PotashCorp Falls after Meeting 2Q16 Estimates: What’s Missing?



PotashCorp’s 2Q16 earnings

The Potash Corporation of Saskatchewan (POT), also known as PotashCorp, reported its 2Q16 earnings on July 28, 2016. The company posted adjusted EPS (earnings per share) of $0.18, which met analysts’ estimates of $0.18.

Following its earnings, POT’s stock fell by 7.2% to settle at $15.9 per share on July 28, 2016. YTD (year-to-date), shares have fallen by ~8%.

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The $0.18 EPS includes a $0.04 adjustment related to a mine suspension in New Brunswick, asset retirement obligations, and Canpotex’s termination of its port option, according to the company. Much of the fall in the company’s earnings has come from weakness in fertilizer prices coupled with softness in demand.

In 2Q16, China and India delayed contract settlements, which, according to the company, hurt its sales. Demand is expected to pick up in the second half of 2016. Agrium (AGU), Mosaic Company (MOS), and Intrepid Potash (IPI) will report their earnings in the coming weeks, helping us gain a fuller picture of fertilizer (IYM) demand.

For 2016, POT’s management expects EPS in the range of $0.4–$0.55 compared to EPS of $1.51 in 2015.

Series overview

In this series, we’ll analyze PotashCorp’s earnings in detail and what the future holds for the company in light of its 2Q16 earnings. We’ll discuss the performance and outlook for each of the company’s three NPK (nitrogen, phosphorus, and potassium) segments. We’ll also discuss prices, shipments, and volumes, which are key to PotashCorp’s sales.

Let’s begin with PotashCorp’s 2Q16 sales.


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