May 3 2010

Potash Corp. of Saskatchewan reported stronger-than-expected quarterly earnings Thursday (Apr 29) and raised its profit forecast due to a sharp rebound in potash demand.

Shares of Potash, the world's biggest fertiliser producer, were buoyed by talk that China's first imports of corn from the US in nearly four years could be followed by more shipments.

"The fact that the slide in corn prices has probably stopped for now with China in the market, that is definitely helping market and farmer psychology," said Broadpoint AmTech analyst, Edlain Rodriguez.

News of China's purchases buoyed Potash stocks and corn futures at the Chicago Board of Trade.

The company raised its full-year earnings forecast to a range of US$4.50-US$5.25 a share. Its previous forecast was US$4-US$5 a share.

"The quarter itself was fine and results were great. It's just the guidance that is not robust enough for people right now," said Edlain Rodriguez.

"But again it depends on how aggressive or conservative Potash Corp want to be. I think they would rather surprise on the upside than disappoint," he added. Potash Corp has stayed cautious with its forecasts this year, after it was forced to repeatedly cut its 2009 outlook in the face of weak potash demand.

Net income for the quarter ended March 31 rose to US$449.2 million, or US$1.47 a share, up from a year-earlier profit of US$307.4 million, or US$1.01 a share. The results beat Wall Street's average forecast of US$1.32 a share.