All Posts from May 4, 2016

Mosaic 1Q aided by currency, tax benefits

The Mosaic Co. today reported first quarter 2016 net earnings of $257 million, down from $295 million in the first quarter of 2015. Earnings per diluted share were $0.73 and included a positive impact of $0.59 from notable items, primarily related to currency and tax benefits. Mosaic’s net sales in the first quarter of 2016 were $1.7 billion, down from $2.1 billion last year, reflecting lower prices as well as lower potash sales volumes. Operating earnings during the quarter were $163 million, down from $319 million a year ago, as the lower net sales were partially mitigated by lower potash and phosphate production costs and benefits of continued expense management initiatives.

“We are seeing the benefits of the actions we’ve taken to weather this down part of the cycle,” said Joc O’Rourke, president and CEO. “While we expect profitability to improve in the second half of the year, we are making further adjustments to ensure Mosaic remains competitive in any environment.”

Cash flow provided by operating activities in the first quarter of 2016 was $266 million compared to $729 million in the prior year.

“Mosaic is focused on optimizing cash flow by reducing operating and support function costs and moderating capital spending,” said Rich Mack, Mosaic’s executive vice president and CFO. “At the same time, our prudent balance sheet management is allowing us to manage effectively through the bottom of the cycle and seek new opportunities for future growth.”

“While the outlook for the first half of 2016 is muted, we see stronger markets and anticipate better results in the second half,” O’Rourke said. “We expect improved profitability to be driven by lower raw material costs, combined with an acceleration in shipment volumes in both phosphate and potash driving up operating rates and margins. We believe our efforts to lower costs and reduce capital spending will further enhance our profitability and cash flow.”

Total sales volumes for the Phosphates segment are expected to range from 2.3 to 2.6 million mt for the second quarter of 2016, compared to 2.8 million mt last year. Mosaic’s realized DAP price, FOB plant, is estimated to range from $335 to $355 per mt for the second quarter of 2016.

Total sales volumes for the Potash segment are expected to range from 1.9 to 2.2 million mt for the second quarter of 2016, compared to 2.3 million mt last year. Mosaic’s realized MOP price, FOB plant, is estimated to range from $180 to $200 per mt.

Total sales volumes for the International Distribution segment are expected to range from 1.4 to 1.6 million mt for the second quarter of 2016, compared to 1.5 million mt last year.

Phosphates sales volumes for the full year are expected to range from 9 to 9.75 million mt. The Potash sales volumes range is now seen as 7.5 to 8.0 million mt, down from a range of 7.5 to 8.5 million mt.

Agrium 1Q income off on weaker prices

Agrium Inc. has announced first-quarter earnings results, with net earnings attributable to equity holders of Agrium of $2 million ($0.02 diluted earnings per share) compared to $12 million ($0.08 per share) in the first quarter of 2015. The reduction in net earnings was driven by weaker selling prices across all nutrients.

Agrium said this was largely offset by excellent results achieved from the Retail operations where gross profit was up at $402 million from the year-ago $371 million, as well as strong Wholesale operational performance though gross profits were off at $153 million from $234 million.

Company-wide revenues were $2.72 billion, down from $2.87 billion. Retail was up at $2.29 billion from $2.26 billion, while Wholesale was off at $649 million from $867 million.

“Agrium’s first quarter results once again highlight the resilience of our business model,” said Chuck Magro, Agrium’s president and CEO. “Our Retail business achieved impressive first quarter EBITDA, with strong margins across all major product lines. Our Wholesale business unit continued to demonstrate excellent operating performance and capitalized on our extensive competitive advantages.

Agrium expects to achieve annual diluted earnings per share of $5.25 to $6.25 in 2016 compared to previous estimate of $5.50 to $7.00. It has lowered the guidance range due to a challenging pricing environment for all nutrients and expectations for a stronger Canadian dollar, partially offset by lower natural gas costs and continued strong performance by the Retail business. It is issuing earnings guidance of $4.00 to $4.30 diluted earnings per share for the first half of 2016.

It has reduced its estimate of annual potash production to 2.3 to 2.4 million mt.

Retail crop nutrient sales mt for 2016 are now expected to be from 9.8 million to 10.3 million mt. The slight widening of the range from the previous estimate is due to a forecasted increase in U.S. planted corn acres.