Potash Corporation of Saskatchewan Inc. (TSX:POT) saw a drop in fourth-quarter demand for fertilizer, but chief executive Bill Doyle said Thursday that he expects demand to increase in the second half of this year.

Doyle said the challenges faced by the company in the last three months of 2011 are expected to linger through the first quarter of 2012, but then business should pick up.

"In North America, we know that spring is right around the corner and we expect record combined acres of corn and soybeans will be planted this year," Doyle told a conference call with financial analysts.

"U.S. farmers are looking at December corn prices above $5.50 per bushel, which holds the promise of exceptional returns. Even though buying is slow today we are confident that farmers will not pass on this opportunity."

Doyle said a similar story is playing out in South America, another key market for potash.

"Our sales team has just returned from Buenos Aires from the Latin American fertilizer conference there and I can tell you the mood is very positive about agriculture in this region," he said.

In its outlook for 2012, the company said it expects to earn $3.40 to $4 per share for the full year, starting with estimated earnings of 55 cents to 75 cents per share in the first quarter.

Total potash shipments for the year are forecasted to be in the range of 9.2 million to 10 million tonnes, compared with nine million tonnes in 2011.

Capital expenditures are expected to be approximately $2.1 billion.

The world's largest fertilizer producer reported Thursday a profit of US$683 million, or 78 cents per diluted share for the three month period ended Dec. 31, 2011. That was up from $508 million, or 56 cents per diluted share, in the same period a year earlier.

Sales grew to $1.87 billion from $1.81 billion.

Analysts were expecting stronger earnings of 89 cents per share, according to those surveyed by Thomson Reuters.

The results came on the heals of an announcement Wednesday that the company was doubling its quarterly dividend to 14 cents per share.

BMO Capital Markets analyst Joel Jackson said Thursday that the company's 2012 potash volume guidance was lower than expected.

"From our take, buyers do not appear to be pessimistic, but are setting up for a sharply back-end loaded spring in Europe and North America within a strong agricultural commodity pricing environment," Jackson wrote in a note to clients.

"In recent weeks, there has been moderate volume pickup in Southeast Asia and Brazil and industry producers continue to exhibit the desire to use supply management to pressure global buyers."

RBC Capital Markets analyst Adam Schatzker said PotashCorp's sales volume and price realization were lower than expected for the quarter, but noted that 2012 looked decent for the company.

"We continue to believe that PotashCorp is well positioned to take advantage of a recovery starting in the second quarter of 2012 and provides investors with exposure to all three fertilizer nutrients with top-tier assets and a unique portfolio of fertilizer investments," Schatzker wrote in a note to clients.

For all of 2011, PotashCorp earned $3.08 billion or $3.51 per diluted share on $8.72 billion in revenue. The compared with a profit of $1.78 billion or $1.95 per share on $6.54 billion in revenue in 2010.

Shares in the company closed up 51 cents at C$45.99 on the Toronto Stock Exchange on Thursday.

Latest From ...