The Mosaic Co. recorded record results for full-year 2022 with net earnings attributable to Mosaic of $3.58 billion on net sales of $19.1 billion, up from the year-ago $1.63 billion and $12.4 billion, respectively. Adjusted EBITDA was $6.2 billion, up from the year-ago $3.6 billion.
“Mosaic delivered record results in 2022, and we expect favorable agricultural markets to continue in 2023,” said Joc O’Rourke, President and CEO. “Despite significant volatility through the year, our business was able to deliver strong free cash flow and return significant capital to shareholders, while also reinvesting in the business. Mosaic is well positioned to continue delivering strong results in 2023, thanks to our low-cost potash operations, our portfolio of value-added phosphate products, and our leading footprint in Brazil, the world’s fastest-growing major agricultural market.”
Mosaic missed analyst projections (Bloomberg Consensus) on adjusted EBITDA and net income for the full year and fourth quarter, however, it topped them on revenues for both periods. Mosaic missed analysts on potash and phosphate volumes, but exceeded volume expectations at Mosaic Fertilizantes.
Fourth-quarter net earnings were $523.2 million on net sales of $4.48 billion, down from the year-ago $664.8 million and $3.84 billion, respectively. Adjusted EBITDA was $1.05 billion, down from the year-ago $1.22 billion.
The company announced that the decision to stop production at the Colonsay potash mine in the fourth quarter because of market conditions (GM Dec. 9, 2022) is expected to be temporary, and a restart is expected in first-half 2023. Prior to the curtailment, Mosaic said Colonsay had been operating at an annual run rate of 1.3 million mt, with plans to expand annual output to 1.8-2.0 million mt by late 2023.
However, with increased production at Esterhazy K3, the company said a Colonsay expansion is less of a priority. Colonsay restarted in August 2021 after being idled for two years due to slumping demand.
The Esterhazy K3 potash mine reached its targeted initial run-rate of 5.5 million mt in first-half 2022 and output was expanded further with the addition of an eleventh miner, which went into service in the fourth quarter. A twelfth miner is currently being commissioned, with the final thirteenth miner expected to be in service in second-half 2023. The addition of these three miners will add 1 million mt of annual capacity.
Mosaic is expecting first-quarter 2023 potash sales volumes of 1.8-2.0 million mt, with realized mine-gate MOP prices in the $425-$475/mt range.
Mosaic said higher fourth-quarter phosphate prices helped offset lower production and sales volumes that were impacted by Hurricane Ian, unplanned operational outages, and a slower-than-expected recovery in demand in the second half of 2022. It said production returned to normal levels in February 2023.
Mosaic expects first-quarter 2023 phosphate sales volumes of 1.7-1.9 million mt, with DAP prices on an FOB basis averaging $625-$675/mt. It said stripping margins are expected to be in line with the fourth quarter as lower raw material costs offset the decline in realized prices.
Mosaic is also involved in expansion projects, including a MicroEssentials capacity increase at its Riverview, Fla., plant, which is expected to be completed by the end of the year. Following the expansion, it expects 50% of North American annual phosphate sales volumes will comprise value-added products.
It said this $40 million investment will have a payback in less than two years. The company said 2022 MicroEssentials sales volumes were 2.8 million mt, with gross margins averaging $33/mt higher than commodity fertilizer sales. Performance products currently account for 43% of total phosphate volumes.
Mosaic Fertilizantes is involved in the construction of a 1 million mt blending and distribution facility at Palmeirante, which it said has attractive logistical access. It said this modest $80 million investment expands the company’s presence in Brazil’s fast-growing northern agricultural region. The company also plans to extend production of the Taquari potash mine in Brazil.
Mosaic Fertilizantes saw its market share for its distribution business grow to approximately 18% in 2022 from 2021’s 16%, according to Mosaic. It said the company is now Brazil’s largest distributor of fertilizer, and when combined with direct sales from the production business, total sales volumes accounted for 23% of all fertilizer sales in Brazil.
Mosaic Fertilizantes had its best year since Mosaic purchased it. However, while sales volumes for Mosaic Fertilizantes were up for both the fourth quarter and year, the segment reported a $20 million operating loss in the fourth quarter, compared to year-ago operating earnings of $195 million. The company cited higher prices and demand in the first half, with a decline in the second half. However, operating earnings were up for the year, at $910 million from $745 million.
Mosaic is also constructing a purified phosphoric acid test plant in North America. It sees the opportunity to enter new markets like lithium iron phosphate batteries and food production.
On average, these projects are expected to generate an after tax, internal rate of approximately 50%.
The company told analysts that it is upgrading sulfuric acid production facilities at its Bartow, Fla., complex and improved operations at its Faustina, La., ammonia plant, which saw a significant increase in ammonia production in the fourth quarter. As a result, over 40% of the company’s ammonia during the quarter was supplied by Faustina, which is the highest in over a couple of years.
As previously reported, Mosaic divested Streamstrong Resort in January for gross proceeds of $160 million (GM Jan. 13, p. 26).
Mosaic also said it realized strong earnings from its equity investments of $196 million, reflecting the contribution from the company’s share of the MWSPC joint venture in Saudi Arabia.
Mosaic expects strong agricultural commodity price trends to drive a recovery in demand for fertilizer in 2023. It said grower profitability has improved significantly, as input costs have eased while ag commodity prices have held at elevated levels. It said grower economics in most global growing regions are constructive.
Mosaic said channel inventories for phosphate and potash in North America, Brazil, India, and other key growing regions have been drawn down, but that nutrient price volatility has delayed replenishment of these channels. The company said that as grower demand ramps up ahead of the Northern Hemisphere’s spring planting season, wholesalers and retailers are expected to return to the market to meet farmer demand.
At the same time, Mosaic said global phosphate supply remains constrained, saying China’s domestic phosphate industry is undergoing significant change as production is diverted from export markets toward domestic industrial and agricultural uses, a secular trend that it said is expected to continue.
As for potash, Mosaic said price weakness persisted through the winter as a result of aggressive marketing of small volumes from producers in Russia and Belarus seeking to recover market share lost in 2022. However, it said global supplies remain constrained and are unlikely to be sufficient to allow the return to trend demand, and could struggle to satisfy the pent-up demand expected in 2023. Mosaic believes Belarus exports were down about 8 million mt in 2022, and expects only modest recovery in 2023. It expects Belarus to export 6-7 million mt, and Russia to export 1.5 million mt less in 2023.
Mosaic noted that over the past 12 months it repurchased $1.7 billion worth of shares, and if fourth-quarter 2021 is included, it has bought back more than 10% of shares outstanding, or roughly 40 million shares. In addition, it has paid investors nearly $200 million in dividends, with the regular dividend up to $0.80 per share from last year’s $0.60. In addition to the regular dividend, Mosaic announced a special $0.25 dividend to be paid in March. It also retired $550 million of debt in November.
| Potash | 4Q-22 | 4Q-21 | 2022 | 2021 |
| Sales Volume (million mt) | 1.9 | 2.1 | 8.1 | 8.2 |
| Production Vol (million mt) | 2.15 | 2.21 | — | — |
| Operating Rate | 77% | 81% | — | — |
| Operating Earnings (million $) | 497 | 443 | 2,768 | 837 |
| Adjusted EBITDA (millions $) | 597 | 517 | 3,117 | 1,286 |
| Sales ($) | 1.14 B | 897 M | 5.2 B | 2.6 B |
| MOP Selling Price $/mt | 581 | 414 | 632 | 285 |
| Phosphates | 4Q-22 | 4Q-21 | 2022 | 2021 |
| Sales Volume (million mt) | 1.6 | 1.8 | 6.6 | 7.7 |
| Production Vol (million mt) | 1.60 | 1.86 | 6.65 | 7.33 |
| Operating Rate | 65% | 75% | — | — |
| Operating Earnings (million $) | 145 | 418 | 1,347 | 1,180 |
| Adjusted EBITDA (millions $) | 348 | 571 | 2,219 | 1,729 |
| Sales ($) | 1.31 B | 1.47 B | 6.2 B | 4.9 B |
| DAP Selling Price $/mt | 722 | 676 | 804 | 564 |
| Mosaic Fertilizantes | 4Q-22 | 4Q-21 | 2022 | 2021 |
| Sales Volume (million mt) | 2.5 | 2.3 | 9.4 | 10.1 |
| Operating Earnings (million $) | ($20) | 195 | 910 | 745 |
| Adjusted EBITDA (million $) | 29 | 197 | 1,049 | 821 |
| Sales ($) | 1.91 B | 1.54 B | 8.3 B | 5.1 B |
| Avg Finished Price (Dest.) | 773 | 654 | 878 | 504 |