Potash Corp. shares buffeted by weak Q2 report, reduced dividend

SASKATOON – Potash Corp. of Saskatchewan Inc. shares are down this morning after the fertilizer company posted a weak quarterly financial report and announced its dividend to shareholders will go down for a second time this year.

Shares of the Saskatoon-based company (TSX:POT) opened on the Toronto Stock Exchange at $21.74, down four per cent from Wednesday’s close at $22.57.

PotashCorp said earlier that subdued global markets caused a drop in its latest quarterly earnings and required the company to reduce its quarterly dividend by 60 per cent.

Its payout to shareholders — declared in U.S. currency — will be cut to 10 cents per quarter, from the 25 cents per share paid in May and August. The dividend is down 74 per per cent from 38 cents per share in February.

The company’s net earnings — also reported in U.S. dollars — fell to $121 million in the second quarter, or 14 cents per share.

That was down from $417 million, or 50 cents per share, in the same period a year ago and about $30 million below analyst estimates.

Revenue was also below estimates at $1.05 billion — about $130 million below expectations.

Analysts had estimated 19 cents per share of net income and $1.184 billion of revenue, according to Thomson Reuters.

Potash Corp. says demand for potash has been healthy in North America and Latin America but shipments have been affected by contract delays in China and India and cautious buying in other Asian markets.

The company says spot prices were down compared to the first quarter of this year, but began to show signs of firming as market fundamentals improved at the end of the second quarter.

The average potash price was $154 per tonne in this year’s second quarter — down from $273 in the same period last year.

“Fertilizer markets have been under pressure through the first six months of 2016, however we believe the uncertainty that weighed on potash market sentiment is now lifting and a recovery is beginning,” said PotashCorp president and CEO Jochen Tilk.

“With key Asian contract prices settled by a number of producers — and buyer inventories at reduced levels — we are seeing improved engagement in all key markets.”

Note to readers: This is a corrected story. An earlier version didn’t specify that PotashCorp reports results in U.S. dollars.