JP Morgan lowers US Mosaic earnings on phosphate

06 October 2008 17:24  [Source: ICIS news]

HOUSTON (ICIS news)--JP Morgan reduced on Monday its 2009 earnings estimate for US fertilizer producer Mosaic due to an expected drop in phosphate production and margins.

JP Morgan now expects Mosaic to reported 2009 earnings of $10.60/share (€7.74/share), down from an earlier estimate of $13/share, according to a research note by David Silver.

JP Morgan lowered its 2010 forecast to $12.40/share from $14.50/share, Silver said.

The firm lowered Mosaic's estimates after the company said it would likely lower 2009 phosphate production to 8m-9m tons (7m-8m tonnes), down from 9.0m-9.4m tons. Mosaic is lowering production because of high inventories.

In addition, phosphate margins will likely drop by $155/tonne, Silver said.

However, the weakness in the phosphate market is temporary, Silver said. Prices should bottom out within two months before rebounding due to autumn demand.

Potash markets have remained mostly stable, Silver said. However, China will likely negotiate harder during the upcoming contract discussions.

Overall, the recent sell off in Mosaic's stock overstates the company's weakness and underestimates its assets, Silver said. Mosaic's stock price has fallen by 75% since reaching its peak in mid-June.

Mosaic shares fell with the general market on Monday. As of 9:53 hours Houston time (14:53 GMT), Mosaic shares were trading on the New York Stock Exchange at $33.66, down 17.66%.

($1 = €0.73)

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By: Al Greenwood
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