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Potash Hikes Dividend by 33%

Zacks Equity Research

Crop nutrient company Potash Corp of Sakatchewan Inc. (POT) recently announced a roughly 33% hike in its quarterly dividend to 28 cents per share from the prior payout of 21 cents. The increased dividend will be paid on May 2, 2013, to stockholders of record as of Apr 11, 2013.

The revision marked the company’s fourth dividend hike since 2011 and resulted in more than 700% cumulative increase in cash dividend.

Potash, which is among the prominent fertilizer companies along with CF Industries (CF), Mosaic (MOS) and Agrium Inc. (AGU), recently released disappointing fourth-quarter results as both revenues and adjusted earnings missed the Zacks Consensus Estimates.

The company’s adjusted earnings (excluding a provision for settlement of antitrust claims) of 52 cents per share missed the Zacks Consensus Estimate of 59 cents. Earnings, as reported, fell to 48 cents per share from 78 cents per share a year ago.

Revenues came in at $1,642 million in the quarter, down 12% from $1,865 million in the year-ago quarter, missing Zacks Consensus Estimate of $1,853 million. The year-over-year decline was due to reduced contributions from all three nutrients arising from slack global fertilizer markets and lower demand.

The company expects earnings for the first quarter and full-year 2013 to be in the range of 50 cents to 65 cents per share and $2.75 to $3.25 per share, respectively.

The company expects gross profits from its potash business to be in the range of $1.9 billion to $2.4 billion in 2013. It expects shipments to be in the range of 8.5-9.2 million tons. The combined phosphate and nitrogen gross margin for full-year 2013 has been forecasted in the range of $1.5 billion to $1.7 billion.

Potash Corp. currently retains a Zacks Rank #5 (Strong Sell).

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