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PotashCorp announces slightly higher earnings for the quarter but lowers its guidance

Published: 13:05 30 Apr 2015 EDT

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PotashCorp (TSE.POT) announced Thursday a profit of US$370 million in the first quarter, representing a US$30 million increase over last year even though its sales remained flat.

This corresponds to a profit of 44 cents per share, against 40 cents per share last year when its profit had amounted to 340 million US.

Quarterly sales were nearly 1.67 billion US, compared with US $ 1.68 billion a year earlier.

The Saskatoon company and world’s largest fertilizer company has attributed this increase thanks to 8.8% higher prices received for its products and a reduction of its operational costs.

These also fell thanks to a lower Canadian dollar, the company said, predicting that this trend would help continue to lower its costs per tonne.

"We delivered stronger earnings compared to last year's first quarter on improved potash and phosphate contributions," said PotashCorp’s President and Chief Executive Officer Jochen Tilk.

But, the results failed to boost the stock, which down 0.8% percent at midday trading at $39.44. Investors are concerned about the company’s less optimistic earnings forecast for the 2015 full year to C$1.75-$2.05 per share with a second quarter forecast ranging from c$0.45-$0.55 per share:

"We adjust our full-year guidance largely on higher Saskatchewan potash taxes and first-quarter performance that trailed our initial expectations. Looking ahead, we are encouraged by the strength in global potash demand and see momentum accelerating through the second quarter, especially in offshore markets," said Tilk.

Tax regime changes and lower demand from Brazil are seen as some of the main factors affecting earnings. In March, Potash Corp warned investors that tax regime changes for potash companies operating in Saskatchewan would have a significant impact on its profits.

The potash giant, member of the CANPOTEX potash cartel that helps to control the price of the mineral fertilizer, said that the Government of Saskatchewan’s 2015-16 provincial budget changes to offset the falling price of oil, would decrease the company’s pre-tax earnings by $75 to $100 million.

 

 

 

 

 

 

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