Mosaic Company Rebounds in Fourth-Quarter 2010 as Demand Recovers

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Researched by Industrial Info Resources (Sugar Land, Texas)--Leading miner and fertilizer producer The Mosaic Company (NYSE:MOS) (Plymouth, Minnesota) showed strong overall results for the fourth quarter of 2010, which ended May 31, although net income and sales were down for the company's full year. Net income stood at $396.1 million for the quarter, compared to only $146.9 million in the same period of 2009, based largely on higher demand and volumes; for the full year, net income was $827.1 million, down from $2.35 billion in 2009.

Net sales were reported to be $1.86 billion, a 16.74% increase from fourth-quarter 2009; for the full year, net sales were $6.76 billion, a 34.36% decrease from 2009.

For the quarter, Mosaic officials cited a strong demand for products and a rebound in prices for the success of the phosphate segment, and improved sales and production volumes for the success of the potash segment. In particular, a rebound in potash demand led to the segment tripling sales volumes from a year ago.

"Fiscal 2010 was a transitional year in agricultural markets and for us," said Jim Prokopanko, Mosaic's president and chief executive officer, in a conference call. "Demand for our products began to rebound during the second half of the year, and we finished on a strong note, as we expected. Our financial results consistently improved each quarter this fiscal year."

The company's two major segments, phosphates and potash, both showed improvements in net sales and operating earnings during the quarter. Phosphate sales stood at $1.19 billion, a 0.02% increase, and earnings at $221.1 million, compared to a loss of $79.2 million in the same period last year. For the full year, phosphate sales were $4.73 billion, a 36.15% decrease from 2009, and earnings were $349.5 million, a 63.66% decrease.

Potash sales were reported at $696.5 million, an 80.07% increase, and earnings at $346.9 million, a 74.67% increase. For the full year, potash sales were $2.17 billion, a 22.83% decrease from 2009, and earnings were $922.8 million, a 34.55% decrease.

Phosphate sales volumes totaled 2.34 million tons, a 6.9% decrease from the fourth quarter of 2009, although the North American crop nutrient sector showed some improvement. For the full year, phosphate sales volumes totaled 11.03 billion tons, a 29.3% increase from 2009. Results from the phosphate sectors were as follows:

• North American crop nutrient sales volumes were reported to be 744,000 tons, an 18.66% increase from the same period last year. For the full year, North American crop nutrient sales volumes totaled 2.86 billion tons, a 26.66% increase from 2009.
• International crop nutrient sales volumes were reported to be 932,000 tons, a 13.38% decrease from fourth-quarter 2009. For the full year, international crop nutrient sales volumes totaled 4.56 billion tons, a 34.62% increase from 2009.
• Crop nutrient blend sales volumes were reported to be 363,000 tons, a 32.15% decrease from the same period last year. For the full year, crop nutrient blend sales volumes totaled 2.18 billion tons, a 10.65% increase from 2009.
• Feed phosphate sales volumes were reported to be 159,000 tons, a 22.31% increase from fourth-quarter 2009. For the full year, feed phosphate sales volumes totaled 619 million tons, an 8.22% increase from 2009.
• Other phosphate-related sales volumes were reported to be 137,000 tons, a 2.14% decrease from the same period last year. For the full year, other phosphate-related sales volumes totaled 11.03 billion tons, a 7.07% increase from 2009.

Potash sales volumes totaled 1.83 million tons, compared to only 647,000 tons in the fourth quarter of 2009, with massive gains in the crop nutrient sectors. For the full year, potash sales volumes totaled 5.54 billion tons, a 9.64% increase from 2009. Results from the phosphate sectors were as follows:

• North American crop nutrient sales volumes were reported to be 701,000 tons, compared to only 234,000 tons in the same period last year. For the full year, North American crop nutrient sales volumes totaled 2.11 billion tons, a 40.27% increase from 2009.
• International crop nutrient sales volumes were reported to be 989,000 tons, compared to only 236,000 tons in fourth-quarter 2009. For the full year, international crop nutrient sales volumes totaled 2.74 billion tons, a 6.83% increase from 2009.
• Non-agricultural potash sales volumes were reported to be 144,000 tons, an 18.64% decrease from the same period last year. For the full year, potash sales volumes totaled 687 million tons, a 29.97% decrease from 2009.

Mosaic officials believe a substantial recovery in phosphate and potash demand is under way. India, Brazil and Argentina are expected to be key growth areas for phosphate, while Brazil, China, India and other Asian regions are expected to drive the demand for potash. While record harvests have pushed global grain and oilseed stocks to more secure levels, demand for these products is rapidly increasing and will require farmers to plant and reap at a record rate.

"We continue to enhance our growth prospects through our potash brownfield expansion program," said Prokopanko in the conference call. "We have also identified opportunity projects that will improve production processes and increase energy efficiency."

Industrial Info is tracking 45 active Mosaic projects in North America that are worth a total of more than $6 billion, including the $1.7 billion expansion to the K-2 U-G potash mine and mill in Esterhazy, Saskatchewan. The two-phase project, which kicked off in June, will expand potash capacity by 900,000 tons per year at the 5.3 million-metric-ton-per-year site, with underground shaft and mill expansions and the addition of brine ponds to increase withdrawal and injection rate. Phase I is expected to be completed by December 2012, and Phase II is expected to be completed by May 2020. For more information, visit Industrial Info's North American Project Database.

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