The Mosaic Co.’s second-quarter results missed analyst estimates, with the company posting net earnings of $1.04 billion ($2.85 per diluted share) on revenues of $5.37 billion and adjusted EBITDA of $2.03 billion. Analyst estimates were $1.4 billion, $5.67 billion, and $2.18 billion, respectively. However, the company easily surpassed the year-ago figures of $437.2 million ($1.14 per diluted share) on net sales of $2.8 billion and adjusted EBITDA of $829 million. Gross margin was $1.85 billion, up from $752.3 million.
“Mosaic’s second-quarter results demonstrate the strength of the business,” said Joc O’Rourke, Mosaic President and CEO. “We are expanding production to help meet global demand and returning significant capital to shareholders. We expect strong fundamentals will continue for the rest of the year and into 2023.
“In potash, we continue to expect Belarusian exports to be down 8 million mt this year,” O’Rourke told analysts. “Some of that will be mitigated by incremental supply from producers like Mosaic over the next 18 months. But that will not be enough to erase the deficit that we see lasting well into 2023 at least.”
O’Rourke said Mosaic expects that Belarusian and Russian exports combined will be down some 12 million mt of potash this year due to sanctions. He said Belarus is probably moving 100,000 mt a month to China by rail, but other than that Mosaic is seeing very little Belarus material in the market.
“In phosphates, China has continued to restrict exports as it prioritizes domestic and industrial demand,” added O’Rourke. “We now believe full-year phosphate exports from China could be down as much as 5 million mt from the prior year total of 11.5 million mt.”
“Shifting focus, we believe global fertilizer demand in the first half of 2022 was down about 10% from the same period last year, which aligns with the shortfall we’ve seen in supply,” he continued. “Grower sentiment has grown more cautious, but supply constraints are supporting global prices and margins well above historical levels, a situation we believe will continue at least through the rest of the year.”
O’Rourke said North America and Brazil have been well-supplied thus far in 2022, but much of the rest of the world is continuing to see unfilled demand of both phosphates and potash as a result of limited supply.
He said that in North America, a compressed season due to weather, as well as higher prices, led farmers to mine their soil. However, he said any of this curtailed application must be made up in the next couple of seasons. He said in both North America and Brazil, Mosaic expects normal application in the second-half 2022. “But as always, with higher prices, people are deferring the purchase as late as they can. However, good economics will mean that in both cases, we believe normal application will occur,” he said.
O’Rourke also gave an update of Mosaic’s potash initiatives, saying the Esterhazy K3 has reached the initial operating run rate target of 5.5 million mt/y at the end of the first quarter, with plans to continue the optimization of the complex with the addition of three new underground miners over the next year, resulting in an incremental 1 million mt/y of production capacity. “At Colonsay, we’ve begun the process of restarting the second mill, which should expand output to 2 million mt/y by the second half of 2023.
“We remain open to modest, high return projects and small bolt on acquisitions, especially in Brazil, but we are not interested in large-scale greenfield projects,” said O’Rourke.
Six-month net earnings were $2.22 billion ($6.05 per share) on net sales of $9.3 billion, up from the year-ago $593.9 million ($1.55 per share) and $5.1 billion, respectively. Gross margin was $3.29 billion, up from $1.19 billion.
| Potash (millions) | 2Q-22 | 2Q-21 |
| Sales Volume (000 mt) | 2.3 | 2.3 |
| Production Volume (000 mt) | 2.4 | 2.1 |
| Gross Margin (million $) | 928 | 217 |
| Operating Earnings (million $) | 915 | 49 |
| Adjusted EBITDA | 998 | 285 |
| Sales (million $) | 1,600 | 663 |
| MOP Selling Price $/mt | 678 | 243 |
| Phosphates (millions) | 2Q-22 | 2Q-21 |
| Sales Volume (000 mt) | 1.7 | 2.0 |
| Production (Finished) Volume (000 mt) | 1.6 | 1.7 |
| Gross Margin (million $) | 642 | 309 |
| Operating Earnings (million $) | 578 | 283 |
| Adjusted EBITDA | 758 | 408 |
| Sales (million $) | 1,800 | 1,200 |
| DAP Selling Price $/mt | 920 | 544 |
| Mosaic Fertilizantes (millions) | 2Q-22 | 2Q-21 |
| Sales Volume (000 mt) | 2.3 | 2.3 |
| Gross Margin (million $) | 450 | 185 |
| Operating Earnings (million $) | 420 | 170 |
| Adjusted EBITDA | 444 | 203 |
| Sales (million $) | 2,300 | 1,000 |
| Avg Finished Price (Dest.) | 974 | 442 |