Cranbury, N.J.-Specialty phosphate maker Innophos Holdings Inc. reported an 81 percent drop in net income for the third quarter ending Sept. 30, 2009, to $15.1 million ($.69 per diluted share) on sales of $161.9 million, versus the year-ago $79.6 million ($3.62 per share) and $291.8 million. The company expects fourth-quarter volumes, except for GTSP fertilizer sales, to be very similar to those of third quarter 2009. It expects selling prices to decline at a rate significantly lower than that experienced in the third quarter. Fourth-quarter raw materials costs are expected to increase $4-$5 million due to the company’s phosphoric acid sourcing mix. Innophos noted that its phosphate rock supply agreement with OCP will end on Sept. 9, 2010. During the remainder of the contract, the company expects conditions will continue to be difficult for its Mexican operations. Through an ongoing focus on efficiency, the business is targeting a minimum goal of remaining profitable until the sourcing situation improves. Innophos and OCP are in arbitration over their rock contract, and OCP has asked the tribunal in Paris to order Innophos to furnish OCP $68.4 million as interim security. Innophos says it will vigorously oppose the request and does not believe it will be granted. The first hearing of the arbitration is slated for mid-November, with its completion expected in July 2010. Going forward, Innophos said it is not considering entering into a new single-source arrangement as it does not believe that would be in its strategic benefit. Major capital expenditures in the quarter included debottlenecking specialty units on the U.S. and Canada, upgrading the Coatzacoalcos, Mexico, food grade capacity, and evaluating the Baja Mexico phosphate mineral rights. Nine-month net income was $63 million ($2.88 per share) on sales of $519.8 million, versus the year-ago $148.2 million ($6.83 per share) and $718.3 million.
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