The Mosaic Co. reported a $541.1 million turnaround in earnings for the fiscal year ending May 31, 2007. Net earnings for the year were $419.7 million ($.95 per diluted share) on sales of $5.77 billion, versus the prior year loss of $121.4 million ($.35 per share) and sales of $5.3 billion. The prior year fourth quarter included a restructuring charge in the phosphate business of $285.6 million after tax ($.75 per share), which pulled the company into the loss column for Fiscal 2006.
Fourth-quarter net earnings were $202.6 million ($.46 per share) on sales of $1.68 billion, versus the year-ago loss of $180.9 million ($.48 per share) and $1.33 billion, respectively.
“Our leadership in the phosphates and potash businesses positions us to capitalize on dynamic agricultural market conditions, resulting in dramatic improved earnings,” said Jim Prokopanko, Mosaic president and CEO. “Our businesses are generating strong cash flow, and we’ve repaid over $450 million of long-term debt since the beginning of the fourth quarter, a significant step towards our goal of achieving investment grade credit ratings.” He told analysts that the company is firing on all cylinders.
Phosphate operating earnings were $311.2 million on sales of $3.2 billion (8.9 million mt at average DAP price of $264/mt) for the year, versus the year-ago loss of $142.8 million on sales of $3.1 billion (10.1 million mt @ $245/t). Volumes were down due primarily to the company’s indefinite closure of two high-cost plants in Fiscal 2006. Fourth-quarter operating earnings were $234.3 million on sales of $959.7 million (2.23 million mt @ $338/mt), versus the year-ago loss of $271.1 million on sales of $805.8 million (2.7 million mt @ $248/mt).
Potash operating profits were $368.2 million on sales of $1.48 billion (7.9 million mt @ $141/mt) versus the prior year $309.8 million and $1.15 billion (6.5 million mt @ $140/mt), respectively. Fourth-quarter earnings were $162.8 million on sales of $494.0 million (2.57 million mt @ $146/mt), versus the year-ago $83.8 million and $328.3 million (1.72 million mt @ $141/mt). Volumes were up significantly in the fourth quarter due to the year-ago delays in buying from China and India.
Nitrogen results were off for the year, though the company said they were improving toward the end of the fourth quarter. Fiscal 2007 operating earnings were 5.3 million on sales of $129.1 million, versus the prior year’s $11.2 million and $143.4 million, respectively. The fourth quarter saw a loss of $1.7 million on sales of $33.3 million, versus the year-ago earnings of $4.7 million on sales of $52.2 million.
Potash shipments are expected to be up significantly in Fiscal 2008, to 8.5-9.0 million mt, according to Mosaic, compared to the 7.9 million mt posted in Fiscal 2007. Fiscal 2008 phosphate projections are 8.6-9.1 million mt versus 2007’s 8.9 million mt.
Mosaic is projecting that Brazil will see a 1 million mt increase in fertilizer use for Calendar 2007, eclipsing the 2004 record year. It expects phosphates and potash to Brazil to be up over 40 and 20 percent, respectively. In the meantime, the company is raising its phosphate estimates for India due to better demand and local production problems. The company also speculated that China, while now a phosphate exporter, may eventually have to import tons by the end of the year.
Mosaic said it was able to reduce potash production costs, even with the increased brine flow at Esterhazy, which is now under control. Fourth-quarter brine expense was $13 million ?Çô $43 million for the year. Mosaic noted that it is operating at high rates, with the possibility of bringing another 700,000 mt online in the next few years. It also noted the possibility of obtaining another 1 million from Potash Corp. of Saskatchewan Inc. after this year. Currently, PotashCorp is entitled to a percentage of Mosaic’s Esterhazy production.
Mosaic also told analysts that it is exploring uranium extraction from phosphate and that it has a project underway to study a new kind of technology for the process. It should know later in the year whether it would proceed, and said that any new facility would be at least three years down the road.