Potash Corp remains confident of market outlook despite weak prices
Potash Corp of Saskatchewan’s (TSX, NYSE:POT) chief executive Jochen Tilk said Thursday he believed prices for the fertilizer won’t follow down the slippery slope trailed by corn, soybean and other crops, which have hit all-time lows as of late.
Discussing the company’s third-quarter results, Tilk added potash demand may experience a modest decline in certain markets next year, including North America. But overall, he thinks global demand in 2015 will be similar to 2014 levels.
"While we expect lower farm profitability still has the potential to impact demand in certain regions, we also believe crop pricing remains within the band that is supportive of farmer economics and fertilization," he said in a statement.
Potash Corp., the world's biggest fertilizer company by market value, estimates that a healthy 58 to 60 million tonnes of the nutrient will be shipped this year, which is more than the 56.5-58 million it had estimated earlier.
“We continue to see encouraging signs in each of our major potash markets with a renewal of demand translating into higher sales volumes,” Tilk said.
And the firm’s Q3 results confirm such a statement — sales rose to $1.64 billion from $1.52 billion, beating the $1.53 billion average estimate.
The Canadian firm, which also makes phosphate and nitrogen fertilizers, narrowed its 2014 forecast profit to $1.75-$1.85 per share from $1.70-$1.90, citing a reduction in estimated income from offshore investments and a higher tax rate.
However, it said it is approaching the end of a decade-long, US$8.3-billion investment program to boost its potash production capacity.
It added it expects to generate vast free cash flow in the years ahead after that program ends, opening the door to potential dividend hikes, acquisitions or both.