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2017 Sales Outlook for PotashCorp and Peers

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Sales breakup

PotashCorp’s (POT) sales are distributed equally among its three product segments—Nitrogen, Phosphorous, and Potassium. PotashCorp’s overall sales have been following a downward trend, and all three product segments have contributed to this decline.

Sales decline

In 2016, PotashCorp’s overall net sales fell significantly, by 32% YoY (year-over-year) to $3.9 billion. On average, the company’s sales have fallen 10% annually over the past five years, with 2016 being the worst.

The Potash segment contributed the most towards the company’s 2016 decline. It fell 41% YoY and has fallen at the rate of 12% annually over the past five years. Phosphate sales fell 25% in 2016 and have fallen an average of 10% annually over the past five years. Nitrogen sales fell 28% in 2016 and have fallen an average of 4% annually over the past five years.

PotashCorp is the largest potash producer by capacity and its sales in the past have been heavily impacted by its Potash segment. Agrium (AGU), Mosaic (MOS), and CF Industries (CF) also produce fertilizers (SOIL) and have struggled as well. Could this struggle end in 2017?

Sales outlook

Wall Street analysts expect PotashCorp’s sales to fall 4% in fiscal 2017 and recover in 2018 by 7% YoY. Therefore, the company’s weakening sales growth may not turn around this year. However, for the other three companies mentioned above, analysts expect sales to expand in fiscal 2017. For Agrium and Mosaic, sales are estimated to grow 3.7% and 3.5% YoY, respectively. For CF Industries, sales are estimated to grow 15.8% YoY. Next, we’ll look at PotashCorp’s sales drivers.

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