Declining profits for PotashCorp of Saskatchewan (PCS) is forcing the company to suspend some operations in Saskatchewan and close a mine on the east coast.
On Thursday, PCS reported a dip in share prices and gross profits in the third-quarter of 2015 compared third-quarter results from 2014. The price per share came in a 34 cents, down from 38 cents this time last year.
Gross margins were also down to $505 million, lower than the $589 million reported in the second half of 2014.
In light of the grim financial report, PCS announced they are permanently closure of the Penobsquis mine in New Brunswick. In Saskatchewan, the fertilizer giant said it’s suspending operations at the Allan, Lanigan and Cory mine for three weeks in December in an attempt to reduce its potash inventory by 500,000 tonnes.
“Broader emerging market concerns have weighed on customer sentiment, contributing to a weaker fertilizer environment in the second half of 2015,” said PotashCorp president and CEO Jochen Tilk, adding despite the rollbacks, the company doesn’t expect employee layoffs.
PCS reported global potash demand remained strong going into the second half of 2015 with higher volumes to Brazil, India and China that helped offset slower sales in other markets. However, PCS said because buyers are moving cautiously amidst economic headwinds and significant currency volatility, prices declined in most key potash markets.
Provincial mining and other taxes for PCS rose to $79 million, up from $52 million in 2014, showing the effects of a weaker Canadian loonie and changes to Saskatchewan’s potash taxation regulations.
Despite broad economic uncertainty, Tilk said the company continues to see strong underlying consumption trends across most key potash markets and they’re maintaining their forecast for 2015 global shipments of 58 to 60 million tonnes. However, PotashCorp no longer expects to reach the high end of its target.