Potash Corp. of Saskatchewan, the world’s largest fertilizer producer by market value, cut its full-year profit forecast as weaker demand in emerging markets prompt it to trim output.
Earnings excluding one-time items are now expected to be $1.55 to $1.65 a share, the Saskatoon, Saskatchewan-based company said in a statement Thursday, compared with a July prediction of $1.75 to $1.95. Potash Corp. said it’s bringing forward the permanent closure of its Penobsquis, New Brunswick, mine and will also initiate inventory shutdowns in December at three Saskatchewan mines, reducing production in the current quarter by almost 500,000 metric tons.
“Broader emerging market concerns have weighed on customer sentiment, contributing to a weaker fertilizer environment in the second half of 2015,” Chief Executive Officer Jochen Tilk said in the statement.
Farmers, pinched by lower crop prices, are cutting expenditures on fertilizers and other inputs, contributing to a 22 percent drop in spot prices for potash this year. Further declines are possible as Potash Corp. and others add new production capacity. To help stem the decline, competitor Mosaic Co. said last month it’s reducing output.
“Fertilizer buyers are sitting on their hands as prices continue to drop,” Christopher Perrella, a Skillman, New Jersey- based analyst at Bloomberg Intelligence, said by phone Wednesday.
Earlier this month, Potash Corp. withdrew its 7.85 billion euros ($8.57 billion) offer for K S AG after pursuing its German rival for about a year. The Canadian company cited declines in commodity and equity markets as well as a lack of engagement by the management at K S, which had rejected the bid.
Potash Corp. last year generated 40 percent of revenue from potash, 34 percent from nitrogen fertilizers, and 26 percent from phosphate.