Canada’s Potash Corp. (TSX, NYSE:POT), the world’s biggest fertilizer producer by market value, cut Thursday its full-year earnings forecast and said it expects to sell less potash in the year than expected due to weak demand and prices, as well as higher costs.
The Saskatchewan-based company saw its third quarter profit fall by 11%, as it also was hit by weak nitrogen prices and increased phosphate costs in the period.
While it deals with weaker demand in emerging markets, such as Latin America, the fertilizer giant has decided to begin temporary inventory shutdowns at three of its Saskatchewan mines in December. It has also resolved to speed up the planned closure of its Penobsquis mine in New Brunswick.
The measures will reduce production by almost 500,000 tonnes in the current quarter.
“Broader emerging market concerns have weighed on customer sentiment, contributing to a weaker fertilizer environment in the second half of 2015,” chief executive Jochen Tilk said in a statement.
Potash Corp. earned US$282 million in the third quarter, or 34 cents a share, down from 38 cents in the same period last year.
Third-quarter earnings, excluding one-time items was 37 cents a share, compared to an average estimate of 38 cents.
The company lowered its full-year profit forecast to $1.55-$1.65 per share from $1.75-$1.95.
Despite the gloomy results, the fertilizer producer said it is already seeing signs of a shift in focus by distributors and farmers to 2016.
“We believe the need for increased global agricultural production – coupled with supportive crop prices – provides a compelling opportunity for farmers,” Tilk said.
Potash prices have been in a multi-year slump, and according to recent reports, the situation won’t improve anytime soon. On the contrary, it is likely to get significantly worse, Macquarie Group said last month.