October 3, 2012


Mosaic's Q1 2012 profit down 18%


As the fertiliser producer's sales were hurt by mostly lower phosphate volumes and prices, Mosaic Co.'s (MOS) fiscal first-quarter earnings dropped 18%.


Shares were down 1.7% at US$57 in premarket trading as the results missed expectations. However, through Monday's (Oct 1) close, the stock is up 31% from a 52-week low in June as rising corn prices have lifted shares in the sector in recent months.


High prices for commodities such as corn have been driving fertiliser demand, though there has been some disagreement whether a drought in the Midwest will help or hinder spending by farmers going into next year's growing season.


Mosaic -- which was spun off from agribusiness giant Cargill Inc.--has seen its sales turn lower in recent quarters as customers have been cautious amid uncertainty about the broader economy and phosphate fertiliser prices have weakened.


In the latest period, phosphate net sales declined 30%. Sales volume was down 16%.


Chief Executive Jim Prokopanko said production also was affected by longer annual maintenance shutdowns and challenges posed by hurricanes and sales were further hurt by low beginning inventories and low Mississippi River levels. "As a result, demand for our products outpaced our ability to produce and deliver; we expect better execution in the quarters ahead," Prokopanko said.


Despite price fluctuations and challenging weather conditions, Mosaic remains optimistic. "The long-term outlook for crop nutrition is outstanding," Prokopanko said.


For the quarter ended August 31, Mosaic reported a profit of US$429 million, or US$1.01 a share, down from US$526 million, or US$1.17 a share, a year earlier. The latest period included a net US$0.02 in charges related to currency fluctuations, legal reserve expenses and other items. The year-earlier period included a net US$0.04 in charges. Revenue decreased 19% to US$2.51 billion.


Analysts polled by Thomson Reuters most recently projected earnings of US$1.15 on revenue of US$2.68 billion. Gross margin rose to 29.8% from 27.5%.

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