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Released October 03, 2012 | SUGAR LAND
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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 overall declines in the first quarter of the company's fiscal year 2013, as lower phosphate sales volumes and prices, as well as difficult weather conditions, offset steady gains in the Potash segment. Net earnings were reported to be $429.4 million, an 18.37% decrease from the first quarter of fiscal year 2012.
Net sales stood at $2.51 billion, an 18.75% decrease from the same period last year. The Phosphate segment experienced tight market conditions, including weather-related factors such as Hurricane Isaac and drought in key geographic areas, and low beginning inventory levels that negatively affected Mosaic's ability to meet demand. The Potash segment saw improved sales in North America, but experienced higher brine management costs due to increased expenses for technology like horizontal drilling. Production also slowed in the segment as demand softened in China and India. Capital expenditures were reported to be $449 million during the quarter.
Industrial Info is tracking 34 active Mosaic projects that are worth a total of more than $7 billion, including a $500 million addition at a potash mine in Colonsay, Saskatchewan, and a $33 million addition at a potash mine in Belle Plaine, Saskatchewan. The Colonsay project, which is the first phase of a $1 billion plan, involves constructing an additional mill, debottlenecking existing equipment, and adding process equipment to increase overall capacity to between 2.1 million and 2.45 million tons per year. The Belle Plaine project involves the construction of a tripper and conveyor system and will require a 60,000-metric-tonne product storage warehouse.
"The North American drought pushed grain and oilseed prices to record highs, and the situation is compounded by the growing logistical challenge of a receding Mississippi River," said Jim Prokopanko, the president and chief executive officer of Mosaic, in a conference call. "Drought has depleted the corn crop in the U.S. heartland, the wheat harvest in Russia, and rice in India. Global grain and oilseed stocks are dropping quickly, and reaching dangerously low levels. Farmers know this well, and they will once again have strong incentive to maximize yields in the coming season. It likely will take two years of trend yields to get stocks back to secure levels. As a result, prices have climbed dramatically. As the fall harvest continues, there is potential for grain and oilseed prices to go even higher in order to balance demand with supply."
As a result of these historically high prices and sensitivity to weather, he later added, "crop nutrients are as affordable as they've ever been."
The Phosphate segment accounted for most of the company's declines, as gains in the Potash segment were marginal:
Among the major projects on the table, Mosaic is making additional investments to continue feasibility work for the expansion of ammonia production capacity, and is ramping up production at its mine in Fort Meade, Florida, to full capacity so it can resume shipping phosphate rock to its facilities in Louisiana.
"Our expansions... will give us significantly increased capacity, and we are confident that long-term demand for the product will grow," Prokopanko said about potash in the conference call. "The current dip in demand, we believe, is essentially a timing issue, and we are beginning to see improving dealer sentiment in North America and elsewhere."
About the phosphate market, he added: "Global supply uncertainty continues to tighten the market. We expect a 6% to 8% increase in global phosphate shipments in calendar 2012, followed by a 3% to 5% increase in 2013, to a record level of 64 million to 66 million tonnes."
For more information, visit Industrial Info's North American Metals & Minerals Project Database.
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, and eight offices outside of North America, 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.
Net sales stood at $2.51 billion, an 18.75% decrease from the same period last year. The Phosphate segment experienced tight market conditions, including weather-related factors such as Hurricane Isaac and drought in key geographic areas, and low beginning inventory levels that negatively affected Mosaic's ability to meet demand. The Potash segment saw improved sales in North America, but experienced higher brine management costs due to increased expenses for technology like horizontal drilling. Production also slowed in the segment as demand softened in China and India. Capital expenditures were reported to be $449 million during the quarter.
Industrial Info is tracking 34 active Mosaic projects that are worth a total of more than $7 billion, including a $500 million addition at a potash mine in Colonsay, Saskatchewan, and a $33 million addition at a potash mine in Belle Plaine, Saskatchewan. The Colonsay project, which is the first phase of a $1 billion plan, involves constructing an additional mill, debottlenecking existing equipment, and adding process equipment to increase overall capacity to between 2.1 million and 2.45 million tons per year. The Belle Plaine project involves the construction of a tripper and conveyor system and will require a 60,000-metric-tonne product storage warehouse.
"The North American drought pushed grain and oilseed prices to record highs, and the situation is compounded by the growing logistical challenge of a receding Mississippi River," said Jim Prokopanko, the president and chief executive officer of Mosaic, in a conference call. "Drought has depleted the corn crop in the U.S. heartland, the wheat harvest in Russia, and rice in India. Global grain and oilseed stocks are dropping quickly, and reaching dangerously low levels. Farmers know this well, and they will once again have strong incentive to maximize yields in the coming season. It likely will take two years of trend yields to get stocks back to secure levels. As a result, prices have climbed dramatically. As the fall harvest continues, there is potential for grain and oilseed prices to go even higher in order to balance demand with supply."
As a result of these historically high prices and sensitivity to weather, he later added, "crop nutrients are as affordable as they've ever been."
The Phosphate segment accounted for most of the company's declines, as gains in the Potash segment were marginal:
- Phosphate segment net sales were reported to be $1.56 billion, a 29.68% decrease from first-quarter 2012, while operating earnings were reported to be $208 million, a 37.54% decrease. Sales volumes stood at 2.7 million tonnes, a 15.63% decrease.
- Potash segment net sales were reported to be $960 million, a 9.97% increase from the same period last year, while operating earnings were reported to be $416 million, a 3.48% increase. Sales volumes stood at 1.9 million tonnes, a 5.56% increase.
Among the major projects on the table, Mosaic is making additional investments to continue feasibility work for the expansion of ammonia production capacity, and is ramping up production at its mine in Fort Meade, Florida, to full capacity so it can resume shipping phosphate rock to its facilities in Louisiana.
"Our expansions... will give us significantly increased capacity, and we are confident that long-term demand for the product will grow," Prokopanko said about potash in the conference call. "The current dip in demand, we believe, is essentially a timing issue, and we are beginning to see improving dealer sentiment in North America and elsewhere."
About the phosphate market, he added: "Global supply uncertainty continues to tighten the market. We expect a 6% to 8% increase in global phosphate shipments in calendar 2012, followed by a 3% to 5% increase in 2013, to a record level of 64 million to 66 million tonnes."
For more information, visit Industrial Info's North American Metals & Minerals Project Database.
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, and eight offices outside of North America, 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.
