July 18, 2012


Mosaic's Q4 revenue down 22% amid lower phosphate prices



As the fertiliser producer saw revenue fall slightly amid lower phosphate pricing, Mosaic Co.'s fourth-quarter profit dropped 22%, but posted results that were better than expected.


Mosaic, which was spun off from agribusiness giant Cargill Inc., has seen earnings mostly climb over the past year as global demand for fertiliser lifts sales. The company in April predicted strong volumes for its potash and phosphate fertilisers, saying demand for crop nutrients has benefited from an early spring season in North America, combined with increasing shipments to South America.


The company on Tuesday (July 17) doubled its quarterly dividend to US$0.25 from US$0.125 as it continues its efforts to boost shareholder value. Mosaic had more than doubled its quarterly dividend in April to US$0.125 a share from US$0.05 a share.


Mosaic and other fertiliser producers have struggled in recent months amid a standoff with customers. Farmer demand has softened amid high prices and dealers have been slower-than-usual in securing supplies.


For the period ended May 31, Mosaic posted earnings of US$507.3 million, or US$1.19 a share, down from US$649.2 million, or US$1.45 a share, a year before. Sales slid 1.4% to US$2.82 billion as growth in potash prices were offset by lower prices in phosphates.


Analysts surveyed by Thomson Reuters recently predicted per-share earnings of US$1.15 on revenue of US$2.55 billion. Gross margin narrowed to 29.6% from 34.8%.


Phosphate net sales fell 5% as the average selling price decreased 14%. Potash net sales edged up 5.5%, while prices rose 13%.


Looking ahead to the fiscal first quarter, Mosaic predicted potash prices ranging from US$415 to US$440 per tonne, while phosphate prices are expected to range between US$510 and US$535 per tonne.


Shares rose 3% to US$57.10 in light premarket trade. The stock is down 17% in the last 12 months through Monday's (July 16) close.

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