Wednesday, January 26, 2011

Potash Corp. (NYSE: POT): Q4 Earnings Preview

Potash Corp. of Saskatchewan, Inc. (NYSE: POT), the world's largest fertilizer producer, is scheduled to release its fourth-quarter financial results before the opening bell on Thursday, January 27, 2011. Analysts, on average, expect the company to report earnings of $1.66 per share on revenue of $1.62 billion. In the year ago quarter, the reported company reported earnings of 80 cents per share on revenue of $1.10 billion.

Potash Corporation of Saskatchewan Inc. produces and sells fertilizers and related industrial and feed products worldwide. The Company owns and operates five potash mines in Saskatchewan and one in New Brunswick.  Potash is the biggest producer of potash and nitrogen and third-biggest maker of phosphate.

In the preceding third-quarter, the Saskatoon, Saskatchewan-based company's net income was $1.32 per share, compared with $247.9 million or $0.82 per share last year. Quarterly sales grew to US$1.58 billion from US$1.1 billion last year and US$1.44 billion. Analysts, on average, expected the company to report earnings of $1.16 per share on revenue of $1.32 billion. 

At its last earnings call in October, the company raised its fiscal 2010 earnings guidance. Potash Corp. said that it now expects fiscal 2010 net income in a range of $5.75 to $6.00 per share, compared with its prior estimate of $5.00 to $5.50 per share. The company also said that it anticipates fiscal 2010 potash segment gross margin between $1.65 billion and $1.75 billion on total shipments of 8.3 to 8.5 million tonnes. Phosphate and nitrogen gross margin are estimated to be $750 million to $850 million for the year.

For fiscal 2011, Potash Corp. expects earnings in the range of $8.00 to $8.75 per share.  

Fertilizer demand continues to strengthen and market segment sentiment has improved due to the rally in grain prices, lean producer inventories and the need to refill a de-stock pipeline.The broad-based rally in agricultural commodity prices translates into profitable farm economics and record or near-record farm income around the world. Rallies in a broad array of agricultural commodity prices during the last few months are fueling an increasingly positive outlook for phosphate and potash demand. Phosphate prices have increased sharply. Growth in China, India, Brazil and other emerging areas around the globe are creating demand. An improving agricultural picture, visibility with pricing, and the fear of inflation could all boost fertilizer stocks higher. 

Early in November, the company won a reprieve from a hostile takeover bid, after BHP Billiton Ltd. decided to drop its $38.6 billion offer after determining the terms sought by Canadian regulators contradicted its business strategy and could have maligned shareholder value.

Also in November, the company's board authorized it to buy back as much $2 billion of its common shares. 

Full Disclosure: None.
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