Shares of Potash Corporation of Saskatchewan (POT-T), the world’s top fertilizer producer, slipped on Toronto Stock Exchange on Dec. 2, after the company shaved up to 20 of its previous per-share earnings guidance for 2002.
Saskatoon-based Potash Corp. now expects full year earnings for 2002 to come in around US$1 to US$1.10 per fully diluted share, well off its previous forecast of US$1.20 per share.
The company attributes its lower earnings projection to a late harvest in the U.S. southeast and Midwest and early winter conditions in Canada, which cut into farmer’s ability to apply fertilizer. While offshore potash volumes are up so far this year, Potash Corp. also points to lower demand in the fourth quarter thanks to credit problems in Brazil, and higher sulphur prices.
The latest revision comes on the heels of one in June when the company lowered second-quarter earnings to US20 per share from US$50 per share, and full year earnings to around US$1.40 per share from US$2 per share. Those cuts were owing to a stronger Canadian dollar and a poor spring planting season in North America.
On a brighter note, the company announced that the Canadian Potash Export Association (Canpotex), the offshore sales agency for Canadian potash producers, recently inked a “flat pricing” deal to sell 1.5 million tonnes of potash to Sinochem, China’s largest chemical trader.
Bill Doyle, Potash Corp.’s chief executive officer said in a prepared statement, “We are looking forward to putting 2002 behind us and this positive Canpotex news is encouraging for 2003. This year started out poorly and just got worse. ”
The company also maintains its full year 2002 cash flow expectations of about US$5.70 per share.
PCS’ shares bottomed out at $94.25, off $8.65 or about 8% in early trade in Toronto on Dec. 2. The shares recovered through the afternoon to finish $3.40 lower at $99.50.
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