BERTRAND MAROTTE
RTGAM



MONTREAL - Last year, Potash Corp. of Saskatchewan Inc. chief executive officer Bill Doyle characterized BHP Billiton Ltd.'s $39-billion (U.S.) hostile bid as an attempt to get the company at such a low price that it amounted to a steal.

Ottawa ultimately blocked the proposed deal, but Mr. Doyle's protestations that Potash Corp. was worth way more than what BHP was offering have been confirmed in spades.

The world's largest fertilizer producer has a market capitalization of about $50.2-billion and its outlook is robust thanks to sentiment that global demand for fertilizer will continue to soar on higher crop and food prices.

The company unveils its first quarter financial results on Thursday.

Analyst Paul D'Amico of TD Newcrest speculated in a recent report that Potash will raise its guidance with the Q1 report, to more than its late January outlook of between $2.80 and $3.20 earnings per share for the fiscal year. He believes potash prices will continue to climb in an environment of higher crop prices.

He's estimating Q1 earnings per share at 77 cents, the midpoint of management's guidance of between 70 and 90 cents. The analysts' consensus estimate is 79 cents.

Potash is expected to continue to ride the positive effects of the global rise in food prices for some time to come.

Demand for potash, a key ingredient in fertilizer for various crops, has been on a steady upswing over the past year as growing populations in emerging countries such as China and India drive increased food production.

Further fuelling demand is the effect of rising incomes in emerging regions. A growing middle class is changing its diet, shifting to greater meat consumption.

A recently released report from the Food and Agricultural Policy Research Institute (FAPRI) sees global per capita meat consumption reaching 63 kilograms per person by 2025, up 10 kilograms.

World fertilizer use is expected to jump to record highs, according to a research note by National Bank Financial Group chief economist Stefane Marion.

"The increase continues to be driven by emerging economies such as China where per-capita meat consumption is set to overtake that of Russia within five years," he said.

"Needless to say, this rapid change in dietary habits is putting significant pressure on feed grain producers as they attempt to keep up with demand for livestock.

"This is translating into a sustained increase in demand for fertilizers."

FAPRI expects world fertilizer use to surge to more than 184 million tonnes in 2024 from 179 million tonnes this year.

Saskatoon-based Potash Corp., which controls about 30 per cent of the world's potash supply, is well positioned to reap the benefits as the world's population grows to an estimated 9.2 billion, from about 6.5 billion, by 2050.

Potash Corp. is moving to add capacity to meet the growing demand.

Mr. D'Amico is, however, maintaining his "hold" recommendation "as the potential upside at this time does not warrant a buy."

But he has increased his one-year target price to $61 from $55.