Potash Corp. Beats Ests in 3Q - Analyst Blog

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Potash Corporation of Saskatchewan Inc. 's ( POT ) third-quarter 2012 earnings came in at 74 cents per share, surpassing the Zacks Consensus Estimate by a penny, but falling well short of the year ago earnings of 94 cents.

Sales in the quarter came in at $2,143 million, down 7.7% from $2,321 million registered a year ago, but beat Zacks Consensus Estimate of $2,026 million. The year over year decline was due to reduced offshore potash sales arising from the delay of new supply contracts with China and India.

Segment Review

Potash: Sales volumes of 2.1 million tons in the quarter were down from 2.2 million tons in the year-ago quarter. Demand for potash remained strong in North America and increased sales were offset by lower offshore sales volumes. Shipments in the quarter increased on a year-over-year basis in Latin America, but were offset by lower sales to India and China.

Average realized potash price was $429 per ton, down 5% from the prior-year quarter. Gross margin declined 20.9% to $554 million.

Phosphate: Sales volumes declined 18.2% year over year to 0.9 million tons, due to lower production as a result of the adverse impacts of tropical storm Debby, a turnaround at the company's Geismar facility and challenging mining conditions in a new portion of its Aurora mine. Average realized phosphate price was $537 per ton, down 10.8% year over year. Gross margin came down 27.8% to $122 million.

Nitrogen: Sales volumes for the segment decreased 15.4% to 1.1 million tons due to gas interruptions in Trinidad and expansion-related downtime at the Augusta facility. Gross margin increased 4.6% to $251 million in the reported quarter, driven by higher prices. Average realized prices for nitrogen products rose 8% to $458 per ton.


Cash and cash equivalent amounted to $461 million as of September 30, 2012, versus $394 million as of September 30, 2011. Capital expenditure in the quarter amounted to $546 million.


The company expects earnings for 2012 to be in the range of $2.40 to $2.60 per share, which includes the impacts of the 39 cents per share adjustment for a Sinofert impairment charge incurred in the second-quarter of 2012.

The company expects gross profits from its potash business to be in the range of $2.1 billion to $2.3 billion in 2012. It expects shipments to be in the range of 7.6-8.3 million tons. The combined phosphate and nitrogen gross margin for full-year 2012 has been forecast in the range of $1.3 billion to $1.5 billion.

Potash Corp., which competes with BASF SE ( BASFY ) and Mosaic Co. ( MOS ), retains a Zacks #3 Rank, reflecting a short-term (1 to 3 months) Hold rating. Currently, we have a long-term (more than 6 months) Neutral recommendation on the stock.

BASF SE (BASFY): Free Stock Analysis Report

MOSAIC CO/THE (MOS): Free Stock Analysis Report

POTASH SASK (POT): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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