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After another very poor quarter from Potash Corp. of Saskatchewan Inc., chief executive Bill Doyle maintained that the rough patch is over and a recovery is well underway. But so far, investors are staying cautious and waiting to see the evidence for themselves.
Potash Corp. shares have been stuck in a rut for several months as fertilizer buyers deferred purchases amid global economic uncertainty. They fell another 3% on Thursday after the company reported first-quarter earnings of US56¢ a share, well short of expectations.
It was the second straight quarter of disappointing results. Saskatoon-based Potash Corp., which has been operating far below capacity, also slashed its full-year outlook.
Mr. Doyle rarely says anything negative about potash demand. Yet on Thursday, he acknowledged that demand took longer to pick up in Q1 than he expected, only doing so at the end of the quarter. He noted that buyers waited until the “last possible minute” to stock up on fertilizer before the spring planting season arrived.
“Despite a slow start to the year, fertilizer markets are now fully engaged,” he said on a conference call.
He further predicted that global potash consumption will hit a record in 2012, and that shipments will be between 53 million and 56 million tonnes, a strong result that would be in line with last year’s shipments of 55.5 million tonnes.
Those numbers imply a massive rebound after a weak Q1. Mr. Doyle figures it is inevitable, because inventories have been drawn down and need to be replenished. He reiterated his view that at current crop prices, farmers have a strong economic incentive to apply more fertilizer and improve yields.
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