Potash Misses Estimates in 4Q - Analyst Blog
February 04 2013 - 3:30AM
Zacks
Potash Corp of Sakatchewan Inc.’s (POT)
fourth-quarter 2012 adjusted earnings (excluding a provision for
settlement of antitrust claims) of 52 cents per share missed the
Zacks Consensus Estimate of 59 cents. Earnings, as reported, fell
to 48 cents per share from 78 cents per share a recorded a year
ago.
For full-year 2012, adjusted earnings were $2.80 per share, missing
the Zacks Consensus Estimate of $2.99. Reported earnings were $2.37
per share, down from $3.51 per share in 2011.
Sales came in at $1,642 million in the quarter, down 12% from
$1,865 million registered a year ago, missing Zacks Consensus
Estimate of $1,853 million. The year-over-year decline was due to
reduced contributions from all three nutrients arising from slack
global fertilizer markets and lower demand.
For full year, sales dipped 9% to $7,927 million and missed the
Zacks Consensus Estimate of $8,088 million.
Segment Review
Potash: Sales volumes of 1.3 million tons in the
reported quarter were down from 1.6 million tons in the year-ago
quarter. Demand for potash remained strong in North America and
drove sales but were offset by lower offshore sales volumes.
Shipments to offshore customers decreased on a year-over-year
basis. This coupled with lower realized prices led to a decline in
gross margin. Gross margin declined 42.2% year over year to $281
million.
Average realized potash price was $387 per ton, down 10.2% from the
prior-year quarter.
Phosphate: Sales volumes declined 5.8% year over
year to 0.8 million tons, due to lower production as a result of
challenging mining conditions at the company’s Aurora mine. Average
realized phosphate price was $577 per ton, down 8.6% year over year
on lower solid and liquid fertilizer prices due to weak demand.
Gross margin went down 39.3% to $99 million.
Nitrogen: Sales volumes for the segment decreased
1.3% to 1.1 million tons due to gas interruptions in Trinidad.
Gross margin decreased 14.5% to $206 million in the reported
quarter. Average realized prices for nitrogen products decreased
1.7% to $453 per ton.
Financial Condition
Cash and cash equivalents amounted to $562 million as of Dec 31,
2012, versus $430 million as of Dec 31, 2011. Long-term debt was
$3,466 million versus $3,705 million a year ago. Capital
expenditure for the fourth quarter amounted to $628 million while
operating cash flow came in at $872 million.
Outlook
The company expects earnings for the first quarter and full-year
2013 in the range of 50 cents to 65 cents per share and $2.75 to
$3.25 per share, respectively.
The company expects gross profits from its potash business in the
range of $1.9 billion to $2.4 billion in 2013. It expects shipments
in the range of 8.5-9.2 million tons. The combined phosphate and
nitrogen gross margin for full-year 2013 has been forecasted in the
range of $1.5 billion to $1.7 billion.
Capital expenditures for the year are anticipated to be about $1.5
billion, with a significant portion related to the remaining potash
expansion projects at New Brunswick and Rocanville.
Potash Corp. currently retains a Zacks Rank #4 (Sell).
Other companies having a favorable Zacks Rank in the fertilizer
industry are Agrium Inc. (AGU), Rentech
Nitrogen Partners, L.P. (RNF) and Yara
International ASA (YARIY). All these stocks carry a Zacks
Rank #2 (Buy).
AGRIUM INC (AGU): Free Stock Analysis Report
POTASH SASK (POT): Free Stock Analysis Report
RENTECH NITROGN (RNF): Free Stock Analysis Report
(YARIY): ETF Research Reports
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