PotashCorp, on Sept. 18 after the close of the markets, announced revised earnings guidance of $3.25-$3.75 per share for full-year 2009, shifting from a range of $4.00-$5.00 per share provided in July 2009. It said the change primarily reflects lower-than-forecasted potash sales volumes due to continued slow demand and limited restocking by fertilizer distributors around the world. Over the past 12 months, nearly 20 million mt of potash production has been curtailed by global producers.
PotashCorp said 2009 earnings are still expected to be among the best in company history, despite an anticipated decrease of 60 percent in year-over-year potash volumes and an 85 percent decline in combined phosphate and nitrogen gross margin. Earnings for third-quarter 2009 are expected to be at the low end of the $0.80-$1.20 per share guidance range previously provided.
The company said potash inventories that can be measured in the retail chain, which excludes less easily identified inventories in China, have been largely eliminated, and potash levels in soils around the world have been significantly reduced. This creates a progressively higher risk to crop yields as soil fertility is continually diminished. While the immediate impact has been masked by good weather and residual soil nutrient levels in markets with healthy long-term fertilization and agronomic practices, such as the U.S. and Australia, yields for key crops in several other major growing regions are expected to be substantially below 2008 levels. A significant rebound is required to address this situation, and the company expects 2010 global potash demand to be in the range of 50-55 million mt.
In other news, on Sept. 23 the company announced that it plans to raise $1 billion in two offerings – one offering of $500 million in 3.75 percent notes due Sept. 30, 2015, and another $500 million in 4.875 percent notes due March 30, 2020.
PotashCorp intends to use the net proceeds to repay outstanding indebtedness under revolving credit facilities and for general corporate purposes. The offering is expected to close on Sept. 28, 2009.