Compass Minerals reported that its specialty fertilizer sales volumes were up 176 percent during the first quarter ending March 31, 2010, to 102,000 st versus the year-ago 37,000 st. Sales were up 37 percent, to $52.5 million from $38.2 million in 1Q 09. However, operating income was off 37 percent, to $17 million from $26.8 million. This was primarily due to a drop in the average price per ton to $514/st from the year-ago $1,020/st.
“Compass Minerals delivered strong sales this quarter through salt pricing growth and better-than-expected demand for our sulfate of potash specialty fertilizer,” said Angelo Brisimitzakis, Compass president and CEO. “Our salt segment maintained robust margins, demonstrating the reliable earning power of our salt applications even when, in quarters like this one, mild winter weather depresses demand for our highway, consumer and professional deicing products. Average sales prices for our sulfate of potash were well above prices when we last sold more than 100,000 tons in the second quarter of 2008, which has led to attractive profitability for our specialty fertilizer segment.
“Winter weather variability is inherent to our deicing business and we know that, over the long term, weather tends to return to normal,” continued Dr. Brisimitzakis. “The highway deicing cycle has begun again, so we are now turning our attention to the 2010-2011 winter. We believe that the price and volume volatility that has characterized the potash industry for the past two years has substantially subsided. We expect our sulfate of potash specialty fertilizer prices to remain stable and attractive though the upcoming growing seasons and we believe that more normal sales volumes will become sustainable in 2010.”
Compass expects second-quarter fertilizer volumes to be about double year-ago levels, with full-year volumes to be more than 300,000 st. It views normal sales at 100,000 st per quarter, or 400,000 st/y. The company noted that in previous years it was able to sell 100,000 per quarter at prices in the $300-$400/st range. It said prices now appear to have set a floor and are over $500/st. “We expect to be able to grow this business at even better margins than we expected when we first initiated Phase I of our SOP capacity expansion projects back in 2007,” said Brisimitzakis. He also said the company is having success at implementing the $30/st SOP price increase it implemented April 1.
Brisimitzakis said the company is uncertain as to when it will receive permits for its SOP expansion at the Great Salt Lake. “It could be imminent or several years off.” The project would add up to 70,000 acres of pond to the current 40,000 acres. The proposed pond could produce up to 400,000 st/y of SOP. It would take some four years to get the first SOP once the permit was granted ?Çô one to build the pond, and three for the evaporation process.
Brisimitzakis also said that in 2010 Compass stopped buying potash from vendors for making SOP. He said the company started 2010 with 200,000 st of SOP in inventory and expects to produce 300,000 st in 2010 and 350,000 st in 2011.
Company-wide, Compass saw a 4 percent decline in net earnings, to $58.9 million ($1.77 per diluted share) from the year-ago $61.6 million. Total sales were up 16 percent, to $357.6 million from the year-ago $309.1 million.
Salt operating earnings were $85.6 million on sales of $302.5 million, up from the year-ago $77.4 million on sales of $268.8 million. Total salt volumes were up at 4.48 million st from 1Q 09’s 4.36 million st, while the average salt price was $67.45/st, up from the year-ago $61.66/st.