Potash Corp. of Saskatchewan lowered its profit forecast Friday, blaming reluctant customers who have been slow to build their inventories of the fertilizer component.
The company said it expects to earn $3.25 (U.S.) to $3.75 a share for the full year, compared to the $4 to $5 it estimated in July. The cut takes it below the average analyst estimate, which Thomson Reuters lists as $3.89 a share for the year.
"The change primarily reflects lower than forecasted potash sales volumes due to continued slow demand and limited restocking by fertilizer distributors around the world," the company said in a statement.
The company has been cutting both its estimates and actual production rapidly this year, reducing the amount of potash it plans to bring to market this year by 5.5-million tonnes. In the last year, nearly 20-million tonnes of potash production has been curtailed by global producers.
The company maintained that demand would pick up next year, as short-sighted customers come rushing back to replenish their supplies.
"Food production is an unending and long-term business," said chief executive officer Bill Doyle. "Decisions related to fertilizer use today inevitably impact crop yields - and soil needs - for years to come. Although there are fluctuations in fertilizer demand, there is an essential need for our products that is based on science... As farmers around the world begin the lengthy process of replenishing nutrients in the soil, we anticipate a new wave of demand growth that will allow us to once again demonstrate the full potential of our company."