The management team at Potash Corp. of Saskatchewan Inc. is developing a lengthy track record of being too optimistic about its industry’s prospects.
The Saskatoon-based company slashed its earnings guidance for the fifth time in six quarters on Thursday as its realized potash prices plunged to stunning lows. Potash Corp. also cut its quarterly dividend 60 per cent to US10 cents a share, the second time this year it has reduced the payout.
Yet despite the grim news, the fertilizer giant believes the potash market really has reached its “low point” this time, and better days are ahead.
“With customer sentiment improving and announced industry shutdowns, we anticipate a more supportive potash environment through the balance of the year,” chief executive Jochen Tilk said on a conference call.
However, the stock price is near a nine-year low as many investors remain skeptical that a turnaround is imminent. The potash industry has been mired in a three-year bear market due to high supply, middling demand and rising competitive pressures.
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