The Mosaic Co. on May 7 reported first-quarter net earnings of $42 million on sales of $1.9 billion, compared with the year-ago net loss of $900,000 on sales of $1.58 billion. Mosaic attributed the net sales increase primarily to its acquisition of Vale Fertilizantes, which closed on Jan. 8 (GM Jan. 12, p. 1). Operating earnings for the quarter were $81 million, up from $30 million a year ago, driven by higher gross margins in all three operating segments
First-quarter earnings per share (EPS) was $0.11, which included a negative impact of $0.09 per share from notable items primarily related to non-cash currency translation charges and costs related to the Vale Fertilizantes acquisition, partially offset by discrete tax items. Adjusted EPS for the quarter of $0.20 was negatively impacted by the late spring and other weather issues. Mosaic also cited “underperformance of Canadian rail providers,” which the company said negatively impacted phosphate and potash sales volumes and unit costs, and was the primary driver of an approximately $290 million increase in working capital.
Net sales in the Phosphates segment were $866 million for the quarter, up from $839 million last year, with higher average sales prices partially offset by lower sales volumes due to the delayed spring and logistical challenges. Gross margin for the segment was $97 million and included a negative $15 million notable item due to refinement of the company’s weighted average inventory costing, compared with $57 million in last year’s first quarter. Mosaic said the gross margin improvement was driven by higher average sales prices and operational improvements, partially offset by higher ammonia and sulfur costs.
The first-quarter average finished product selling price for the Phosphates segment was $431/mt, compared with $369/mt last year, while total finished product sales volumes were 1.9 million mt, down from 2.3 million mt last year. Mosaic attributed the sales volume decline to the idling of its Plant City, Fla., concentrates facility in December and delayed planting in North America.
Net sales in the Potash segment totaled $404 million for the quarter, down from $414 million last year. While the segment posted higher average sales prices, which helped push gross margins to $102 million from the year-ago $69 million, Mosaic said this was more than offset by reduced sales volumes due to a change in the Canpotex revenue recognition policy and logistical challenges during the quarter. The gross margin total included a negative $5 million notable item due to weighted average inventory costing.
The first-quarter average selling price for the Potash segment was $239/mt, up from $210/mt last year, while total sales volumes for the quarter fell to 1.7 million mt from last year’s 2.0 million mt due to the change in Canpotex’s revenue recognition policy. MOP cash costs, including brine management costs, were $86/mt for the quarter, flat with last year despite a negative impact from logistics-related product containment issues during the quarter.
The Mosaic Fertilizantes segment posted net sales of $665 million for the quarter, up from $427 million last year. Gross margin was $59 million, compared with $18 million in last year’s first quarter. The first-quarter average finished product selling price for the segment was $420/mt, compared with $375/mt a last year, while total finished product sales volumes came in at 1.6 million mt for the quarter, up from 1.1 million mt last year.
For calendar 2018, Mosaic said it now expects $1.20-$1.60 in adjusted earnings per share, with full-year finished product sales volumes coming in at 8.2-9.0 million mt for both potash and phosphates, and 9.2-10 million mt for Mosaic Fertilizantes.
