The Mosaic Company reported fourth quarter fiscal 2012 net earnings of $507 million, compared to $649 million a year ago. Earnings per diluted share were $1.19 in the quarter compared to $1.45 last year. The year-over-year decline was primarily driven by lower phosphate pricing.
Mosaic’s net sales in the fourth quarter of fiscal 2012 were $2.8 billion, roughly flat with the same period last year, as growth in realized potash prices was offset by lower prices in phosphates.
“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.”
Mosaic’s gross margin for the fourth quarter was $834 million, or 30 percent of net sales, compared to $995 million, or 35 percent of net sales, a year ago. Fourth-quarter operating earnings were $671 million, a decrease of 19 percent compared to $825 million a year ago. The decreases in gross margin and operating earnings were primarily driven by lower phosphate pricing.
Cash flow provided by operating activities in the fourth quarter of fiscal 2012 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. Capital expenditures totaled $449 million in the quarter. Mosaic’s total cash and cash equivalents were $3.8 billion and long-term debt was $1.0 billion as of May 31, 2012.
Net sales in the Phosphates segment were $1.8 billion for the fourth quarter, down 5 percent compared to last year. Gross margin was $322 million, or 18 percent of net sales, compared to $479 million, or 25 percent of net sales, for the same period a year ago. The decline in net sales and gross margin was attributed to lower finished goods pricing. Operating earnings for the segment were $224 million for the quarter, down 39 percent compared to $370 million last year.
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 2.8 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.
“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.”
Net sales in the Potash segment totaled $1 billion for the fourth quarter, up six percent compared to $982 million a year ago, as higher realized prices were partially offset by a small decline in sales volume. Mosaic estimates sales volumes in the quarter were negatively impacted by approximately 100,000 mt