Market and product
Mosaic flags phosphates retreat after summer surge
The US-based group, the world's biggest phosphate fertilizer producer, said that its revenues from the nutrient rose 16.8% to $1.66bn in the latest quarter, lifted by a jump of some 600,000 tonnes to 3.3m tonnes in sales volumes.
The average selling price of diammonium phosphate (DAP), a benchmark product, fell 9.3% to $461 a tonne, showed a decline on that in the June-to-September quarter too, although Mosaic achieved a rise in sales prices of phosphate blends.
Gross margin in phosphates soared by $101m to $294m.
"Despite increasing raw material costs, logistical issues and lower grain prices, Mosaic sold more tonnes at higher prices with a notably improved margin per tonne," said Jim Prokopanko, the Mosaic chief executive.
"We have high expectations for our phosphates business."
'Production curtailment'
Nonetheless, Mosaic lowered to 64m-65m tonnes its forecast for world industry phosphate shipments this year, a figure which, while a record, is below the group's previous estimate at the "high end of 65m-66m tonnes".
Mosaic highlighted the popularity of NPK, a mixed nitrogen, phosphate and potash fertilizer, which in India, the top phosphate import market, "is replacing DAP".
The group - which a month ago revealed it was cutting phosphate fertilizer production "primarily because of high prices" of sulphur and ammonia, key raw materials - pegged its phosphate sales in the October-to-December period at 2.5m-2.8m tonnes, a fall of potentially 26% year on year.
The DAP price achieved in the current quarter will fall to $430-450 a tonne, while its phosphate operations will run at capacity of 70-80%, "reflecting ongoing production curtailment to limit high-cost inventory build-up".
Mosaic's phosphate operations ran at 85% of capacity in the July-to-September quarter.
Potash outlook
In potash, however, Mosaic forecast a rise in sales volumes to 2.0m-2.3m tonnes in the current quarter, from 1.9m tonnes a year before, and 1.8m tonnes in the July-to-September period.
Potash prices, will come in at $275-290 a tonne, after averaging $291 a tonne in the latest quarter, while capacity utilisation will increase to 85-90%.
In the July-to-September period, Mosaic's potash operations ran at only 62% of capacity, curtailed by excessive rains, as also noted by rival Intrepid Potash, besides by planned maintenance closures.
"We are well positioned to take advantage of improving potash fundamentals," Mr Prokopanko said.
Rising profits
The comments came as the group unveiled a 62% rise to $201.9m in earnings for the July-to-September quarter, on revenues up 17.9% at $2.25bn.
Earnings per share, excluding one-off factors, came in at $0.56, a little below market expectations for a $0.59-per-share result.
Mosaic shares stood 1.2% higher at $43.22 in morning deals in New York.
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