Potash Corp. earnings tumble as prices drop
Potash Corp. says its third-quarter net earnings dropped 45 per cent to $356 million from $645 million in the same period last year as a result of weaker prices and lower potash sales volumes.
The Saskatoon-based company says offshore investments in Jordan, Chile and Israel contributed $85 million to earnings for the quarter.
But PotashCorp says while the need for crop nutrition fuelled strong demand in the first half of 2013, a change in strategy by Uralkali in July stalled global demand.
Key markets — particularly large buyers in China and India — delayed purchases or were reluctant to accept major shipments against existing contracts.
As a result, shipments from North American producers fell to one of the lowest third-quarter totals in recent history.
Price of potash drops
PotashCorp says buyer caution and competitive pressures resulted in a price of $307 per tonne in the quarter, down from $429 in the same period last year.
As a result, says the company, it has revised its 2013 potash gross margin forecast range to $1.5-$1.7 billion on expected shipments of 8 million and 8.4 million tonnes.
"The most recent quarter can best be characterized as a predictable response to an unpredicted event," said PotashCorp president and CEO Bill Doyle.
"As we have seen in the past, fertilizer customers faced with uncertainty act with extreme caution. While this volatility does not change the long-term underlying fundamentals of fertilizer demand, it did significantly slow market activity and our ability to deliver the results we expected."