Mosaic Company Posts Record Earnings from Worldwide Potash Demand, but Foresees a Slower Future

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Researched by Industrial Info Resources (Sugar Land, Texas)--On October 2, the Mosaic Company (NYSE:MOS) (Plymouth, Minnesota), one of the world's leading suppliers of potash and phosphate fertilizer products, announced extremely large earnings for the company's first quarter of the 2009 fiscal year, which ended August 31, 2008. Mosaic's net sales for the quarter were $4.3 billion, compared with $2 billion in 1Q08. Net earnings were $1.18 billion, compared with $305.5 million from the same period last year. The current extremely high price of potash is primarily responsible for these figures. For more information, see related article from July 29, 2008 - Price of Potash Sending Producers into $16 Billion Capital Spending Frenzy.

However, the projections for future sales are not extremely optimistic. In a conference call regarding the earnings, Mosaic's President and CEO James T. Prokopanko said "The combined effects of softer seasonal demand, higher customer inventory levels, and falling raw materials costs have led to a shift of customer sentiment resulting in more cautious purchasing behaviors. ... We will adjust our phosphate production levels downward during the next several months by 500,000 to as much as 1 million tons and adjust our sales volume guidance by similar amounts."

While Mosaic estimates that India will be importing 5.3 million metric tons in 2008, up from about 3 million tons in 2007, the company believes these imports will begin falling again in 2009. Additionally, the company projects that domestic potash shipment and delivery "will remain about flat in 2008 and 2009."

Industrial Info is currently monitoring more than $2.3 billion of active projects of Mosaic that are either planned or under way. These include grassroot mine construction, expansions, additions and upgrades for mines and factories, and maintenance turnarounds. One of the larger overall projects involves $163 million of repairs, upgrades and additions at Mosaic's Uncle Sam Acids plant in Uncle Sam, Louisiana, located about 50 miles from New Orleans. Mosaic is currently performing an estimated $10 million of infrastructure upgrades at the plant, such as repairing or replacing exisiting pipes, ductwork and electrical instrumentation. Completion of the upgrades is expected by the end of 2010. Additionally, three sulfuric acid units are receiving major upgrades, beginning this year or early 2009, at an estimated combined cost of $50 million. Over $100 million of additional projects at the plant are scheduled for the future. For information on these and other Mosaic projects, visit Industrial Info's North American Industrial Database.

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