Potash Issues Slew of Bad News; Stock Up

Potash (POT), the Canadian fertilizer giant, followed its cross-border rival Mosaic (MOS) with quarterly results that showed unprecedented declines from a year ago.

But Potash compounded the bad news by missing its already lowered profit estimates for the quarter, and then by reducing its profit guidance for the rest of the year.

And still investors pushed up shares of Potash Thursday. The stock was moving in morning trading at $91.09, up $2.16, or about 2%, on volume of 3.5 million shares. Average daily volume is $9.1 million.

Potash said its second-quarter earnings plunged 79% to $187 million, or 62 cents a share, from $905 million, or $2.82 a share a year ago. Analysts were looking for EPS of 69 cents. In late June, Potash issued a profit warning, saying it would likely post a profit of 70 cents.

Revenue tumbled to $856 million from $2.6 billion a year ago.

The problem? No one's buying fertilizer. Or, in Potash's words, buyers "continued to be extremely cautious in the wake of the global economic downturn, creating an unprecedented decline in potash and phosphate sales volumes as well as phosphate and nitrogen prices."

The company did not mince words about how bad it's been: the worst decline in business "ever."

And so Potash also warned that per-share earnings for the third quarter will likely come in at 80 cents to $1.20. Analysts' consensus estimates had pegged a profit of $1.56 a share. For the full year, Potash provided a range between $4 and $5 a share for its profit target, below analysts' current targets of $5.24 a share.

Potash boss Bill Doyle said in a statement, "We faced the most significant deferral of demand our industry has ever seen."

Also, like Mosaic, Potash made arguments about the inevitability of the global need for crop nutrients, and went on to say that it expects a "strong rebound in 2010 potash volumes." The company expects total industry-wide potash demand to require volumes of 55 million to 60 million tons of production in 2010.

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