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Potash Corp. of Saskatchewan Inc. on Thursday slashed its annual earnings guidance and cut its quarterly dividend for a second time this year as it continues to contend with slumping fertilizer nutrient prices and lower sales volumes.

The Saskatoon, Saskatchewan-based fertilizer company said it now expects full-year earnings of between 40 cents and 55 cents a share, down from its most recent guidance of between 60 cents and 80 cents a share and well off the $1.52 a share it earned in 2015.

Potash Corp. said lower prices for potash, nitrogen and phosphate, the three key fertilizer nutrients it produces, will weigh on results for the rest of the year, as they did through the latest quarter. It noted that even with healthy potash demand in North America and Latin America, delayed contracts in China and India weighed on shipments.

Depressed prices for crop nutrients amid a glut of supply and weak demand in recent years have hurt producers.

The company said potash gross margin fell to $123 million in the second quarter from $417 million a year earlier, while sales volumes dropped 16%. It said its average realized potash price fell to $154 a metric ton from $273 a ton a year earlier. Prices and volumes for nitrogen and phosphate were also weaker.

Potash Corp. posted a second-quarter profit of $121 million, or 14 cents a share, down from $417 million, or 50 cents a year earlier.

It said results in the latest quarter included charges totaling 4 cents a share, including a 2-cent charge related to Canpotex Ltd.'s decision to shelve plans for a new export terminal in British Columbia. Analysts had been expecting a profit of 18 cents a share, according to Thomson Reuters.

Sales fell 39% in the quarter to $1.05 billion, below the $1.18 billion analysts were expecting.

The company, which said it plans to slash its quarterly dividend payout to 10 cents a share in September, said it believes potash markets have reached their low point and expects conditions to begin to improve over the rest of the year. Potash already cut its dividend once this year, to 25 cents a share from 38 cents.

"Fertilizer markets have been under pressure through the first six months of 2016; however, we believe the uncertainty that weighed on potash market sentiment is now lifting and a recovery is beginning," Chief Executive Jochen Tilk said in a release.

The company said it continues to expect potash sales volumes for 2016 to be in the range of 8.3 million and 8.8 million tons. For the third quarter, Potash is guiding for earnings between 5 cents and 10 cents a share, well below the 34 cents it earned a year earlier and below analyst expectations for 14 cents a share.

Write to Judy McKinnon at judy.mckinnon@wsj.com

(END) Dow Jones Newswires

July 28, 2016 10:05 ET (14:05 GMT)

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