All posts by hlancey@bloomberg.net

Mosaic 4Q Beats Analysts on Income, Adj. EBITDA; Colonsay Production Curtailed

China, Earnings, Featured, Phosphate, Potash, U.S.

The Mosaic Co. reported fourth-quarter net earnings attributable to the company of $365.3 million on net sales of $3.15 billion, down from the year-ago $523.2 million and $4.48 billion, respectively. Adjusted EBITDA was $646 million, down from the year-ago $1.05 billion.

Mosaic beat the average estimate of major analysts (Bloomberg Consensus) for earnings and adjusted EBITDA, which were $283.2 million and $596.4 million, respectively.

Full-year net earnings were $1.16 billion on net sales of $13.7 billion, down from the year-ago $3.6 billion and $19.1 billion, respectively. Adjusted EBITDA was $2.76 billion down from 2022’s $6.2 billion.

“Mosaic successfully navigated a highly dynamic market in 2023,” said Bruce Bodine, President and CEO. “We delivered strong free cash flow and returned significant capital to shareholders while reinvesting in the business. Looking into 2024, Mosaic expects to continue to benefit from a strong phosphates market and is well positioned to deliver solid results as we optimize our low cost potash operations. In addition, we are focused on improving our phosphates production level, expanding our portfolio of value-added products, growing our leading presence in Brazil, and enhancing the overall efficiency of our operations.”

Mosaic reported that in response to current potash market conditions, it has decided to curtail production at its Colonsay mine in Saskatchewan. Bodine told analysts that the move demonstrates the company’s commitment to flexibly manage its network to assure that low cost sites like Belle Plaine and Esterhazy operate at capacity while Colonsay is only used when market conditions dictate.

Mosaic noted that it has completed the development of the Esterhazy K3 mine, which it said is the largest and one of the most efficient and low-cost potash complexes in the world. In addition, Mosaic added that Canpotex’s port at Portland, Ore., returned to normal operations in December after being idled since April 2023 (GM May 19, 2023).

Mosaic expects first-quarter potash sales volumes in the 2-2.2 million mt range with realized mine-gate MOP prices in the $225-$250/mt range. The company expects North American demand to remain robust and that demand in Southeast Asia and Brazil will improve as the year progresses.

Mosaic explained that lower phosphate results reflect the impact of lower prices and production challenges due to weather-related events and repairs of its sulfuric acid facilities in Louisiana, partially offset by lower raw material prices. It said phosphate prices stabilized in second-quarter 2023 and rose in the second-half, and it expects this to continue in 2024, as well as low raw material prices.

Mosaic expects a tight global supply of phosphate into 2024 with China’s exports expected to be capped as the domestic market is prioritized over exports. It said firm phosphate prices and low raw materials prices suggest that stripping margins will stay elevated for the foreseeable future.

Mosaic first-quarter phosphate guidance is for 1.6-1.8 million mt with DAP prices on an FOB basis averaging $580-$605/mt.

Mosaic Fertilizantes reported much lower net sales, with the company citing lower prices, inflationary cost pressures, and high-priced inventory. It said destocking for high-priced inventories was completed in second-quarter 2023 and that fourth-quarter distribution margins per mt were above historical norms.

Due to heavy lower margin nitrogen distribution in the first quarter, Mosaic Fertilizantes expects margins below historical norms for the quarter but expects margins to be within norms for the year.

Potash (millions)  4Q-23 4Q-22 2023  2022
Sales Volume (000 mt) 2.6  1.9 8.98.1
Production Volume (000 mt)2.5 2.18.29.0
Gross Margin per mt99289137351
Operating Earnings (million $)222 4971,1522,768
Adjusted EBITDA322 5971,4713,117
Sales (million $)7581,1363,2005,200
MOP Selling Price $/mt  243581308632
Phosphates (millions)4Q-234Q-2220232022
Sales Volume (000 mt) 1.6 1.67.06.6
Production (Fin.) Vol. (000 mt)1.51.6 6.6 6.7
Gross Margin per mt88148100268
Operating Earnings (million $)21 1453751,347
Adjusted EBITDA259 3481,2272,219
Sales (million $)1,070 1,3104,7006,200
DAP Selling Price $/mt552722 573804
Mosaic Fertilizantes (millions)4Q-234Q-2220232022
Sales Volume (000 mt)2.2 2.59.7 9.4
Gross Margin per mt441122111
Operating Earnings (million $)50 (20)75 910 
Adjusted EBITDA 11129 3271,049
Sales (million $) 1,1921,9105,7008,300
Avg Finished Price (Dest.) 552 773587 878

Nutrien Misses 4Q Earnings Estimate; Sees Tight Inventories, Increased Volumes for 2024

Belarus, Brazil, Canada, China, Earnings, Featured, Natural Gas, Nitrogen, Phosphate, Potash, Russia

Nutrien Ltd. posted fourth-quarter net income of $176 million, considerably below the average analyst estimate (Bloomberg Consensus) of $347.4 million. Nutrien surpassed analyst estimates on revenues, however, posting $5.7 billion versus $5.37 billion. Year-ago income and revenue were $1.12 billion and $7.53 billion, respectively.

Adjusted EBITDA was $1.08 billion versus the analyst estimate of $1.12 billion. Year-ago adjusted EBITDA $2.1 billion.

“We saw a continuation of strong fertilizer market fundamentals in North America during the fourth quarter driven by improved affordability, an extended fall application season, and low channel inventories,” said Ken Seitz, President and CEO. “Utilizing the strengths of our integrated business, we achieved record fourth-quarter potash deliveries, increased crop nutrient sales volumes across our global Retail network, and generated strong cash flow from operations.”

Looking ahead, Seitz said the company expects to deliver higher fertilizer sales volumes and Retail earnings in 2024, supported by increased crop input market stability and demand. “We continue to prioritize strategic initiatives that enhance our capability to serve growers in our core markets, maintain the low-cost position and reliability of our assets, and position the company for growth,” he said.

Nutrien expects 91-92 million acres of corn in the US in 2024, with soybean acreage at 87-88 million acres.

Nutrien recognized a $76 million non-cash impairment in the fourth quarter in its Nitrogen segment relating to its Trinidad property, plant, and equipment due to a new natural gas contract and the resulting outlook for higher expected natural gas costs and constrained near-term availability. It expects availability to improve when new gas fields come online in 2026.

For the full-year, Nutrien recorded non-cash impairment of assets of $774 million in aggregate primarily related to Retail-South America goodwill and Nitrogen and Phosphate property, plant, and equipment.

Full-year net earnings were $1.28 billion on sales of $29.1 billion, down from the year-ago $7.7 billion and $37.9 billion, respectively. Adjusted EBITDA was $6.1 billion down from $12.2 billion.

Nutrien estimates 2024 global potash shipments up at 68-71 million mt from 2023’s 67-68 million mt, and expects a relatively global market with incremental increases in supply from producers in Canada, Russia, Belarus, and Laos.

It sees strong potash demand for the North American spring application season as channel inventories are tight, and also expects a significant increase in demand from Southeast Asia due to favorable economics from palm oil and rice. Good demand is also expected from India, Europe, and Latin American outside of Brazil.

China and Brazil are seen as having built up inventories versus year-ago levels. As a result, the company told analysts it does not assume an imminent settlement on the China contract.

Nutrien sees nitrogen supply constraints in 2024, including limited Russian ammonia exports, reduced European operating rates, and Chinese urea restrictions. The company expects Henry Hub natural gas prices to average $2.50/mmBtu for the year.

Nutrien said North American supplies of nitrogen are tight going into the spring season, noting that net imports in the first half of the 2023/24 fertilizer year were down an estimated 55% compared to the three-year average. It said global industrial demand remains at risk as European and Asian markets have yet to rebound to historical levels.

Nutrien said phosphate inventories are low in North American entering the spring season and it expects global supplies to remain tight due to low Indian stocks and China’s restrictions on exports.

Nutrien guidance for 2024 includes Retail adjusted EBITDA of $1.65-$1.85 billion, up from 2023’s actual $1.5 billion. Potash sales volumes are put at 13-13.8 million mt, up from 2023’s actual 13.2 million mt. Nitrogen sales volumes are seen as 10.6-11.2 million mt, up from 10.4 million mt due in part to improved production in Trinidad.

Phosphate volumes are pegged at 2.6-2.8 million mt versus 2023’s 2.6 million mt. The company noted its own improved operating rates after turnarounds at Aurora, N.C., and White Springs, Fla.

Nutrien announced that its Board of Directors declared a quarterly dividend of $0.54 per share payable on April 11, 2024, to shareholders of record on March 28, 2024. This represents an approximate 2% increase from the prior dividend declared on Nov. 1, 2023, and equates to an annualized dividend of $2.16 per share.

The Board also approved the purchase of up to 5% of Nutrien’s issued and outstanding common shares over a twelve-month period through a normal course issuer bid (NCIB).

Retail (millions)4Q-234Q-2220232022
Adjusted EBITDA2293911,4592,293
Gross Margin9891,0774,4305,179
Total Sales3,5024,08719,54221,350
CN Sales1,8082,3208,37910,060
CN Margins3463491,3781,766
CN Volume (000 mt)2,8632,49412,63211,513
Avg ($/mt)631930663874
CN gross margin per mt120139109153
Potash (millions)4Q-234Q-2220232022
Adjusted EBITDA4639582,4045,769
Gross Margin4271,0672,3636,499
Total Sales7761,3773,7597,899
Sales Volume (000 mt)3,3032,61813,21612,537
Avg ($/mt)235526284630
Nitrogen (millions)4Q-234Q-2220232022
Adjusted EBITDA3918411,9303,931
Gross Margin2856991,3793,281
Total Sales8771,5883,8306,604
Sales Volume (000 mt)2,7342,59610,42310,280
Avg ($/mt)321611367642
Gas Costs ($/mmBtu)3.307.443.497.77
Phosphate (millions)4Q-234Q-2220232022
Adjusted EBITDA 13028470594
Gross Margin7016243511
Total Sales4724291,7302,073
Sales Volume (000 mt)7535312,5512,378
Avg ($/mt)627807678872

Crew Abandons Houthi-Hit Ship

Europe, News Briefs

The crew of a UK-owned commercial ship in the Red Sea abandoned the vessel following a Houthi attack late Feb. 18, the first such evacuation since the militant group began menacing trade in the waterway late last year, according to Bloomberg. No injuries were reported and the crew was evacuated to Djibouti.

The ship, the Rubymar, is a relatively small cargo ship and was believed to be carrying phosphates from Saudi Arabia to Varna, Bulgaria. As of Feb. 21, Blue Fleet Group, which operates the vessel for owner Golden Adventure Shipping SA, told Bloomberg it was working with a salvage company to tow the vessel to Djibouti.

The vessel was hit by two rockets, one on the deck and one on the side of the ship between the hold and the engine room. While the ship did not sink, its engine room and fifth hold were underwater, while holds 1-4 were above water. The vessel was stable, awaiting a tugboat to be towed to Djibouti.

Groups Threaten EPA with Phosphogypsum Suit

News Briefs, Phosphate, U.S.

Environmental groups on Feb. 13 gave the US EPA a 60-day notice of plans to sue the agency for failing to respond to a rulemaking petition requesting stronger oversight and regulation of toxic and radioactive waste – phosphogypsum – from phosphate mining and fertilizer production.

“It’s time for the EPA to take aggressive steps to stop the ongoing environmental injustices and destruction caused by the phosphate industry’s waste,” said Ragan Whitlock, an attorney at the Center for Biological Diversity. “It’s been nearly three years since the state dumped 215 million gallons of toxic, radioactive waste from the Piney Point facility into Tampa Bay, but the EPA has done absolutely nothing to prevent the next phosphate pollution disaster.”

In February 2021, 17 organizations petitioned the EPA to better regulate phosphogypsum and process wastewater under the Resource Conservation and Recovery Act.

The wastes are currently exempt from hazardous waste regulations to protect the phosphate industry from the cost of compliance. However, the group’s noted that Florida’s largest phosphate manufacturer, The Mosaic Co., reported a net income of $3.6 billion in 2022 alone.

The groups’ petition asked the EPA to revisit its 1991 decision exempting phosphoric acid production wastes from federal hazardous waste regulations so the agency can properly oversee the safe treatment, storage and disposal of phosphogypsum and process wastewater.

The Mosaic Co. had not responded to inquiries at press time. As reported by the Tampa Bay Times, however, Mosaic’s website notes that phosphogypsum is deposited on stacks under “strict standards” established by the Florida Department of Environmental Protection and the EPA. Mosaic also described itself as “one of the most highly regulated companies” in the state.

“Florida regulations are among the most rigorous in the nation, which is why the US EPA is using Florida’s phosphogypsum regulations as a template for the rest of the nation,” according to the website. “Mosaic has developed extensive monitoring systems for air pollution control, surface and groundwater management, employee health and safety, process safety management, and waste management/minimization.”

The environmental groups involved include People for Protecting Peace River, Portneuf Resource Council, Rise St. James, Sierra Club, Waterkeeper Alliance, Waterkeepers Florida, Bayou City Waterkeeper, Our Santa Fe River, Healthy Gulf, ManaSota-88, and the Center for Biological Diversity.

Unigel, Creditors Agree to Restructuring Plan

Brazil, News Briefs

Unigel Participacoes reached an agreement with creditors led by Pacific Investment Management Co. to kick off an out-of-court restructuring, capping months of talks after the fertilizer maker missed bond payments.

Unigel and a group of its subsidiaries have filed two plans with a Sao Paulo court, according to a statement released on Feb. 20, Bloomberg reported. Only certain financial creditors will have their claims restructured under the plans, it said.

The Brazilian company is seeking to restructure about 3.9 billion reais ($792 million) in existing debt into new bonds and convertible notes. Unigel said it will issue at least $100 million of new notes maturing in December 2027, and those who inject money will receive a total equity stake of 50%.

The chemicals maker got the support of more than a third of its debt holders to kick off the restructuring, and it now has 90 days to convince holders of more than 50% of the debt to sign off for the settlement to take effect.

In addition to Pimco, the plans have the backing of DoubleLine Capital, Amundi SA, Banco BTG Pactual SA’s asset-management unit, Moneda, Verde Asset Management and Vontobel Asset Management, according to a separate filing. Unigel had rushed to pitch the creditors a deal last week to avoid filing for bankruptcy protection (GM Feb. 16, p. 32).

The agreement marks a turnaround for Unigel, which skipped coupon payments on its dollar and Brazilian real-denominated notes in the past few months as losses piled up due to a global downturn in fertilizer prices. It has failed to keep up with some of the terms of covenants, including maintaining debt levels low enough relative to a measure of earnings.

Unigel’s dollar bonds due in 2026 gained as much as 6.3 cents to 31.5 cents on Feb. 21 according to Trace data.

CommoditAg Launched in Canada

Canada, News Briefs

Online marketplace CommoditAg, Effingham, Ill., has expanded into Canada, its first foray outside of the US.

The Canadian launch of CommoditAg.ca includes a comprehensive ag input platform that introduces a wide array of products including nutrients, chemicals, equipment, and services, where it hopes to create a convenient one-stop shop for farmers.

The platform functions as a channel connecting buyers and retailers, encouraging users to explore local options they may not have considered previously.

Biologicals Study Progresses to Year Two

News Briefs, U.S.

Research firm Stratovation Group, Columbus, Ohio, on Feb. 16 announced plans for Year Two follow-up research to its 2013 report, “Biologicals: Farmer Value, Perception, and Potential.”

Strategic partners for the first round included the Agricultural Retailers Association (ARA), DC Legislative and Regulatory Services (DCLRS), and The Fertilizer Institute (TFI). A new strategic partner for the Year Two research initiative is the Biological Products Industry Alliance (BPIA).

“Signals continue to indicate that the agricultural biologicals market is growing at a rapid pace, and companies in that space are doing all they can to secure the best intelligence possible to inform their strategic decisions,” said Stratovation Group’s Founder and CEO Cam Camfield. “Working with a diverse mix of industry partners will make this a stronger body of work as we glean insights from farmers to continue mapping out a roadmap to growth for the sector.”

Justin P. Louchheim, TFI’s Vice President of Government Affairs, stressed the importance of the study. “It allows biologicals companies the information they need to keep pace with and stay attuned to the incorporation of their products as part of farmers’ efforts related to nutrient use-efficiency, soil health, and water use,” he said. “The study will also help keep policy makers updated about the importance of biologicals as any regulatory issues take shape across agriculture.”

Camfield said the study will be an annual research initiative due to the sector’s rapid innovation and competitive landscape. The study will be accompanied by a separate related study into the use of biologicals by specialty crop growers.

Orica to Buy Texas-Based Cyanco

Africa, Australia, Canada, Natural Gas, News Briefs, Texas

Australian explosives manufacturer Orica Ltd. reported that it has agreed to buy Texas-based sodium cyanide producer Cyanco Intermediate 4 Corp. from an affiliate of Cerberus Capital Management for $640 million on a cash-free, debt-free enterprise value basis.

Orica said the acquisition will be funded from the company’s existing cash and undrawn  committed debt facilities, alongside a A$400 million (approximately $262 million  at current exchange rates) underwritten institutional placement.

Cyanco is a leading manufacturer and distributor of sodium cyanide primarily serving the gold mining industries in the US, Canada, Mexico, Latin America, and Africa with two manufacturing plants in Nevada and Texas. The acquisition will more than double Orica’s existing sodium cyanide production capacity to approximately 240,000 mt/y.

Orica said the acquisition will significantly increase its footprint in “the very attractive North American gold mining industry and strategically located to access cost-competitive US natural gas-based manufacturing assets.”

The transaction is expected to be completed by the end of FY2024, which ends Sept. 30, 2024, subject to the expiration of certain regulatory waiting periods and other customary closing conditions.

Thai Potash Mine Owner Weighs Stake Sale

Asia, China, News Briefs, Potash, Thailand

Italian-Thai Development Pcl (ITD) is considering selling its 90% stake in Asia Pacific Potash Corp., which has mining rights in Thailand, and is seeking about $500 million, according to Bloomberg, citing people familiar with the matter.

The Bangkok-based construction company is working with an adviser and talking with potential buyers, including from China, one of the people said. Talks with potential interested parties are ongoing and may not lead to a deal, the people said, asking not to be identified discussing confidential information.

Asia Pacific Potash referred queries from Bloomberg News to ITD, which didn’t respond to a request for comment. ITD, one of Thailand’s biggest construction firms, acquired Asia Pacific Potash in 2006. The company has exploration and development rights to high-grade potash deposits in the northeastern Thai province Udon Thani.

Asia Pacific Potash applied to the government for rights to the 10,500-acre site in 2003, but it took until 2022 for it to receive official approval to operate the project for 21 years, according to the company’s website. It has annual capacity of 2 million mt of potash, the company said.

Thai Prime Minister Srettha Thavisin inspected the main mine on Feb. 19, according to a government statement. He asked about the source of funds for the project and also met citizens opposed to the potash mine, it said.

ITD’s market value has shrunk since reaching around $3 billion in the 1990s, falling to $100 million now. The company, which was founded in 1954, reported a net loss of 44.7 million baht ($1.2 million) in third-quarter 2023 and a 4.76 billion baht loss for full-year 2022.

The company’s President and biggest shareholder, Premchai Karnasuta, was released from prison on parole last year after being sentenced for wildlife poaching, including, according to the Bangkok Post, a rare black panther.

Krungthep Turakij newspaper reported in January that ITD planned to delay payment of 2 billion baht in bonds due the following month. Bondholders later agreed to approve extending redemption dates for two years.

Tunisia Gets Saudi Loan for Phosphate Rail

News Briefs, Phosphate, Saudi Arabia

A $55 million loan from the Saudi Fund for Development will help finance the first phase in an upgrade of the railway network dedicated to phosphate transportation, according to Bloomberg, citing a statement by the Tunisian Economy and Planning Commission.

The Commission said the project will raise capacity and have a positive impact on the economy and public finances. It said the Saudi fund is one “of Tunisia’s most prominent development partners” and has provided it with a total $1.2 billion in financing since 1975. The fund is ready to continue supporting Tunisia’s development plans, the Commission cited CEO Sultan Abdulrahman Al-Marshad as saying.