Potash Corp of Sakatchewan Inc.
) dropped around 2.3% after the company cut its third quarter
2013 earnings guidance. The fertilizer company now expects
earnings to be roughly 41 cents per share for the third quarter,
down from its previous forecast of 45 cents to 60 cents per
share. The company's shares eventually closed at $31.39 in the
trading session following the announcement, losing around
The reduction in the earnings guidance is mostly due to
lower-than-expected potash sales volumes late in the quarter as
buyers delayed their purchases owing to near-term market
uncertainty. The company will report its third-quarter results on
Oct 24, where it will further discuss about the full year
Potash Corp., which is among the prominent fertilizer
companies along with
), released disappointing second-quarter 2013 results as both
revenues and adjusted earnings missed the Zacks Consensus
Revenues fell by double digits year over year, hurt by lower
pricing across all three nutrients and competitive pressure. The
company cut its earnings forecast for the full year taking into
account the weak price environment.
While Potash Corp. will benefit from strong geographic
diversification and expanded operational capability in potash, it
is exposed to macroeconomic uncertainties and price volatility.
Average realized potash price fell 18% year over year in the
second quarter as competitive pressure pulled down contract and
spot market prices. Pricing pressure was also witnessed in the
Moreover, Potash Corp. is seeing somewhat weak potash demand
in India, a key market. Indian government's move to trim potash
subsidy levels coupled with higher retail pricing and local
currency devaluation resulted in lower demand in the country.
Adding to the problems is declining crop yields. These challenges
may sustain through second-half 2013.
Potash Corp. currently retains a Zacks Rank #5 (Strong
), with a Zacks Rank #1 (Strong Buy), is a good option for
investment in the fertilizer industry.
AGRIUM INC (AGU): Free Stock Analysis Report
CHINA BLUECHEM (CBLUY): Get Free Report
MOSAIC CO/THE (MOS): Free Stock Analysis
POTASH SASK (POT): Free Stock Analysis Report
To read this article on Zacks.com click here.