The Mosaic Co. reported a 37 percent increase in net earnings for the second quarter ending Nov. 30, 2011, compared to the year-ago quarter, after excluding the year-ago gain from the sale of the Fosfertil business. Actual net earnings attributable to Mosaic were $623.6 million ($1.40 per diluted share), compared to the year-ago $1.02 billion ($2.29 per share). Mosaic had a year-ago after-tax gain of $570 million from the Fosfertil sale.
Second-quarter net sales moved up 13 percent, to $3 billion from the year-ago $2.67 billion, driven by improved pricing, partially offset by lower volumes.
“Our excellent results demonstrate the strength of underlying agricultural fundamentals combined with effective execution by our businesses,” said Jim Prokopanko, Mosaic president and CEO. “While we expect third-quarter results to decline due to near-term macroeconomic uncertainty and cautious distributor purchasing behavior, we remain confident of the strong long-term demand prospects for our products. In this environment, we continue to focus on generating value by executing our strategy.”
Prokopanko reminded analysts that corn prices are back up, concerns about Europe’s economy have moderated, and spring is just around the corner. He said North American dealers reported a brisk prepayment season at the end of December. “Most report that they have received as many or more dollars as they did during the last year’s excellent season. This bodes well for strong spring demand, and more importantly for strong application rates.” While he noted that distributors have delayed purchases, he said it was a matter of timing – that tons would move.
“We made substantial progress on our strategic priorities during the quarter,” said Prokopanko. “Our potash expansion initiative remains on track and on budget. We’ve completed a major phase of our Esterhazy K2 expansion that, when combined with the now certain reversion of the tolling agreement tons, increases our potash capacity by two million mt in calendar 2013. Our innovative premium phosphate product, MicroEssentials®, continues to take an increasing share of North American sales, adding value to farmers, distributors, and shareholders. We also took steps toward optimizing our balance sheet, including the repurchase of nearly five percent of our outstanding shares.
“Our Potash segment’s operating earnings grew 42 percent compared to the second quarter last year,” continued Prokopanko. “While the seasonal lull has recently slowed sales, we expect record global shipments in 2012 and project a strong spring application season. Recent macroeconomic uncertainty has caused distributors around the world to become cautious, and we anticipate significant sales volumes will be delayed until our fourth fiscal quarter. We currently maintain appropriate inventory levels and plan to produce at rates needed to satisfy expected demand in the second half of fiscal 2012.”
Second-quarter potash operating income was $357.8 million on sales of $838.6 million, up from the year-ago $251.5 million on sales of $699 million. Overall, sales were down at 1.76 million mt from the year-ago 1.8 million mt, though production was up at 1.8 million mt versus 1.68 million mt. The average MOP price was up 33 percent, to $440/mt from the year-ago $331/mt.
Second-quarter international MOP sales were up 43 percent to 1.05 million mt, with an average price of $393/mt compared to the year-ago 737,000 mt and $281/mt. However, North American sales were off 42 percent to 525,000 mt, with an average price of $533/mt versus the year-ago 910,000 mt and $351/mt.
Second-quarter phosphate operating earnings were up 7 percent, to $431.6 million on sales of $2.18 billion from the year-ago $402.3 million on sales of $1.97 billion. Total tons sold were down