Potash Corp. of Saskatchewan Inc. reported an 80 percent drop in net income from year-ago levels. First-quarter earnings were $75 million ($0.09 per diluted share), which included notable charges of $52 million, of which $0.03 was for non-cash charges in the Phosphate segment and $0.03 related to New Brunswick severance charges. Year-ago income was $370 million ($0.45 per share).
First-quarter revenues were $1.21 billion, down from the year-ago $1.66 billion.
PotashCorp missed its first-quarter guidance of $0.10-$0.20 per share and has lowered its guidance for the year from $0.90-$1.00 to $0.60-$0.80 per share. Second-quarter guidance is $0.15-$0.20 per share.
“Lower prices for all nutrients weighed on our performance for the quarter and contributed to a more subdued outlook for the year,” said PotashCorp President and CEO Jochen Tilk. “In potash, the deferral of new contracts in China led to cautious buying patterns in other regions, resulting in a weaker demand environment and lower prices.”
“Amidst this backdrop, we took meaningful steps during the quarter that align with our potash strategy, including the suspension of operations in New Brunswick and production curtailments in Saskatchewan. While these steps impacted our first-quarter results, we are confident they best support medium to long-term performance. Our approach to markets – like our approach to the balance sheet – will continue to be proactive and prudent,” said Tilk.
“Importantly, we believe this approach – coupled with supportive economics and recognition of improved nutrient value by farmers – is already making a difference. In recent weeks, spot markets have begun to stabilize and customer sentiment is improving. We see better conditions for the remainder of 2016, but recognize that the timing and strength of a recovery is still unfolding.”