PotashCorp (POT) Tops Q1 EPS by 7c, Beat on Revenue, FY17 EPS Guidance Raised

PotashCorp (NYSE: POT) reported Q1 EPS of $0.18, $0.07 better than the analyst estimate of $0.11. Revenue for the quarter came in at $1.11 billion versus the consensus estimate of $1.03 billion.

GUIDANCE:

PotashCorp sees FY2017 EPS of $0.45-$0.65, versus the consensus of $0.52.

Key Highlights

• First-quarter earnings of $0.18 per share1
• Cash provided by operating activities of $223 million
• Rocanville ramp-up well underway; on track to reduce company-wide potash cost of goods sold by approximately $10 per tonne in 2017
• Full-year 2017 guidance increased to $0.45-$0.65 per share, including merger-related costs of $0.05 per share

Financial Outlook

Taking the above market factors into consideration, we have raised the bottom end of our guidance ranges for potash sales volumes and gross margin to 8.9-9.4 million tonnes and $600-$800 million, respectively.

In nitrogen, we continue to expect that pressure from new US capacity will keep margins below those of the previous year. Similarly, we forecast phosphate profitability to be below 2016 levels as difficult market fundamentals are expected to weigh on realizations for our products. Given these considerations, we maintain our combined nitrogen and phosphate gross margin estimate of $150-$400 million in 2017.

Our effective income tax rate is anticipated to fall to a range of 2-5 percent, primarily due to a non-cash income tax provision recovery relating to provincial tax changes that will be realized in future years.

Selling and administrative expenses have been lowered and are now forecast in the range of $220-$230 million, while finance costs are now expected to be higher, in the range of $225-$235 million.

Additionally, income from equity investments is now anticipated in the range of $150-$170 million, above the previous guidance range.

We have revised our full-year foreign exchange rate assumption to CDN$1.33 per US dollar, slightly higher than previous guidance.

Based on these factors, we have increased our full-year 2017 earnings guidance to $0.45-$0.65 per share, including merger-related costs of $0.05 per share.

For earnings history and earnings-related data on PotashCorp (POT) click here.

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