Mosaic Company Sees Sales Boost in Third-Quarter 2014, Pares Capex Outlook for Year

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Researched by Industrial Info Resources (Sugar Land, Texas)--Leading miner and fertilizer producer The Mosaic Company (NYSE:MOS) (Plymouth, Minnesota) reported a continuing growth in demand for phosphates and potash in third-quarter 2014. Higher overall sales volumes and fewer one-time expenses offset a drop in MOP selling prices in the Potash segment. Net earnings were reported to be $201.9 million, compared with $124.4 million in third-quarter 2013.

Industrial Info is tracking more than $5.5 billion in active projects involving Mosaic, including two major projects at the New Wales Fertilizer Plant in Mulberry, Florida: a $225 million expansion, and a separate $20 million addition of a heat recovery system. The expansion involves constructing two new warehouse buildings and installing new equipment to increase capacity to 3.5 million tonnes per year, while the addition will include a new interpass absorption tower. Both projects are expected to be completed in the second quarter of 2016.

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Net sales stood at $2.25 billion, a 17.92% increase from the same period last year. Sales volumes in the Phosphates segment sharply increased, resulting in stronger margins, despite higher raw material costs and lower grain prices. Sales increased more steadily in the Potash segment, although margins were down due to a drop in average MOP prices, higher Canadian resource taxes and higher depreciation. Demand momentum in both segments continued to show strength.

Capital expenditures for the quarter were reported to be $188.4 million, compared with $332.5 million in third-quarter 2013.

"Global demand for potash and phosphates remained strong during the quarter," said Jim Prokopanko, the president and chief executive officer of Mosaic, in a conference call. "Our shipment volumes came in at the low end of the original guidance range: in Potash, because of primarily weather-related production issues in Saskatchewan and New Mexico, which underscore the tight inventory situation; and in Phosphates, because of the timing of some quarter-end shipments. Phosphate shipments declined somewhat, even as costs rose for raw materials, especially ammonia. As we announced last month, we will curtail phosphate production because of these conditions."

Capital expenditures and equity investments for full-year 2014 are expected to be between $1 billion and $1.2 billion--a $200 million drop from previous estimates, as some expenditures were put off into 2015. Still, executives say the company is on pace to deliver more tonnes in 2014 than in any of the past five years, nearing the records set in 2008. In the fourth quarter, total Phosphate sales volumes are expected to be between 2.5 million and 2.8 million tonnes, and total Potash sales volumes are expected to be between 2 million and 2.3 million tonnes.

"We're making good progress on our strategic initiatives," Prokopanko said. "We are on track to complete the acquisition of Archer Daniel Midlands' (NYSE:ADM) (Chicago, Illinois) distribution business in Brazil and Paraguay by the end of the year. We are well along the process of planning for integration. Once complete, the acquisition will enable us to expand our distribution in Brazil from 4 million tons to 6 million, and capture a bigger percentage of the incremental value from our premium microessentials product, from one of the most dynamic agricultural markets in the world."

He added: "The remaining potash expansion at our K3 shafts in Esterhazy continues on budget and on time. We closed the sale of our decommissioned Hershey, Michigan, mine and have signed an agreement to sell our distribution business in Argentina."

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Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, three offices in North America and 10 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle™, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities.