Potash producers have been through some challenging times. In the midst of a potash bear market, formerly can't-miss potash producers have seen their revenues fall and profits shrink. They have seen Belarusian Potash Company, which propped up prices, break apart and their share prices badly lag their respective indices. 

In response to falling potash prices, potash producers have done their best to cut costs and reduce spending.  With those efforts, things are slowly turning around. PotashCorp's (NYSE:POT) most recent quarterly earnings reflect what may be a bottoming quarter.

First quarter earnings
For the quarter, PotashCorp earned 40 cents per share on revenues of $1.68 billion. Earnings were down 36% year over year while revenue was down 20% year over year.   

Total gross margin came in at $565 million, down from $867 in Q1, 2013 while total nutrient shipments came in at 2.3 million metric tons, up from 2.2 million metric tons a year ago.


Total gross margin was down despite more nutrient shipments because the company had an average realized price for potash of $250 per metric ton versus $363 per metric ton in same period last year and almost $500 per metric ton in 2011.  

The company also realized lower phosphate and nitrogen prices as well. 

The bottom line
PotashCorp's weak first quarter could be a bottoming quarter because things are now improving. 

There are already signs, for example, that potash prices are firming up. According to the company, global potash spot prices have all strengthened since the end of 2013. Potash prices in Brazil are 10% higher than at the end of 2013 while potash prices in Southeast Asia are 6% higher. 

The trend of rising potash prices should continue in the future because the price fixing arrangement between Russia's Urakali and Belarus' Belaruskali will eventually get back together. Once the two reconstitute the Belarusian Potash Company, they can withhold supply from the marketplace and potash prices will rise. 

In addition to potentially rising potash prices, there are several other factors that support the stock. 

One support factor is PotashCorp's share buyback. The company bought 11.7 million shares of stock at an average price of $34 for the quarter, but is only 60% done with its program. The remaining 40% of the buyback needs to be done before August of this year, so there will likely be significant buying ahead. 

Another support factor is BHP Billiton's (NYSE:BHP) continued interest in PotashCorp. Although Canada may not allow BHP Billiton to acquire PotashCorp outright, BHP Billiton can still accumulate a minority stake on the open market. If the conglomerate does that, PotashCorp shares will see significant buying. 

Perhaps the most important support factor of all is PotashCorp's cost cutting. The company lowered its cost of goods sold per metric ton for all its nutrient segments in the quarter and should continue to do so in the future. With lower costs, PotashCorp can spend more money on its dividend or share buybacks. 

PotashCorp's weak first quarter earnings report is a reflection of how things were in the rearview mirror. With potash prices likely to rise and the company continuing to cut costs, PotashCorp will see better times ahead. 

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Jay Yao has no position in any stocks mentioned. The Motley Fool owns shares of PotashCorp. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.