Problems with its sulfuric acid plants in the second quarter put Phosphate Holdings Inc. (PHI), the owner of Mississippi Phosphates Corp., in the loss column for the second quarter ending June 30, 2010. PHI reported a net loss of $4.9 million ($.58 per diluted share) versus the year-ago positive $104,000 ($.01 per diluted share).
Despite what the company called a good second quarter for phosphates, production problems held the company back. “Operationally, the second quarter of 2010 was challenging,” said Robert Jones, PHI CEO. “For the quarter, the company’s sulfuric acid production was approximately 66 percent of planned levels. Production rates at both sulfuric acid plants were impacted by problems with the interstage absorption coolers. Moreover, we had a boiler failure in one of our sulfuric acid plants, which shut that sulfuric acid plant down for 27 days during the quarter.”
Jones said the acid plant problems had a corresponding unfavorable impact on DAP production, as the company produced 150,968 st – or 75 percent of planned production – of DAP in the second quarter.
PHI reported a second-quarter operating loss of $7.08 million, versus the year-ago income of $76,000. EBITDA was a negative $4.59 million, compared to the year-ago positive $3.05 million.
Total sales for the second quarter were up 45 percent, to $62.1 million from the year-ago $42.7 million. The average DAP sales price was up 45 percent, to $400.26/st from the year-ago $275.39/st. The company sold 152,434 st of DAP, with 84,888 st (56 percent) as exports and 67,546 st (44 percent) for the domestic market.
PHI said third-quarter DAP prices are up significantly. However, it cautioned that certain known issues in its sulfuric acid plants will not be addressed until a scheduled maintenance turnaround in November. PHI is projecting third-quarter DAP production between 155-165,000 st. While it can give no assurances, it anticipates that it will return to profitability in the third quarter.
“We view the second half of 2010 as promising,” said Jones. “With expectations of an early harvest and another large U.S. corn crop in 2011, fertilizer applications should be robust. Phosphate inventories throughout the chain are generally low. Demand for phosphates remains strong as India continues to purchase large phosphate volumes. South America restocking requirements are emerging and the U.S. market is strong.”
PHI had a first-half net loss of $2.3 million ($.27 per share) on sales of $122.2 million, compared to the year-ago loss of $11.4 million ($1.50 per share) on sales of $97 million. Six-month operating losses were $2.9 million versus the year-ago loss of $18.2 million, while EBITDA was a positive $2.6 million compared to the year-ago negative $12.8 million.