Takeover target Potash smashes profit expectations thanks to strong demand

PotasH, the world’s top fertiliser maker, steamrolled quarterly earnings expectations yesterday, on the back of stronger potash demand and higher prices for its nitrogen and phosphate-based nutrients.

The Canadian fertiliser maker is currently battling a $39bn (£24.4bn) hostile bid from mining giant BHP Billiton. Potash Corp has flatly rejected BHP’s bid and launched a lawsuit against the Anglo-Australian miner in an attempt to stymie a takeover.

Potash Corp said net income in the quarter ended 30 September rose to $402.7m, or $1.32 a share, up from a profit of $247.9m, or 82 cents, a year earlier. Quarterly revenue rose 43 per cent to $1.58bn.

BHP launched the $130-a-share bid in August, but Potash’s stock has consistently traded well above that level, indicating that a sweetened bid will be required for the suitor to carry the day.

The company’s potash business, which typically accounts for the lion’s share of its profits, generated two-thirds of the company’s gross margin in the quarter, as demand for the key crop nutrient has staged a steady comeback following a lean patch.