Potash Corp. of Saskatchewan Inc. has slashed its dividend 34 per cent as the company faces ongoing weakness in fertilizer markets.

It is the first cut to its quarterly dividend since Potash’s initial public offering in 1989, according to Bloomberg.

The Saskatoon-based company reported weaker-than-expected fourth quarter earnings and offered up a very cautious outlook. These announcements came just nine days after Potash Corp. announced the closing of its New Brunswick potash operations, and they underscore how challenging the market for the crop nutrient has become.

“Weaker fertilizer prices late in the year reduced our earnings for the quarter, giving rise to a more cautious outlook for all three nutrients (potash, nitrogen and phosphate) as we begin 2016,” chief executive Jochen Tilk said in a statement.

The quarterly dividend was reduced to 25 cents U.S. a share, down from the prior level of 38 cents. This move did not come as a shock to investors. Potash Corp.’s dividend yield was above nine per cent, a signal from the market that a dividend cut was a strong possibility.

Tilk said the New Brunswick suspension and the dividend cut are part of a “thoughtful and holistic” approach to position the company for long-term success and balance the interests of stakeholders.

“Longer term, we maintain our conviction that the drivers of fertilizer demand — rising global crop production and supportive farmer economics — will support improved market conditions,” he said.

For the fourth quarter, Potash Corp. reported earnings of US$201 million, or 24 cents a share. That was down sharply from 49 cents share in the same quarter a year ago, and below the consensus analyst estimate of 31 cents.

Potash Corp. noted that prices for all nutrients deteriorated as buyers were cautious. The rise of the U.S. dollar has made fertilizer more expensive for farmers outside the United States, which has limited their purchases. The company is also facing stronger competition in the potash business after the collapse of a Russian-Belarusian marketing group in 2013.

Potash Corp.’s realized potash price was US$238 a tonne in the fourth quarter, down sharply from US$284 in the fourth quarter of 2014.

Despite falling prices, global potash demand remains decent. The company expects demand to reach 59 to 62 million tonnes this year, which would be in line with the 2015 figures.

But Potash Corp. still expects a sharp decline in earnings in 2016. It is calling for a profit of 90 cents U.S. to $1.20 a share. By comparison, it earned US$1.52 a share in 2015 and US$1.82 a share in 2014.

With file from Bloomberg