The Mosaic Co. net earnings attributable to Mosaic were off 22 percent during its fourth quarter ending May 31, 2012, to $507 million ($1.19 per diluted share) on sales of $2.82 billion, compared to the year-ago $649 million ($1.45 per share) on sales of $2.86 billion. The year-over-year decline was primarily driven by lower phosphate pricing.
Gross margins were $833.8 million, down from the year-ago $995.2 million, while operating earnings were $670.8 million, down from $824.9 million.
Despite the earnings drop, Mosaic exceeded its own guidance for the quarter and continues to pump out so much cash it is boosting dividends.
"We completed a fiscal year of significant accomplishments with a strong fourth quarter," said Jim Prokopanko, Mosaic president and CEO. "The extended spring season in North America, along with continuing strong demand for our products in Central and South America, led to solid financial results for the quarter. Despite challenging market conditions for much of the fiscal year, Mosaic made great progress. We improved our operating efficiency in both Potash and Phosphates, made substantial headway on our potash expansion projects, set new records for premium product sales and cash from operations, and, most important, our people delivered our best safety performance ever."
Fourth-quarter cash flow was $1.2 billion, compared to $973 million in the prior year. The year-over-year improvement was primarily driven by decreased North American phosphate inventory and increased customer prepayments.
"Our business continues to generate substantial cash," Prokopanko said. "While we remain committed to our multi-year, multi-billion-dollar investments for growth, we also have the ability to return capital to our shareholders through dividends and future share repurchases. Today we announced that we will double our annual dividend, to $1.00 per share; in fact, our dividend will have increased 400 percent since February of this year. This decision reflects our confidence in our ability to generate strong results over the long term, as well as our commitment to delivering tangible shareholder value."
Fourth-quarter Phosphate operating earnings were $224.1 million on sales of $1.79 million, down from the year-ago $369.9 million on sales of $1.88 million. The fourth-quarter average DAP selling price FOB plant was $494/mt, compared to $574/mt a year ago. Phosphates segment total sales volumes were 2.9 million mt, compared to 2.84 million mt a year ago. Mosaic’s North American finished phosphate production was 2.1 million mt, or 86 percent of operational capacity, flat with the same period a year ago. Curtailments early in the quarter were offset by subsequent high operating rates as the market tightened through the 2012 quarter.
Ammonia was down at $417/mt from the year-ago $476/mt, while sulfur was up slightly at $200/lt from $197/lt.
"Our Phosphates business ended the year on a strong note, with robust shipments worldwide," Prokopanko said. "The phosphate market has tightened, as producer inventories dropped dramatically with global demand more than offsetting lower sales to India. While ammonia prices have increased, we expect these cost increases to be offset by higher finished product prices. As a result, we expect the gross margin percentage in the first quarter of 2013 to remain essentially unchanged from the prior quarter. Increased production at the South Fort Meade mine should benefit our rock costs later in the year."
Fourth-quarter Potash operating earnings were $463.6 million on sales of $1.04 billion, down from the year-ago $469.2 million on sales of $982.4 million. Mosaic estimates sales volumes in the quarter were negatively impacted by approximately 100,000 mt resulting from the now resolved Canadian rail strike in May.
The fourth-quarter a