(Reuters) — PotashCorp plans to cut production and trim its full-year earnings and sales forecasts as volatile currencies and economic pressures weigh on demand for the crop nutrient.
The world’s biggest fertilizer company by capacity reported an 11 percent drop in quarterly profit, also hurt by weak nitrogen prices and increased phosphate costs.
PotashCorp shares are down more than one-third this year.
The company in late October lowered its full-year profit forecast to US$1.55-$1.65 per share from $1.75-$1.95.
Chief executive officer Jochen Tilk said the company would advance the planned closure of its Penobsquis, N.B., potash mine and temporarily shut production in December at three Saskatchewan mines.
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Potash output in the fourth quarter is expected to fall by nearly 500,000 tonnes, Tilk said, adding he did not expect to lay off employees.
PotashCorp’s results and revised outlook point to a deeper-than-expected slump in the potash market, said Alta Corp Capital analyst Peter Prattas.
“The down trend continues as we enter a vacuum for the next couple of months as the next (supply) contract with China is negotiated,” he said.
“Only then do we foresee the opportunity for a bottoming of price declines.”
Potash prices have sunk 20 percent year-over-year in the U.S. Corn Belt, according to Mosaic Co. data, as demand weakened amid soft crop prices.
Demand has also been stifled by a new Chinese tax that makes potash more expensive in the country, as well as by the strong U.S. dollar and dry Indian crop conditions.
Saskatoon-based PotashCorp expects to sell 9.0-9.2 million tonnes of potash this year.
The company, which also makes phosphate and nitrogen fertilizers, had earlier forecast sales of 9.3-9.6 million tonnes.
