The Mosaic Co. reported increased net earnings for the second quarter ending Nov. 30, 2006, to $65.9 million ($.15 per diluted share ) on sales of $1.52 billion, versus the year-ago $55 million ($.13 per share) and $1.50 billion, respectively. “The second quarter got off to a slow start as a result of a delayed fall season but ended on a bright note, with an increase in sales volumes in November,” said Mosaic President and CEO Jim Prokopanko. Likewise, he said sales have continued strong into the third quarter, with good supply/demand fundamentals for nitrogen and phosphates in particular.
Despite the increase in net earnings, Mosaic saw second-quarter declines in gross margin and operating earnings due to lower selling prices in phosphates and potash and higher production costs, partially offset by unrealized mark-to-market derivative gains of $.9 million versus year-ago losses in that category of $7.5 million.
Results were also up for the first half at $174.9 million ($.40 per share) on sales of $2.8 billion, versus the year-ago $131.1 million ($.30 per share) and $2.9 billion, respectively.
Mosaic told analysts it sees a 10-11 percent increase in phosphate and potash sales for the fertilizer year ending in June 2007.
Two bright spots are the biofuels industry and India, which the company said is “on fire,” due partly to low foodstocks. High soybean prices have also renewed optimism for better conditions in Brazil.
Responding to inquiries whether Potash Corp. of Saskatchewan Inc. is the only potash producer that can add incremental capacity in the next three-five years, Mosaic said it could as well, with the potential to add 200,000 mt/y at Colonsay and 500,000 mt/y at Belle Plaine through 2012.
As for the new inflow at Esterhazy, the company said its goal is to get back to traditional levels of inflow in months, if not weeks.
Overall fiscal 2007 guidance remains the same with respect to volumes – 8.5-9.3 million mt of phosphate and 7.7-8.1 million mt of potash.
Mosaic told analysts that 2008 could even be better than 2007 if the creeks don’t rise.
| Net Sales $/m | 2Q-06 | 2Q-05 | YTD-06 | YTD-05 |
| Phosphates | 763.9 | 735.8 | 1,553.5 | 1,592.3 |
| Potash | 352.1 | 330.2 | 642.2 | 597.9 |
| Nitrogen | 25.8 | 35.2 | 46.9 | 59.4 |
| Offshore | 499.9 | 467.8 | 803.8 | 807.8 |
| Total | 1,522.0 | 1,497.5 | 2,810.6 | 2,901.1 |
Operating Earnings
| Net Sales $/m | 2Q-06 | 2Q-05 | YTD-06 | YTD-05 |
| Phosphate | 5.1 | 41.1 | 88.0 | 148.0 |
| Potash | 78.2 | 111.3 | 139.0 | 209.8 |
| Nitrogen | 2.9 | 5.0 | 2.8 | 5.3 |
| Offshore | 4.5 | (5.8) | .9 | (14.0) |
| Total | 90.7 | 139.3 | 222.3 | 331.3 |