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Thu, Jan. 28, 8:21 AM
- Potash Corp. (NYSE:POT) -4.1% premarket after reporting weaker than expected Q4 earnings and cutting its quarterly dividend, hurt by weakening fertilizer prices.
- POT is slashing its dividend payout by 34% Y/Y to $0.25/share from $0.38/share, the first cut since the company’s IPO in 1989.
- "Weaker fertilizer prices late in the year reduced our earnings for the quarter, giving rise to a more cautious outlook for all three nutrients as we begin 2016," POT says.
- POT says Q4 potash sales volumes fell 31% Y/Y, while its average realized potash price fell to $238/metric ton from $284 a year earlier; it sees 2016 potash sales volumes of 8.3M-9.1M metric tons.
- Despite falling prices, POT sees global potash demand of 59M-62M metric tons in 2016, in-line with 2015; POT also produces nitrogen and phosphate.
- POT issues downside earnings guidance for Q1, seeing EPS of $0.10-$0.20 vs. $0.29 analysts consensus estimate, and for FY 2016, expecting EPS of $0.90-$1.20 vs. $1.45 consensus.
- Earlier: Potash Corp. -7% on speculation over dividend cut (Jan. 25)
Mon, Jan. 25, 1:06 PM
- Potash Corp. (POT -6.8%) plunges to 52-week lows as J.P. Morgan analysts say lower nutrient prices likely will prompt management to cut dividend payments.
- "Our base case is that [POT] will reduce it because the dividend was set during a period of cyclical strength and a higher level of earnings and industry structure conditions that does not resemble today’s business landscape," analysts led by Jeffrey Zekauskas write, expecting POT will reduce its annual dividend to $1 from the current $1.52 and downgrading shares to Neutral from Overweight.
- Bernstein analyst Jonas Oxgaard also expects the dividend will be reduced, saying "the fear of [POT] going into financial distress and having bigger problems than paying dividends likely outweighs any reward the company is getting from the dividend at this stage."
- Also: MOS -5.5%, AGU -2%, IPI -3.2%.
Fri, Jan. 22, 11:36 AM
- Potash Corp.'s (POT +1.6%) suspension of production at its Picadilly mine in New Brunswick due to weak market conditions could lead the company to shelve plans to build a new west coast shipping terminal with Canpotex partners Mosaic (MOS -1.8%) and Agrium (AGU +1.6%), POT CEO Jochen Tilk says.
- The decision earlier this week allows Canpotex to "indefinitely defer" a decision on constructing the C$900M Prince Rupert terminal, Tilk told a CIBC investor conference yesterday, saying "We certainly don’t anticipate making that decision in the next 10 years, so we’re very good with our port facilities on the west coast and on the east coast."
- Tilk also said POT’s board would discuss the company’s dividend next week; analysts have speculated that POT will reduce its dividend.
Dec. 16, 2015, 3:39 PM
- Earnings estimates for Agrium (AGU +0.9%) and Potash Corp. (POT +2.9%) are trimmed by 10%-13% for 2016 and 2017 at Macquarie, which expects agricultural commodities to continue to suffer from oversupply and weak demand in 2016.
- Macquarie anticipates that the poor economic health of farmers around the world will lead to limited consumption of nitrogen fertilizers and a sharp pullback for potash.
- The firm also cuts its stock price target for the companies, to $95 from $105 for AGU and to $17 from $21 at POT.
Dec. 7, 2015, 2:37 PM
- Potash Corp. (POT -2.7%) is lower after BofA analyst Steve Byrne reinstated coverage of the stock with an Underperform rating and $20 price target, expecting increased capex in the potash industry over the last decade to depress operating rates in the next couple of years.
- Increased capacity due to the incentivization of brownfield expansion and the current favorable production price of potash coupled with the weakening outlook in farm income levels may all influence potash price discipline, Byrne believes.
- If potash prices fall towards the marginal cost of $200/metric ton, Byrne thinks market forces could push prices even lower to encourage global capacity reduction; in such an environment, POT would be able to maintain its dividend only if it meaningfully cut capex or increased production rates.
Nov. 24, 2015, 3:11 PM
- Potash Corp. (POT +1.5%) is preparing a new takeover approach for K+S (OTCQX:KPLUY), which likely would come next spring, Reuters reports, citing German investor newsletter Platow Brief.
- POT on Oct. 5 withdrew its €7.9B takeover proposal for K+S, citing the decline in global commodity markets and a lack of engagement by K+S management.
- Also: AGU +1.7%, MOS +1.8%, IPI -1%.
Oct. 30, 2015, 12:58 PM
- News this week included weak results and guidance from Intrepid Potash (IPI -5.4%), Potash (POT -2.8%), Bunge (BG -0.9%).
- Coming next week are earnings from Agrium (AGU -1.6%), Mosaic (MOS -2.1%) and CF Industries (CF +0.5%). While analysts have already sharply reduced estimates for the trio, Jaguar Analytics reminds POT and BG had also already seen big cuts, but still missed expectations and slashed guidance further.
Oct. 7, 2015, 11:48 AM
- Potash (POT +2.6%) is higher even as shares are downgraded to Hold from Buy with a $24.50 price target, cut from $37.75, at HSBC, which cites an "uncertain" commercial and financial strategy in light of the failure of the company’s proposed bid for K+S.
- The firm notes a significant decline in prices in the Brazilian potash market over the past two months, with the latest indicators reflecting a decline in prices to $290/ton or below, while also foreseeing negative implications for 2016.
- The downgrade reflects an unclear strategy as well as weaker fundamentals, HSBC says, adding that the attempt to purchase K+S implies that POT still looks for growth by acquisition, meaning shareholders "may not in the end pocket these sums or the value of stakes in ICL or SQM."
Oct. 5, 2015, 7:43 AM
- Potash Corp. (NYSE:POT) +4% premarket after saying it withdrew its offer for rival potash producer K+S (OTCQX:KPLUY), citing challenging market conditions and a lack of engagement by K+S management.
- POT had offered €41/share ($45.98) for the German company, valuing K+S at €7.9B ($8.8B), but K+S refused to negotiate, saying POT’s offer undervalued the company and that a takeover could cost jobs.
- An acquisition of K+S would have given POT an opportunity to realize savings from selling potash within North America from its own western Canada mines and from K+S's Legacy mine.
Sep. 21, 2015, 3:32 PM
- Potash (POT -3%) is downgraded to Underperform from Neutral with a $22 price target at Macquarie, which sees no letup in the multi-year slump in potash prices anytime soon; in fact, the firm thinks the downturn will grow significantly worse.
- The firm foresees an average potash price of just US$254/metric ton next year, down from more than $300 today, citing ongoing weakness in agricultural markets and depreciating currencies in emerging markets.
- Macquarie expects global potash demand to fall by 4.4M metric tons in 2016, and with China sitting on huge potash stocks, the balance of pricing power will shift toward buyers and away from sellers, which could lead to the collapse of the potash contract pricing system.
- Also: AGU -1.5%, MOS -1.6%, IPI -2.5%, SQM -0.9%.
Jul. 7, 2015, 3:48 PM
- Potash Corp. (POT -2.2%) reportedly would be open to raising its $8.6B bid for K+S (OTCQX:KPLUY) if the German company could reveal more value not currently seen by the Canadian company.
- POT's €41/share bid represents a 43% premium to the average weighted price of K+S shares over the past six months, but K+S CEO Norbert Steiner has said the Legacy project alone is worth at least €21/share on top of €29 for the German company’s existing operations.
- The market may be factoring in a better than 50-50 probability that a deal happens, but J.P. Morgan Ben Scarlett sees only a one-in-three chance of success, believing a deal would face substantial execution risk and anti-trust or other concessions.
- The firm thinks European and North American anti-trust authorities will examine the impact of a deal in their own regions, and perhaps invoke conditions that require approval from authorities in places such as Brazil, China and India.
Jun. 26, 2015, 2:50 PM
- Potash Corp.'s (POT -2.1%) attempt to buy rival K+S (OTCQX:KPLUY) and create a company capable of controlling up to 30% of the global potash market is likely to face pushback from the German company and regulatory hurdles, analysts say.
- WSJ reports that K+S is likely to reject the confirmed offer from POT, believed to come in at slightly more than €40/share ($44.80) in cash, since it is seen as undervaluing the dominant position the two could achieve in North America, where POT has major mines and K+S is developing its own mine.
- Many analysts say the combined large market share in North America, and in other markets including Germany, means that German regulators likely would reject a takeover, particularly since Germany nixed a similar takeover attempt in 1997.
- K+S has sunk €2B ($2.2B) into a new Canadian potash mine which should start up in late 2016, which will add low-cost capacity of 2M metric tons/year for K+S - and which POT seems to be trying to scoop up on the cheap, writes WSJ Heard on the Street's Helen Thomas.
Jun. 25, 2015, 2:24 PM
- Potash Corp. (POT +2.2%) is higher following reports that it is in early-stage discussions to acquire German potash supplier K+S AG (OTCQX:KPLUY).
- Any deal could value K+S at more than €7B ($7.9B), or €40/share, according to the Handelsblatt newspaper, which first reported POT’s interest.
- Bloomberg reports that K+S is likely to reject the POT offer because it deems the bid as too low.
May 29, 2015, 11:43 AM
- Potash Corp. (POT -2.3%) is downgraded to Hold from Buy with a $35 price target, cut from $39, at TD Securities, which says global potash prices have been moving sideways at best so far this year despite a number of supply curtailments.
- The firm says it sees few catalysts to move POT’s share price higher.
Apr. 30, 2015, 8:29 AM
- Potash Corp. (NYSE:POT) -2.5% premarket after reporting weaker than expected Q1 earnings and cutting its guidance for the year, warning that 2015 potash prices likely would be lower than expected.
- POT issues downside guidance for Q2, seeing EPS of $0.45-$0.55 vs. $0.57 analyst consensus estimate, and lowers its FY 2015 EPS outlook to $1.75-$2.05 from its previous view of $1.90-2.20 and $2.02 consensus.
- POT maintains its estimate for full-year potash gross margin of $1.5B-$1.8B and sales volumes of 9.2M-9.7M metric tons; it expects market conditions to support a stronger pricing environment for phosphate, and forecasts combined nitrogen and phosphate gross margin of $1.0B-$1.2B for the year.
- Guidance for potash sales volumes for the year was maintained at between 9.2 million and 9.7 million tons, as was its full-year potash gross margin view of between $1.5 billion and $1.8 billion.
- In Q1, potash gross margins rose 43% Y/Y to $428M, helped by higher realized prices and lower per-ton costs, with the average realized potash price of $284/metric ton up from $250 a year earlier; potash sales volumes were relatively flat at 2.3M tons, while sales volumes for both nitrogen and phosphate fell and prices improved.
Mar. 30, 2015, 11:58 AM
- The Canpotex North American potash consortium says it has finalized 2015 supply contracts with all of its major customers in China.
- Canpotex says shipments to China will reach at least 1.8M metric tons, up from 1.6M in 2014, and may be as much as 2.5M metric tons, depending on supply, demand and logistics; the group does not release price terms but says the contracts are at "current competitive levels."
- Belarusian Potash said earlier this month it signed a contract with China to sell potash for $315/ton including shipping costs, which was $10 more than last year’s price.
- Canpotex represents Potash Corp. (POT +1.5%), Mosaic (MOS +2.6%) and Agrium (AGU +1.5%).
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