s first-quarter phosphate gross margin totalled $152m, slightly above the $150m generated in the same quarter last year, while its nitrogen gross margin climbed to a first-quarter record of $219m from the $203m reported in the same period last year.
Doyle said the company expects the acceleration in potash demand that began at the very end of the quarter to continue, supporting increased volumes through the remainder of the year.
“Despite a just-in-time buying pattern that slowed demand over recent months, fertilizer buyers are now fully engaged and demand for our products, especially potash, is expected to improve as the year progresses,” said Doyle.
PotashCorp expects record or near-record second-quarter earnings, with net income per share to approximate $0.90-1.10.
“We now forecast earnings for the full year to be in the range of $3.20-3.60 per share,” the company said.
($1 = €0.76)
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