(Reuters) — Potash Corporation of Saskatchewan cut the top end of its full-year earnings forecast range and the company reported a lower-than-expected quarterly profit as income fell from its overseas investments.
The price of potash plunged this year, hurting the profits of companies producing the crop nutrient.
The breakup of global potash trading partnership Belarusian Potash Co. nearly a year ago accelerated the price fall as it created more competition among producers.
PotashCorp, the world’s biggest fertilizer company by market value, said average realized price for potash fell nine percent to $281 per ton in the third quarter ended Sept. 30. The crop nutrient sold for as much as $900 in 2008.
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However, the company said the global potash industry was now expected to ship 58 to 60 million tons in 2014, higher than the 56.5 to 58 million tons it had estimated earlier.
“While recent weakness in crop prices is expected to result in some reduction to global crop acreage, we believe potash remains an affordable and necessary investment for growers as they look to offset lower prices by enhancing yields,” PotashCorp said.
U.S. farmers have been using less fertilizer due to lower crop prices and a delay in harvest.
“Despite the positive near-term commentary regarding strong potash volumes, we continue to remain concerned about challenges in 2015 driven by lower crop prices,” Citi analysts wrote in a note.
PotashCorp, which also makes phosphate and nitrogen fertilizers, narrowed its 2014 forecast profit to $1.75 to $1.85 per share from $1.70 to $1.90, citing a reduction in estimated income from offshore investments and a higher tax rate.
The company’s investments in potash companies in Jordan, Israel and Chile accounted for eight percent of its profit in the third quarter, down from 24 percent a year earlier.
The company cut its forecast for full-year income from offshore investments to $205 million to $215 million from $230 million to $240 million. It also raised its effective tax rate for the year ending December to 27-29 percent from 26-28 percent, citing a tax change in Chile.
PotashCorp’s net income fell 11 percent to $317 million, or 38 cents per share, in the third quarter. The company’s profit was hurt also by a 34 percent rise in tax expenses.
Revenue increased eight percent to $1.64 billion.
