The Mosaic Co., Plymouth, Minn., reported fourth-quarter net earnings attributable to Mosaic of $112.3 million ($0.29 per diluted share) on net sales of $2.52 billion, compared to the year-ago loss of $431.1 million ($1.23 per share) and $2.09 billion, respectively. Adjusted EBITDA was up, at $590 million from $366 million. The company also announced an increase in its annual dividend target, to $0.20 per share.
“Mosaic delivered strong fourth-quarter results to complete a year of significant accomplishments and operational excellence,” said President and CEO Joc O’Rourke. “We are capturing the full benefit of improved market conditions, and we expect our strong business and financial performance to continue in 2019.”
Fourth-quarter Phosphate gross margins were $151 million on sales of $926 million, compared to the year-ago $133 million and $1 billion, respectively. Volumes dropped to 1.9 million mt from 2.5 million mt, reflecting the closure of the company’s Plant City, Fla., facility, as well as wet weather that impacted the fall application season. Margins per mt were up, at $81 from $53.
Mosaic reported record MicroEssentials sales, reflecting an 18 percent annual growth rate over the past decade. The company said it sold over 3 million mt of the product in 2018, with 1 million mt going to Brazil. Production topped 3 million mt, getting closer to 3.5 million mt of capacity. Going forward, the company expects to add storage to address the seasonality of sales versus production, as well as debottlenecking its existing facilities.
Fourth-quarter Potash gross margins were $202 million on sales of $592 million, up from the year-ago $114 million and $496 million, respectively. The company cited higher prices and increased volumes. Volumes were 2.3 million mt, up from 2.2 million, and gross margins per mt were $88 versus $51.
Mosaic said it produced record volumes during the quarter and year, with a quarterly operating rate of 99 percent. Fourth-quarter MOP cash costs of production dropped to $72/mt from $87/mt.
O’Rourke told analysts that both global potash and phosphate demand/supply were expected to be in balance in 2019, with potash producers having to produce at record capacity in order to meet demand. He noted that while Mosaic, Belaruskali, and some ICL mines were at record production in 2018, other production came offline in the U.K. and Germany, with production decreased in Chile and flat in China.
As for the wet fall season in North America, he expects that at least 80 percent of the tonnage that was not applied in the fall will go down in the spring.
Fourth-quarter Mosaic Fertilizantes gross margins were $118 million on sales of $969 million, up from the year-ago $32 million and $520 million, respectively. Volumes were 2.1 million mt, up from 1.4 million mt, while gross margins per mt were $56, up from $23.
Mosaic reported that due to the complex and significant nature of the Vale acquisition it would need extra time to file its annual 10-K. It expects to file it within 15 days of the March 1 deadline.
Full-year net income was $470 million ($1.22 per share) on sales of $9.6 billion, up from 2017’s loss of $107.2 million ($0.31 per share) and $7.41 billion, respectively. Adjusted EBITDA was $2.03 billion, up from $1.21 billion.
Full-year Phosphate operating earnings were $415 million, up from 2017’s $192 million. Adjusted EBITDA was $872 million versus $555 million. Volumes were off, at 8.4 million mt from 9.5 million mt.
Full-year Potash operating earnings were $454 million, up from $281 million. Adjusted EBITDA was $805 million versus $581 million. Volumes were 8.8 million mt versus 8.6 million mt.
Full-year Mosaic Fertilizantes operating earnings were $227 million, up from 2017’s $63 million. Adjusted EBITDA was $410 million versus $73 million, with volumes up at 9.13 million mt from 6.02 million mt.
“Mosaic generated strong cash flow in 2018, and we expect another good year ahead,” he added. “The 100 percent targeted dividend increase we announced today exemplifies our positive outlook.”
Citing accelerated synergy capture in Brazil, the transformation of its phosphate business, and a successful ramping up of the Esterhazy K3 potash mine, Mosaic is projecting 2019 adjusted EBITDA of $2.2-$2.4 billion and adjusted EPS of $2.10-$2.50. It sees 2019 potash sales volumes at 9-9.4 million mt, phosphate at 8.6-9 million mt, and Mosaic Fertilizantes at 9.4-9.8 million mt.
First-quarter 2019 assumptions include potash volumes of 1.7-2 million mt with gross margins of $90-$100/mt, phosphates at 1.6-1.9 million mt and $40-$50/mt, and Mosaic Fertilizantes at 1.3-1.6 million mt and $40-$50/mt.