Next Potash Corp CEO likely to keep priority on price
In January, Potash Corp forecast a profit of $1.40 to $1.80 a share for 2014, lower than last year, when it earned $2.04 a share. The company's shares are down about 9 percent from a year ago, although they have rebounded more than 5 percent in 2014.
The shares dropped more than 2 percent in New York and Toronto on Monday afternoon, falling slightly faster than those of its North American peers.
Unlike Potash Corp, Inmet was a producer whose rate of production and sales did not significantly affect market prices. Consequently, Tilk's history at Inmet does not reveal his views on supply management, said Raymond Goldie, analyst at Salman Partners.
To be sure, forces outside Potash Corp's boardroom could prompt Tilk to play a different hand than expected. Uralkali continues to operate outside of BPC, leaving supplies less tightly managed than they have been in recent years.
BHP Billiton PLC and K+S AG, meanwhile, are building mines in Potash Corp's Saskatchewan backyard that could erode Canpotex's market clout. BHP has not yet given the full go-ahead to its potash project.
Doyle, who turns 64 next month, was expected to retire soon, but bypassing internal candidates for someone with no background in fertilizers might surprise some investors, Scotiabank analyst Ben Isaacson said in a note to clients.
Doyle may be most remembered for fending off a hostile takeover by BHP Billiton in 2010. The Canadian government's rejection of BHP's move is likely to deter any potential suitors from approaching Potash Corp in the foreseeable future.
Tilk is just the latest new face atop the world's biggest fertilizer producers. Earlier this year, new CEOs took the helms of Agrium Inc and CF Industries, replacing chief executives who were, like Doyle, approaching normal retirement age.
Uralkali also replaced its CEO in a shakeup after the collapse of BPC.
The appointment of Tilk followed a three-year search. The company's board decided to start the transition now because an "exceptional candidate" was available, Potash Corp's Johnson said.
Doyle, who served as CEO for 15 years, led Potash Corp through an $8-billion, 11-year expansion of its Canadian potash mines that is nearly complete, freeing up cash for other uses. With Uralkali, Mosaic and Agrium also expanding, however, global capacity exceeds current demand, and another round of cost-cutting by Potash is likely, BGC analyst Mark Gulley said.
Tilk has valuable experience from building Inmet, but Potash Corp is "a mature company" that doesn't need more mines, said Schwartz of Baskin, which is also a former shareholder of Inmet.
"It's going to be a tough job," Schwartz said. "This guy is going to be criticized if he doesn't do something, criticized if he does. So, good luck."
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