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Phosphate Holdings shaves losses in 4Q; turnarounds, raw materials to impact 1Q
Phosphate Holdings Inc., the sole owner of Mississippi Phosphates Corp., reported a net loss of $2.8 million ($.36 per basic and diluted share) for the fourth quarter ending Dec. 31, 2009, compared to a year-ago loss of $58.1 million ($7.59 per diluted share). Total net sales for the quarter were up 32 percent, to $47.2 million from the year-ago $35.8 million.
“The fourth quarter of 2009 was one of transition in the phosphate market,” said Robert Jones, Phosphate Holdings CEO. “After an extended period of sluggish phosphate demand due, in part, to weather conditions, uncertainty of product prices, and inadequate credit availability, DAP prices began to recover. DAP prices increased from a low of $262 per short ton, NOLA, during mid-November of 2009, to $334 per short ton, NOLA, at year end. As of March 22, 2010, DAP prices approximate $425 per short ton, NOLA, while export prices are approximately $440 per metric ton, U.S. Gulf.
“The resurgence in DAP prices is attributable to both buyers and sellers realizing that phosphate stocks throughout the supply channel are low and the anticipation of a strong spring planting season,” continued Jones. “With depleted nutrients in the farmers’ soil, coupled with low fall 2009 application levels due to the late harvest, we expect strong demand for fertilizer throughout 2010.”
“With the improvements in DAP demand and price, we are experiencing raw material input cost increases and, in one case, availability issues,” he added. “Most notable has been the $60 increase in sulfur to $90 per long ton for the first quarter of 2010. More problematic has been near-term supply shortages of sulfur. Changes in oil refinery feedstock and product mix and recent turnarounds have led to a shortage of sulfur. While ammonia availability has not been an issue, prices in the U.S. Gulf have increased significantly since year end from $300 per metric ton, CFR, to $450 per metric ton, CFR, in March 2010.” Those prices did, however, decline to $415/mt for April.
The average sales price of DAP during the fourth quarter of 2009 was $276/st, a 42 percent decrease from the prior-year price of $478/st. During the fourth quarter, the company sold 168,078 st of DAP, with 84,324 st moving into export markets. The company had operating losses of $4.4 million, compared to the year-ago operating losses of $90.5 million. EBITDA was a negative $1.9 million, compared to the year-ago negative $88.5 million. Fourth-quarter 2008 EBITDA was negatively impacted by inventory write-downs to net realizable value of $84.8 million.
Full-year 2009 net losses were $13.6 million ($1.76 per share), as compared to 2008 losses of $3.5 million ($0.46 per share). Results for 2009 were impacted by inventory write-downs to net realizable value of approximately $10.4 million.
Full-year 2009 net sales were $186.3 million, a 58 percent decrease from 2008 net sales of $445.8 million. The company incurred an operating loss of $21.7 million compared to the year-ago loss of $4.5 million. EBITDA was a negative $10.9 million, versus 2008’s positive $5.9 million. EBITDA in 2009 and 2008 were negatively impacted by inventory write-downs of $10.4 million and $87.7 million, respectively.
Phosphate Holdings said operational issues have negatively impacted the fourth-quarter 2009 results, as well as first quarter 2010 to date. During the fourth quarter of 2009, the company produced 153,873 st of DAP, approximately 83 percent of planned production levels for the quarter. This shortfall resulted from various unplanned outages in its sulfuric acid operations. In late 2009, the company completed a comprehensive review of the operational issues hindering sulfuric acid production. Several of the key issues identified were addressed in a planned turnaround of the No. 2 sulfuric acid plant in January 2010, and an unplanned four-day outage in the No. 3 sulfuric acid plant in December 2009. The company said improvements in the operating factors were achieved in both sulfuric acid plants.
Various factors, including extreme cold temperatures and heavy rainfall events, negatively impacted operations during the first quarter of 2010. Subsequent to the turnaround on the No. 2 sulfuric acid plant, problems with the coolers in the interstage absorption towers developed, and the company is working to replace the applicable coolers. The planned turnaround, weather factors, and interstage absorption tower cooler problems will impact DAP production during the first quarter of 2010.
As of Dec. 31, 2009, the company had a cash balance of approximately $2.1 million and no outstanding borrowings under its revolving credit agreement. It spent approximately $0.3 million on capital expenditures in the fourth quarter of 2009, and $4.9 million for the year ended December 31, 2009.
Jones added that the company continues to fully cooperate with the Environmental Protection Agency (EPA) and the Mississippi Department of Environmental Quality (MDEQ) on their respective Administrative Order under Section 7003(a) of the Resource Conservation and Recovery Act (RCRA) and the Notice of Violation issued on Sept. 23, 2009 (GM Oct. 5, 2009). The company said Sept. 30 that corrective actions were initiated immediately after an inspection detected surface and groundwater contamination within the plant, and that additional work was underway. At the time, the company said surface water contamination within the plant was mitigated, and the company had confirmed through third-party testing that the groundwater contamination was localized and contained and that there has been no migration off site.
During 2009, the company expensed approximately $1.3 million and capitalized costs of approximately $0.1 million related to these matters. It estimates it will incur additional capital costs of $1.7 million to address the EPA and MDEQ requirements.
In other news, the company announced that Rex Deloach resigned from the company’s board of directors Feb. 24, 2010.
ICL reports second-best year in 2009, best-ever 4Q, record K sales to India
Despite the global economic downturn in 2009, Israel Chemicals Ltd. (ICL) reported its second-best year and its best-ever fourth quarter.
ICL 2009 net income to shareholders was $770.4 million on sales of $4.55 billion, down from 2008’s $2 billion and $6.9 billion, respectively. While sales and income were off from 2008, ICL noted that 2008 was an exceptional “spike” year for the fertilizer and chemical industries. Fourth-quarter net income was $202.7 million on sales of $1.23 billion, up from the year-ago $175.8 million and $1.19 billion.
On March 24, ICL’s board declared a dividend totaling $155 million, which will be paid April 27, 2010, in recognition of its fourth-quarter 2009 results. This brings the total dividends paid in 2009 to $530 million.
ICL’s fertilizer segment, ICL Fertilizers, reported an 82 percent increase in operating income for the fourth quarter ending Dec. 31, 2009, to $219.3 million on sales of $633.2 million, compared to the year-ago $120.4 million and $508.8 million, respectively. The increase reflected the rise in sales and decline in input costs, especially sulfur, countered partially by a decline in some selling prices.
Quarterly sales were up 24 percent. The increase reflects a 94 percent increase in the quantity of potash sold due to rising activities in India and Brazil. In addition, there was a 143 percent increase in the quantities sold of phosphate fertilizers due to steadily rising demand in India, Brazil, and other markets.
For the year, the fertilizer unit had income of $723.1 million on sales of $2.15 billion, down from 2008’s record $2.02 billion and $4.25 billion. Sales were off 49.5 percent, reflecting a sharp decrease in quantities sold of all products – especially potash – and the reduction in average selling prices. The company said the primary markets evidencing a high level of activity in 2009 were Brazil and India. Towards the end of 2009, demand from other markets began to strengthen.
ICL noted that since January 2010, ICL Fertilizers has signed agreements with a number of customers in China for the delivery of 620,000 mt of potash, including an option, during 2010. In addition, in March the company announced that it will supply Indian customers with a total of 1.43 million mt of potash, including options, at $370/mt CFR over a 12-month period beginning in April 2010. This quantity is the largest ever sold by ICL.
Marsulex reviews strategic options
Marsulex Inc., a producer and supplier of sulfur-based industrial chemicals, said March 23 that it has initiated a review of strategic options for the company. It has started a broad-based process that includes review of opportunities for strategic alliances, joint ventures, mergers, or a corporate sale of all or part of the business. It said there can be no assurances that this process will result in any transaction.
“We think that Marsulex’s strong balance sheet, consistent financial performance, attractive growth prospects, technological capabilities, and customer base are attractive attributes as we proceed with the strategic review,” said Laurie Tugman, Marsulex president and CEO.
Marsulex has engaged TD Securities Inc., CIBC World Markets Inc., and Houlihan Lokey as advisors. No timetable has been set for completion of the review.
In the meantime, Marsulex says it continues to conduct its business as usual and remains fully focused on providing environmental compliance solutions for customers.
Earlier this month, Tugman touted company performance, saying “it has now realized five consecutive years of growth in EBITDA and net earnings, demonstrating the underlying strength and sustainability of our business through the economic cycle.” Marsulex 2009 net earnings were up 61.4 percent, to C$33.4 million on sales of C$300.5 million from 2008’s C$20.7 million and C$322.6 million, respectively. EBITDA for 2009 was C$82.3 million, up from 2008’s C$69 million. Positive earnings continued into the fourth quarter, with the company posting net earnings of C$6 million on revenues of C$62.7 million, versus the year-ago C$3.2 million and C$75.1 million, respectively. EBITDA was down slightly, however, to C$13.7 million from the year-ago C$14.9 million.
In addition to its sulfur business, Toronto-based Marsulex is also a provider of industrial services, including environmental compliance solutions for air quality control and processing or handling of industrial by-products or waste streams.
ARA urges members to oppose health care bill
Washington-The Agricultural Retailers Association (ARA) jumped into the national health care debate on March 19 with an 11th hour plea to members to call their Representatives to urge them to oppose HR 3590, the historic health care legislation that the House ultimately approved on March 21 with a vote of 219-212. “It is critical that all ARA members call their U.S. Representatives today and voice their strong opposition to the Senate-passed healthcare bill H.R. 3590,” ARA said in its alert. “Lawmakers must understand that the rising cost of healthcare is unsustainable in a struggling economy. Agricultural employers do not need reforms that add to the cost of doing business.” ARA cited a U.S. Chamber of Commerce study that said the bill could cost from $1.8 trillion to more than $2.5 trillion in the first ten years of full implementation. “This proposal fails to provide the fundamental healthcare solutions businesses and their employees desperately need,” ARA said. “Pushing through a flawed bill that dumps disproportionate costs on small businesses while providing unfair exemptions to labor unions is simply political pandering disguised as reform.” ARA’s appeal included a phone script for would-be callers. “Everyone keeps saying this is supposed to be a bill that helps businesses like mine,” the script said. “But this bill will actually end up raising our cost of doing business and will make my health insurance even more expensive. This would ultimately eliminate jobs and be the exact opposite of what healthcare reform legislation should accomplish.” ARA’s script urged callers to tell their congressmen that HR 3590 “fails businesses by imposing (1) a new health insurance tax that will increase our insurance costs; and (2) huge costs in the form of new taxes, compliance fees, and government regulation. Because of the politically motivated deals made to secure the support of big labor, the costs to pay for H.R. 3590 fall disproportionately on the already strained backs of America’s agricultural businesses and other small businesses located in rural communities.” Following the March 21 House vote, President Obama signed the bill into law on March 23. On March 25, the Senate voted 56-43 to approve some final fixes to the bill, which the House then confirmed with a final 220-207 vote.
Port of Churchill gets new manager, higher goals
Winnipeg-Pat Avery has joined OmniTRAX Canada Inc. as its vice president of energy and commodities, and will oversee operations at the Port of Churchill and the Churchill Marine Tank Farm in northern Manitoba. Avery’s duties there will include expanding the handling, movement, and storage of fuel, freight, and related services. He will also market the Port of Churchill and the tank farm to the northern territory of Nunavut and international markets. “We are pleased to have a person with Pat Avery’s knowledge, experience and expertise join our team,” said Gary Long, CEO of OmniTRAX. “He has already made significant contributions to our operations.” OmniTRAX Canada, an affiliate of OmniTRAX Inc. of Denver, Colo., has operated the Port of Churchill and the Hudson Bay Railway since 1997. The Port is Canada’s only deep-water Arctic port. It serves more than 30 countries in the export of grain from the prairie provinces, and is a key trade link with Nunavut. In 2009, the Port handled one of the highest tonnages on record with 529,000 mt of wheat for the Canadian Wheat Board. In October 2007 the Port made fertilizer news when it received 10,000 mt of Russian ammonium nitrate brought in by Farmers of North America (FNA), a Saskatoon-based farmers’ cooperative (GM Oct. 22, 2007). A first for Manitoba, the 2007 fertilizer delivery was heralded by FNA and port officials as a game-changer for farmers in Western Canada. Avery comes to the Port with more than 15 years of experience in the energy and fuel business across North America, including jobs with ARCO and Santa Fe Pacific Pipeline. He also worked in the fertilizer, chemical, and grain business with JR Simplot for more than a decade, including a two-year stint at Simplot’s Brandon, Manitoba, facility. “I am pleased to join such a dynamic and forward thinking company as OmniTRAX,” Avery said. “This company is dedicated to growing and diversifying its business through the Port of Churchill and I look forward to assisting with those endeavors. This is an opportunity for growth and employment for the people of Northern Manitoba and Nunavut.” Avery said he’d like to see the port handle canola, flax, peas, and other specialty crops in addition to wheat. He also said he plans to pursue contacts in the fertilizer and mining sectors to expand fertilizer and mining-industry equipment shipments through the port.
BHP completes acquisition of Athabasca Potash
Melbourne-BHP Billiton Canada Inc. said March 23 that it has completed the previously announced acquisition (GM Feb. 1, p. 1) of all the issued and outstanding common shares of Athabasca Potash Inc. for C$8.35 per common share, or C$341 million. The deal provides BHP with 100 percent control of the Burr project and various additional potash exploration properties in Saskatchewan. BHP says it now has access to more than 14,000 km2 of prospective exploration ground in the world-class Saskatchewan potash basin. BHP has filed an application with the Toronto Stock Exchange to delist the API common shares.
SO3 release causes evacuations, closes river
Neosho, Mo.-Seven miles of the Mississippi River were closed off and evacuations ordered at several surrounding businesses after a mechanical malfunction in an incinerator at the BASF plant caused the release of approximately 200 pounds of sulfur trioxide, according to investigators with the Missouri Dept. of Natural Resources (MDNR). MDNR spokesman Judd Slivka told Green Markets that fortunately there were no injuries and the sulfur trioxide, which drifted toward the river, didn’t mix with water and turn into sulfuric acid. He said that although given the small amount of the release there was no need to issue drinking water alerts, Hannibal and Louisiana, Mo., about 10 miles away, were notified of the incident. Slivka said the release, which occurred about 8 a.m., was probably caused by a malfunction in the incinerator stack. “The affected area was in a 500-yard radius around the plant and light winds out of the south/southwest pushed the release toward the river,” Slivka reported. He said the river closure, ordered by Coast Guard as a precautionary measure, lasted about two hours. The plant is located between Hannibal and Palmyra, about 115 miles north of St. Louis. Sulfur trioxide, a significant pollutant that is the primary agent in acid rain, is produced as a precursor to sulfuric acid.
N.C. brothers charged with having bomb material
Shawboro, N.C.-Both the U.S. Federal Bureau of Investigation (FBI) and Currituck County sheriff’s detectives are continuing their investigations of two brothers living in a Shawboro rental house where authorities have found bomb-making materials, including nitric acid, hydrochloric acid, and sulfuric acid. Currituck County Sheriff Susan Johnson reported that her narcotics unit served a search warrant on March 11, after which narcotics detectives discovered an indoor marijuana manufacturing operation. Detectives also discovered bomb-making materials in the residence after the owner became suspicious when he called on the occupants about keeping a pet dog that was not allowed in the home. Sheriff Johnson said her office then called in the State Bureau of Investigation and the FBI. Timothy Brian Robinson, 32, was taken into custody. His brother, Daniel Allen Robinson, 34, was arrested in Chesapeake, Va., and faces two counts of possession of weapons of mass destruction, including a bottle with a fuse attached and several chemicals and poisonous plants that could be used for bomb-making. Sheriff Johnson said at a news conference that the FBI has not yet filed federal charges against the brothers. She also emphasized that the arrests emphasize the “importance of knowing your neighbors.” Daniel Robinson is being held in a Chesapeake jail without bond. Timothy Robinson is in the Currituck County Detention Center under a $60,000 bond.
RCMP raid produces bomb material
Edmonton, Alberta-More than 200 items, including potassium nitrate, an ingredient in explosives, were seized in an Royal Canadian Mounted Police (RCMP) raid on the Trickle Creek farm of Wiebo Ludwig. Ludwig has served jail time for 1990 natural gas pipeline bombings and was arrested and later released last January in connection with numerous bombings of sour-gas installations, according to court documents obtained by CBC News. There was no response by either phone or email from RCMP in British Columbia to the news report, which stated that a search at the farm, near Hythe, Alberta, 550 km northwest of Edmonton, was carried out in January. RCMP officers reportedly found a long list of items, including chemistry textbooks, weapons, and office supplies, along with the chemical. The search reportedly was part of an investigation into six bombings that took place between October 2008 and July 2009 at EnCana’s natural gas pipelines.