EmailPotash (POT $60.52 +1.3%) reported second quarter earnings of $0.96 per share, $0.11 better than the Capital IQ Consensus Estimate of $0.85.
Revenues rose 61.8% year/year to $2.33 billion versus the $2 billion consensus.
Company issues in-line guidance for Fourth Quarter. Company sees EPS of $0.80-1.00 vs. $0.89 Capital IQ Consensus Estimate. Co issues in-line guidance for FY11, sees EPS of $3.40-3.80 vs. $3.43 Capital IQ Consensus Estimate.
Higher prices for all three nutrients and continuing strong demand, especially for potash and phosphate, pushed second-quarter gross margin to $1.2 billion, double the $0.6 billion generated in the same quarter of 2010. Gross margin for the first six months of 2011 reached $2.3 billion, a substantial increase over the $1.3 billion earned in the same period last year. During the quarter, key spot-market potash buyers moved aggressively to secure sufficient volumes to fill immediate needs. With demand putting pressure on global supply capabilities, producers operated at or near record production levels in an attempt to keep pace.
Even with uncertainty around macroeconomic issues -- including US and European sovereign debt concerns -- weighing on equity markets and investors' tolerance for risk, the strength of agricultural fundamentals continues to provide a highly favorable environment for our business. The pursuit of higher crop yields is essential to meeting the world's immediate and long-term food needs and is driving strong demand for all three nutrients, especially potash. While no industry is fully immune to external economic forces, the need to meet the world's ever-increasing food supply requirements is an important challenge and a powerful force. Company sees evidence of this today. When investors back away from agricultural commodities, commercial buyers quickly step in to secure a share of the world's crop production. Although crop prices are likely to fluctuate, company anticipates they will remain at levels that provide farmers with the motivation to maximize production and the confidence to invest in their most important asset --- their soil.
