The Mosaic Co., Tampa, reported second-quarter net income attributable to the company of $437.2 million ($1.14 per diluted share) on net sales of $2.8 billion, up from the year-ago $47.4 million ($0.12 per share) and $2.04 billion, respectively. Adjusted EBITDA was $829 million, up from $383 million.
The Bloomberg Consensus, the average from a survey of major analysts, projected Mosaic earnings at $328.2 million on revenues of $2.92 billion, with adjusted EBITDA of $803.1 million (GM July 30, p. 29).
“Mosaic’s results for the second quarter of 2021 highlight the benefits of our transformation efforts in a strong pricing environment,” said Joc O’Rourke, Mosaic President and CEO. “Underlying agricultural markets remain constructive, and this is driving demand for fertilizer. The second half of 2021 is expected to be one of our strongest periods in more than a decade.”
Second-quarter phosphate revenues were up 54 percent over the year-ago quarter as a result of strong price increases. However, sales volumes were down 11 percent year-over-year to 2.0 million mt, as sales were limited by production. The company said sulfur availability negatively impacted production volumes, which totaled 1.8 million mt, but said this issue has been resolved with the recovery of U.S. Gulf refinery operating rates. Production volumes in second-half 2021 are expected to return to normal levels.
Second-quarter potash sales volumes were 2.3 million mt, down 9 percent, and were negatively impacted by rail issues that slowed Canpotex sales. In early June, Mosaic shut down its K1 and K2 shafts, accelerated the shift of ore production to the new K3 project at Esterhazy, and began the process to restart operations at Colonsay. The company now expects the net negative impact to sales volumes to be approximately 500,000 mt in the second-half 2021, down from the original estimate of 800,000 mt.
Company-wide, six-month net earnings were $593.9 million ($1.55 per share) on sales of $5.1 billion, up from the year-ago loss of $155.6 million ($0.41 per share) and $3.84 billion, respectively.
O’Rourke told analysts that second-half 2021 is set up to be one of the strongest periods in over a decade. Mosaic said third-quarter phosphate and potash segment sales are approximately 90 percent committed and priced. It said the phosphate average realized prices in the third-quarter are expected to be $90-$100/mt higher than second-quarter realized prices.
However, raw material costs in the third quarter are expected to increase $15-$25/mt per mt versus second-quarter costs. Third-quarter potash average realized prices are expected to be $25-$35/mt higher than second-quarter realized prices.
“All of this implies higher earnings in the third-quarter and very strong results in the fourth and into 2022,” added O’Rourke.
Mosaic said that in three of the four major fertilizer markets – North America, Brazil, and China – domestic crop prices continue to incent nutrient application to drive higher yields. It said while in India normal monsoon and good crop prices are incentivizing growers to maximize yields, supply may be limited by importer economics, where margins are negative given the market prices, current subsidy, and the government set retail price.
It said India shipments are likely to remain constrained until the situation changes. Regardless, even with the situation in India, it said global markets are expected to remain tight.
In addition, Mosaic said Chinese exports are expected to decline in the second half due to in-country seasonal demand, and noted that China’s National Development and Reform Commission (NDRC) has asked fertilizer manufacturers to temporarily stop the arrangement of exports in order to ensure domestic supply (GM July 30, p. 32).
| Potash | 2Q-21 | 2Q-20 |
| Sales Volume (million mt) | 2.3 | 2.6 |
| Gross Margin (million $) | 217 | 132 |
| Gross Margin per $/mt | 93 | 51 |
| Sales (million $) | 663 | 555 |
| MOP Selling Price $/mt | 243 | 182 |
| Phosphates | 2Q-21 | 2Q-20 |
| Sales Volume (million mt) | 2.0 | 2.2 |
| Gross Margin (million $) | 309 | 18 |
| Gross Margin per $/mt | 156 | 7 |
| Sales (million $) | 1,200 | 762 |
| DAP Selling Price $/mt | 544 | 287 |
| Mosaic Fertilizantes | 2Q-21 | 2Q-20 |
| Sales Volume (million mt) | 2.3 | 2.6 |
| Gross Margin (million $) | 185 | 101 |
| Gross Margin per $/mt | 78 | 39 |
| Sales (million $) | 1,000 | 787 |
| Brazil MAP Price $/mt | 589 | 314 |
| Avg Finished Price (Dest.) | 442 | 308 |