Mosaic’s Sales Tumble as Prices Stay Low

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The Mosaic Co. (NYSE: MOS) reported first-quarter 2014 results before markets opened Tuesday. The fertilizer maker reported quarterly adjusted diluted earnings per share (EPS) of $0.54 on revenues of $2 billion. In the same period a year ago, Mosaic reported EPS of $0.89 on revenue of $2.3 billion. First-quarter results also compare to the FactSet consensus estimate for EPS of $0.60.

Mosaic continues to struggle with low prices for its phosphate and potash fertilizers. The company continues to repurchase shares. Mosaic said it bought back 36 million shares in the first quarter and has now bought back or committed to repurchase 52 million shares, 12% of its shares outstanding at the end of 2013. So far that has amounted to an increase of less than 6% in the stock price.

The company’s potash sales for the first quarter totaled 2.4 million metric tons (tonnes), near the low end of the company’s expectations. The average selling price in the quarter was $267 per tonne, compared with $303 per ton in the fourth quarter and $376 a tonne a year ago. Production reached 70% of capacity, about 15% lower than anticipated.

In the company’s phosphates segment, sales totaled 2.7 million tonnes, above the forecast of 2.3 million to 2.6 million tonnes, and the average realized price was $414 per tonne, above the prior quarter’s average price of $381 a tonne but well below the year-ago price of $491 per tonne.

For the second quarter of 2014, Mosaic expects to sell 3.1 million to 3.4 million tonnes of phosphates, up from the year-ago second quarter total of 2.9 million tonnes. The company forecasts an average selling price of $430 to $460 per tonne.

Sales volumes for potash are expected to be in a range of 2.2 million to 2.5 million tonnes in the second quarter, compared with 2.4 million tonnes in the year-ago quarter. The average sales price is expected to fall in the range of $250 to $275 per tonne.

The company’s CEO said:

While weather continued to create challenges in the operating environment, strong global demand for phosphates pushed prices and margins higher during the first three months of the year, and our early positioning of potash in North America allowed for significant volume growth.

Shares closed at $49.71 Monday and were inactive in premarket trading Tuesday. The stock’s 52-week range is $39.75 to $64.65. FactSet had a consensus analyst price target of around $50.60 before these results were announced.

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