February 13, 2014

 

The Mosaic Company reported fourth quarter 2013 net earnings of US$129 million, compared to US$616 million a year ago with earnings per diluted share at US$0.30 in the quarter compared to US$1.44 in 2013.

 

Notable items negatively impacted earnings per share by US$0.06. Mosaic's net sales in the fourth quarter of 2013 were US$2.2 billion, down from US$2.4 billion last year. Operating earnings during the quarter were US$179 million, down from US$463 million a year ago, as record phosphate and strong potash sales volumes were more than offset by lower realised prices.

 

The Mosaic Company also announced that its Board of Directors has authorised a US$1 billion share repurchase programme, allowing the company to repurchase Class A or common shares, through direct buybacks or in open market transactions. Mosaic expects to use share repurchases to meet and maintain its stated balance sheet targets, and remains committed to retaining investment grade credit ratings.

 

"While our results for the fourth quarter reflect the low market prices for potash and phosphates, current market conditions are improving," said Jim Prokopanko, the company's president and chief executive officer.

 

Cash flow provided by operating activities in the fourth quarter of 2013 was US$503 million compared to US$377 million in the prior year. Fourth quarter 2014 cash flows reflect strong sales volumes and declining inventory levels. Investments plus capital expenditures totalled US$370 million in the quarter. Mosaic's total cash and cash equivalents were US$5.3 billion and long-term debt was US$3.0 billion as of December 31, 2013.

 

For the 12 months concluded on December 31, 2013, net income was US$1.1 billion, or US$2.49 per diluted share, compared to US$1.9 billion, or US$4.34 per diluted share, in 2012. Net sales were US$9.0 billion, down from US$10.0 billion a year ago. Full-year operating earnings were US$1.3 billion, down from US$2.2 billion a year ago. Lower net sales and operating earnings for the year were primarily driven by lower realised prices for both potash and phosphate, partially offset by higher potash volumes and lower phosphate raw materials costs. Full year selling, general and administrative (SG&A) expenses were US$393 million compared to US$424 million in 2012, a decrease of 7%. Net cash provided by operating activities was US$2.0 billion.

 

Net sales in the phosphates segment were US$1.6 billion for the fourth quarter, down 6% compared to last year, as higher sales volumes were more than offset by lower finished product prices. Gross margin was US$188 million, or 12% of net sales, compared to US$280 million, or 17% of net sales, for the same period a year ago.

 

Net sales in the potash segment totalled US$652 million for the fourth quarter, down from US$726 million last year, as higher shipment volumes were more than offset by a 30% decline in average realised MOP prices. Gross margin was US$134 million, or 21% of net sales, compared to US$300 million, or 41% of net sales a year ago. Operating earnings were US$88 million, down from US$260 million in the prior year. The over-year decrease in operating earnings was driven by lower realised prices, higher depreciation expenses and higher idle plant costs.

 

Total sales volumes for the phosphates segment are expected to range from 2.3 to 2.6 million tonnes for the first quarter of 2014, compared to 2.7 million tonnes last year.

 

Total sales volumes for the potash segment are expected to range from 2.3 to 2.7 million tonnes for the first quarter of 2014, compared to 2.0 million tonnes in 2013.