PotashCorp reduces earnings guidance in year of agricultural cutbacks

As farmers cut back their use of fertilizers globally in a tough economy this year, potash production dropped to the point where earnings have been hurt, says Canada's PotashCorp.

RENO, NV - 

Potash Corporation of Saskatchewan has cut its earnings guidance from a range of $4 to $5 a share to a revised guidance of $3.25-$3.75/sh for full-year 2009.

Nevertheless, the company advised that the 2009 earnings "are still expected to be among the best in company history, despite an anticipated decrease of 60% in year-over-year potash volumes and an 85% decline in PotashCorp's combined phosphate and nitrogen gross margin.

However, third quarter earnings are expected to be in the low end of the 80-cent-$1.21 per share guidance range previously announced.

"Potash inventories that can be measured in the retail chain-this excludes less easily defined inventories in China-have been largely eliminated and potash levels in soils around the world have been significantly reduced," the company noted in a news release. "While the immediate impact has been masked by good weather and residual soil nutrient levels in markets with healthly long-term fertilization and agronomic practices, such as in the U.S. and Australia, yields for key crops in several other major growing regions are expected to be substantially below 2008 levels."

"A significant rebound is required to address this situation," PotashCorp noted, "and we expect 2010 global position demand to be in the range of 50-55 million tonnes."

"The potash, phosphate and nitrogen being mined from the soil by current crops must be replaced to protect the world's future food production," PotashCorp CEO Bill Doyle said. "As farmers around the world begin the lengthy process of replenishing nutrients in the soil, we anticipate a new wave of demand growth that will allow us to once again demonstrate the full potential of our company."

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