Mosaic Company's Second-Quarter Sales Rise 59% on Higher Potash and Phosphate Demand

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Researched by Industrial Info Resources (Sugar Land, Texas)--The Mosaic Company (NYSE:MOS) (Plymouth, Minnesota) yesterday reported strong second-quarter fiscal 2011 results. The company's net sales for the quarter were $2.7 billion, up 59% from the same quarter of the previous year. Net sales in Mosaic's Phosphate segment were $2 billion, compared to $1.3 billion in 2Q10. Potash segment sales for the quarter were $699 million, up from $414.3 million last year.

"Our Phosphates business is generating strong results, and operating earnings are outpacing those from our Potash segment so far this year," said Mosaic President and CEO Jim Prokopanko in a company press release. Mosaic's Phosphate segment sold 3.7 million tons (up 10% from 2Q10) at an average price of $461 per metric ton, which was up a significant 61% from 2Q10's average price of $287 per metric ton. The Potash segment sold 1.8 million metric tons, up 75% from the corresponding quarter of 2010. However, this segment's average sales price of $331 per metric ton was down 11% from the corresponding quarter of the 2010 fiscal year.

In a conference call regarding the company's results, Larry Stranghoener, executive vice president and chief financial officer, said that Mosaic expects an average potash sales price of between $330 and $350 per metric ton in the third quarter. "We expect an average DAP (diammonium phosphate) selling price in the third quarter of $510 to $540 per tonne, as we capture the upward momentum in DAP pricing," said Stranghoener, adding that the company's Phosphate segment expected to operate in excess of 85% during the quarter (compared to 88% in the second quarter) and the Potash segment to operate in excess of 90% capacity (compared to 75% capacity in the second quarter).

To help keep up with increasing demand, Mosaic expects capital spending for the 2011 fiscal year to range between $1.2 billion and $1.4 billion. "We've been executing well against our potash expansion plans," said Prokopanko in the conference call. "We are well on our way to adding 5 million tons of additional capacity through this decade. So far, we have committed over $3 billion to bring on an additional 3 million tons of capacity over the next several years, with an additional 2 million tons in early planning stages. These projects include the expansion of mine and milling capacity at all three Canadian mine sites. Underground, we are adding mining equipment and conveyors, as well as further development of new mine cavities for our solution mine at Belle Plaine. Above ground, we are adding milling, screening, compaction and storage capacity."

Phase I of the Belle Plaine potash mine is expected to be completed this summer and will add an additional 300,000 to 400,000 tons per year to the 2.2 million ton per year solution mine. A second and third phase will follow. In total, the expansion will more than double the mine's capacity to 4.5 million to 5 million tons per year. In addition, construction of an underground conveyor system is expected to kick off this summer at the mine. Details of these and more than $5 billion worth of active Mosaic Company projects can be found in Industrial Info's North American Industrial Database.

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