Potash Corporation of Saskatchewan Inc. (POT - Free Report) has declared operational changes at its Cory potash facility as well as inventory adjustments at its Allan and Lanigan facilities.
The operational changes at the Cory facility include a move to produce only white potash with an expected operational capability of about 0.8 million tons. Earlier, the facility produced both red and white potash and had an operational capability of 1.4 million tons. The change will result in removal of certain positions like around 100 permanent employees and 40 temporary positions. About 350 employees will continue to work at the facility. The workforce reduction is expected to take effect in February with remaining changes occurring in the third quarter of 2017.
The company is taking this step in order to optimize production at its lowest cost operations, including Rocanville and other Saskatchewan sites, where new capacity was added and employment levels have risen by about 265 since 2014. The reduction in workforce is not expected to affect the availability or quality of products across the company’s portfolio of operations and, thus, impact on customers is not expected.
Potash Corp. stated that along with the ramp-up of additional low-cost production from Rocanville, the company will continue with its practice of matching supply with market demand – its Lanigan facility will curtail production for 6 weeks starting Jan 2017 and its Allan facility will curtail production for 12 weeks starting Feb 2017. The number of temporary layoffs in relation with these inventory adjustments has not been determined as the company is evaluating the opportunities for reassigning positions to capital and maintenance projects during the down-time.
Potash Corp.’s adjusted earnings of 11 cents per share for third-quarter 2016 surpassed the Zacks Consensus Estimate of 9 cents. Revenues for the quarter slumped 29.9% year over year to $982 million and missed the Zacks Consensus Estimate of $1,004 million.
Potash Corp. narrowed the guidance range for its potash sales volumes to 8.5 million–8.7 million tons and refined gross margin outlook to $400–$500 million. The company also tightened the gross margin guidance range for nitrogen and phosphate in the range of $400–$450 million.
The company also narrowed its earnings guidance for 2016 to the range of 40 cents to 45 cents per share.
Potash Corp. currently holds a Zacks Rank #3 (Hold).
Some better-ranked companies in the basic materials space include Celanese Corporation (CE - Free Report) , BASF SE (BASFY - Free Report) and MAG Silver Corp. (MAG - Free Report) , all carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Celanese has an expected earnings growth of 9.5% for the current year.
BASF has an expected long-term growth of 5.6%.
MAG Silver has an expected earnings growth of 61.1% for the current year.
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