Potash Corp Cuts Dividend 60%
CBJ — Potash Corp, the world’s biggest fertilizer company by capacity, cut its full-year profit forecast and dividend for the second time this year and said that potash markets had reached their low point.
Prices for the crop nutrient have fallen to their lowest in about a decade, weighed down by excessive mining capacity and soft demand in key export markets.
“We believe the uncertainty that weighed on potash market sentiment is now lifting and a recovery is beginning,” Chief Executive Jochen Tilk said in a statement.
Saskatchewan-based Potash plans to cut its quarterly dividend to 10 cents per share from 25 cents. Its shares fell 4.7% in New York and Toronto, and the U.S.-listed stock touched a two-week low of US$16.32, down 40% in the past 12 months.
Potash cut its full-year profit forecast to a range of 40 to 55 cents, from the 60 to 80 cents it forecast in April.
The company maintained its forecast for full-year potash sales volumes in the range of 8.3 million to 8.8 million tonnes but said it expected lower prices earlier in the year to weigh on results.
Potash’s net earnings fell to US$121 million, or 14 cents per share, in the second quarter ended June 30 from US$417 million, or 50 cents per share, a year earlier, pressured by weaker-than-expected prices.
The company’s average realized potash price fell 44% year over year to US$154 per tonne during the quarter.
On an adjusted basis, earnings were 18 cents per share, in line with expectations. Sales fell 39% to US$1.05 billion.