A stronger Canadian dollar, coupled with lower nitrogen and phosphate fertilizer prices, has led Potash Corporation of Saskatchewan (POT-T), the world’s largest fertilizer company, to shave 15 off its previous second-quarter earnings estimate.
The company now expects second-quarter earnings to ring in around US85 per share, lower than the original estimate of about US$1 per share.
It was the second profit warning from Potash in as many months. In May, citing low phosphate prices, the company cut its 2001 forecast to the lower end of its estimate of between US$4 and US$4.50 per share.
Despite lower prices for phosphate and nitrogen fertilizer, the company says gross margins for both nutrients are expected to be higher than in the second quarter of last year.
“Relative to last year’s second quarter, the lower earnings can be accounted for in non-operating items, such as lower other income and a stronger Canadian dollar,” the company says.
PCS says its Canadian-dollar monetary assets and liabilities are converted at a month-end exchange rate, resulting in a non-cash gain or loss on the income statement.
The company’s stock fell $3.96 to $83.30 in late afternoon trading on the Toronto Stock Exchange. The issue has traded in a 52-week range of between $72.50 and $120.40 per share.
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