Potash Reports Huge Profit Decline

Fertilizer giant Potash reports a staggering, yet expected, decline in profit and revenue for its third quarter.
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SASKATOON, Saskatchewan (TheStreet) -- Fertilizer giant Potash (POT) reported a staggering, yet expected, decline in profit and revenue for its third quarter.

Potash has been scaling back its financial guidance all year, and it did so again in its earnings release Thursday. It's now expecting fourth-quarter earnings of between 65 cents and 85 cents a share, well below the $1.18 a share that Wall Street analysts were targeting.

The reduced forecast comes as Potash -- wrestling with a recession-induced collapse in crop growing and, therefore, fertilizer demand -- continues to cut back on production of the potassium compounds that gave the company its name. Potash expects total 2009 shipments to amount to between 3 million and 3.2 million tons.

The outlook for next year hasn't improved, either. The company keeps reeling in its 2010 forecasts for global potash demand. During the summer, Potash believed that 2010 would see as much as 60 million tons of potash consumption. In its earnings release Thursday, the company said that it now looks as though demand will come closer to 50 million tons.

And yet, following the general upward trend in fertilizer stocks despite

ugly near-term prospects

, Potash shares rose during Thursday's regular session, if slightly. In afternoon trading, the stock was changing hands at $103.22, up 0.7%, on heavier-than-average volume. Part of the company's popping share price of late may have been due to increasing speculation that

BHP Billiton

(BHP) - Get Report

, the world's largest mining concern, has interest in taking out the Canadian producer of potash, which is mined.

For its third quarter, the company posted earnings of about $250 million, or 82 cents a share, down 80% from the $1.2 billion, or $3.93 a share, it earned in the year-ago period. Analysts were expecting 81 cents.

Revenue tumbled 64% to $1.1 billion from about $3.1 billion a year ago, about even with what Wall Street was predicting for the third quarter.

-- Written by Scott Eden in New York

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Scott Eden has covered business -- both large and small -- for more than a decade. Prior to joining TheStreet.com, he worked as a features reporter for Dealmaker and Trader Monthly magazines. Before that, he wrote for the Chicago Reader, that city's weekly paper. Early in his career, he was a staff reporter at the Dow Jones News Service. His reporting has appeared in The Wall Street Journal, Men's Journal, the St. Petersburg (Fla.) Times, and the Believer magazine, among other publications. He's also the author of Touchdown Jesus (Simon & Schuster, 2005), a nonfiction book about Notre Dame football fans and the business and politics of big-time college sports. He has degrees from Notre Dame and Washington University in St. Louis.