Mosaic profit beats estimates after potash sales exceed forecast

Bloomberg NewsJanuary 5, 2013 

Mosaic Co., the largest U.S. fertilizer producer, reported fiscal second-quarter profit and sales that beat analysts' estimates as it sold more potash than expected.

Net income rose to $628.8 million, or $1.47 a share, in the three months through November, from $623.6 million, or $1.40, a year earlier, Plymouth, Minn.-based Mosaic said Friday in a statement. Profit excluding a tax benefit and other items was 99 cents a share, beating the 88-cent average of 11 estimates compiled by Bloomberg.

Sales declined to $2.54 billion from $3.01 billion, more than the $2.51 billion average of 12 estimates.

Mosaic sold 1.5 million metric tons of potash in the quarter, compared with 1.8 million a year earlier, as China and India delayed purchases of the crop nutrient and other buyers awaited the outcome of price negotiations. That beat the company's own November forecast.

"Farmers around the world are enjoying outstanding economics, with high commodity prices and relatively low costs for crop nutrients and other inputs," Chief Executive Officer Jim Prokopanko said in the statement. "We believe strong agricultural fundamentals will lead to strengthening crop nutrient markets."

Mark Connelly, a New York-based analyst at Credit Agricole Securities USA, expected Mosaic to ship 1.355 million tons of potash in the period at an average of $444 a ton.

Adam Schatzker, a Toronto-based analyst at RBC Capital Markets, projected shipments of 1.3 million tons at an average of $445.

On Nov. 13, the company lowered its second-quarter forecast for potash shipments to 1.3 million to 1.4 million tons. Mosaic said it expected to sell potash during the quarter at the high end of a range of $435 to $450 a metric ton.

Shares of Mosaic, which also produces phosphate-based crop nutrients, have increased 7.9 percent in the past 12 months.

Mosaic employs more than 200 workers in eastern Manatee County, where it operates phosphate mines.

The company mines millions of tons of phosphate rock annually, which is processed at its fertilizer plants, where it is converted to phosphate fertilizer, according to Mosaic Manager of Public Affairs Russell Schweiss.

A portion of the company's products is shipped through Port Manatee, the county's port near the Manatee-Hillsborough line, he said.

Its principal phosphate production facilities are located in Florida and Louisiana, and its potash production facilities are located in New Mexico, Michigan and Saskatchewan, Canada.

Canpotex, the offshore marketing arm of Mosaic, Potash Corp. of Saskatchewan and Agrium said on Dec. 31 that it would sell 1 million tons of potash to China at $70 less a ton than China's previous price. The deal works out to about $400 a ton.

India will probably hammer out an agreement with potash suppliers within the first three months of this year, Connelly said in a Dec. 31 note to clients.

-- Herald reporter Sara Kennedy contributed to this report.

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