SASKATOON — Potash Corp. of Saskatchewan sees greater global demand and higher prices for fertilizer ahead and is raising its financial outlook for the rest of the year as a result.
“Farmers need and want to grow more food and to do that they will need more fertilizer, especially potash,” chief executive Bill Doyle told analysts Thursday.
As a result, Potash Corp. (TSX:POT) is diversifying sales even more beyond markets such as China and India to countries elsewhere in Asia as well as in Latin America, Doyle said.
His remarks came after the world’s largest potash producer reported a strong quarterly profit of $840 million, up from $480 million in the same quarter last year.
Potash Corp. also said it was raising its outlook for third-quarter earnings to between 80 cents and $1 per share. Full-year earnings are estimated at $3.40 to $3.80 per share.
Investors reacted positively by sending Potash stock up $1.19, or 2.1 per cent, to $57.22 in early afternoon trading on the Toronto Stock Exchange.
“Just as rising consumption has put pressure on the grain supply, the increase in potash demand is expected to test the world’s production limits for the foreseeable future and these conditions are supporting higher prices for potash,” Doyle said during the conference call.
Earnings per share climbed to a record for the quarter of 96 cents from 53 cents a year earlier.
Sales in the quarter rose to $2.33 billion from $1.44 billion as higher fertilizer demand and prices doubled gross margins to $1.2 billion.
“With farmers committed to increasing yields and capitalizing on the unprecedented economic opportunity, we worked to keep pace with growing demand, which resulted in a record quarter for our company,” Doyle said.
Last summer, Potash became the target of a nearly US$40-billion hostile takeover offer by Anglo-Australian mining giant BHP Billiton. However, company management staunchly rejected the BHP bid as too low, with Doyle saying at the time that the fertilizer market was set to grow by leaps and bounds.
The deal was eventually blocked by Ottawa as not being of net benefit to Canada.