The Mosaic Co. reported a third-quarter net loss of $4.2 million, down from net earnings of $841.7 million in last year’s third quarter. Revenues totaled $3.55 billion for the quarter, down 34% from the year-ago $5.35 billion. Adjusted EBITDA was $594 million from the year-ago $1.69 billion.
The current quarter reflected the after-tax impact of notable items totaling $231 million, mainly the impact of a foreign currency transaction loss and an adjustment to asset retirement obligations.
“Our third quarter results highlight the versatility of our business,” said CEO Joc O’Rourke. “Destocking inventories in Brazil early in the year left us well positioned for the second half of 2023 and 2024. As we look ahead, our outlook is positive. Around the world, growers are incentivized to maximize yields through appropriate levels of fertilizer application. As a result, demand for our products has rebounded this year, and we expect robust demand through 2024.”
O’Rourke told analysts that Mosaic’s phosphate and potash shipments in North America were the highest in the last five years. “This was followed by a great summer fill program and a very strong fall application season,” he said. “The last three months through October were a record for Mosaic’s North American potash shipments.”
“We saw similar dynamics play out in Brazil,” he added. “We expect total fertilizer shipments in Brazil to be 43-44 million mt, the second-highest total in history.”
While Mosaic’s results trailed analysts’ expectations, company shares rose 2.6% on Nov. 8, the day after the earnings release, to close at $32.77.
Third-quarter Potash segment operating earnings were $200 million, down from the year-ago $793 million, while adjusted EBITDA dropped to $267 million from $871 million, reflecting the impact of lower prices. The Colonsay mine was restarted in the quarter to help meet strong North American demand during Esterhazy’s planned turnaround in July. The company expects Colonsay to remain up so the company can meet the needs of the North American spring season.
Fourth-quarter potash sales volumes are expected to be in the 2.4-2.6 million range, up from the third quarter’s 2.2 million mt. Fourth-quarter realized mine-gate MOP prices are expected to be in the $235-$260/mt range, down from the third quarter average of $266/mt.
The Phosphate segment reported an operating loss of $58 million in the third quarter, down from the year-ago income of $131 million. Adjusted EBITDA slipped to $201 million from $481 million. The company said the results reflect the impact of lower prices and production impacts following Hurricane Idalia and a power outage disruption in Louisiana that occurred late in the third quarter. These were partially offset by lower raw material costs.
Mosaic expects the Louisiana repairs to be completed in the fourth quarter. President Bruce Bodine said the company had unexpected operational and maintenance issues at two of its larger sulfuric acid plants, which ultimately restricted finished product production during the back half of the year. He said a “large chunk” of that production has just returned to production and the remaining work will be completed by the end of the year.
Mosaic expects fourth-quarter phosphate sales volumes of 1.6-1.8 million mt, approximating the third quarter’s 1.7 million. DAP prices at the plant are expected to average $530-$580/mt, up from the third-quarter average of $487/mt.
Mosaic Fertilizantes reported third-quarter operating income of $77 million, down from the year-ago $323 million, while adjusted EDITDA declined to $147 million from $343 million.
Following inventory restocking that was completed early in the second quarter, Mosaic said the Brazilian unit’s third-quarter distribution margins returned to historically normal levels, averaging $34/mt. It expects further improvement in the fourth quarter to $40-$50/mt.
Looking ahead, Bodine reviewed several company initiatives in Mosaic’s earnings call. He noted the company’s expansion of MicroEssentials capacity at its Riverview, Fla., complex, as well as the investments it has made in Mosaic BioSciences. “We are pushing further into non-commodity value-added Ag products,” he said.
Mosaic is exploring a 100,000 mt purified phosphoric acid plant in Louisiana to serve the lithium iron phosphate (LFP) battery market. The Board of Directors has approved engineering work on the facility and the price tag for the project is put at $500 million.
“In Brazil, Mosaic is already the country’s largest supplier of fertilizer and we are expanding our footprint further, with a 1 million mt distribution facility at Palmerainte in the fast growing northern region in Brazil,” Bodine said.
“In potash, we’re further optimizing our Esterhazy facility by debottlenecking the mills and adding 400,000 mt of very low-cost production,” he added. On top of these, Bodine said Mosaic is also pursuing cost reduction initiatives and operational improvements that should save the company at least $150 million.
Company-wide, Mosaic posted nine-month net income of $799.6 million on net sales of $10.55 billion, down from the year-ago $3.06 billion and $14.64 billion, respectively.
| Potash (millions) | 3Q-23 | 3Q-22 |
| Sales Volume (000 mt) | 2.2 | 2.1 |
| Production Volume (000 mt) | 1.9 | 2.3 |
| Gross Margin (million $) | 210 | 799 |
| Operating Earnings (million $) | 200 | 793 |
| Adjusted EBITDA | 267 | 871 |
| Sales (million $) | 720 | 1,400 |
| MOP Selling Price $/mt | 266 | 666 |
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| Phosphates (millions) | 3Q-23 | 3Q-22 |
| Sales Volume (000 mt) | 1.7 | 1.7 |
| Production (Finished) Vol. (000 mt) | 1.6 | 1.7 |
| Gross Margin (million $) | 88 | 358 |
| Operating Earnings (million $) | (58) | 131 |
| Adjusted EBITDA | 201 | 481 |
| Sales (million $) | 1,000 | 1,600 |
| DAP Selling Price $/mt | 487 | 809 |
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| Mosaic Fertilizantes (millions) | 3Q-23 | 3Q-22 |
| Sales Volume (000 mt) | 3.1 | 2.8 |
| Gross Margin (million $) | 106 | 348 |
| Operating Earnings (million $) | 77 | 323 |
| Adjusted EBITDA | 147 | 343 |
| Sales (million $) | 1,700 | 2,600 |
| Avg Finished Price (Dest.) | 566 | 931 |