Mosaic's profits rise in Q2, production cuts coming in Q3

05 January 2009 23:21  [Source: ICIS news]

HOUSTON (ICIS news)--Mosaic said on Monday that its earnings more than doubled during its fiscal second quarter of 2009 year-over-year, but the US fertilizer producer anticipates a weaker third quarter with production cuts on the horizon.

Net earnings for the company's second quarter, which ended 30 November 2008, were $959.8m (€691.1m).

Mosaic's earnings for the same quarter a year earlier were 58.9% less at $394.0m.

Mosaic's president and CEO Jim Prokopanko said earnings shot up last quarter due to "higher realised selling prices", but poor performance at the tail end of the quarter foreshadowed what he expects during its third quarter.

"Toward the end of the quarter, however, worldwide crop nutrient sales activity dropped sharply, and it is expected to remain weak through at least the third quarter," he said.

"Because of these conditions, we are reducing our production to manage excess inventories, reducing capital expenditures and working to maintain financial strength and flexibility."

Significant cutbacks will come specifically in potash and phosphate production, the two areas where Mosaic saw its best results.

Potash operating earnings more than tripled in the second quarter, and the average second-quarter DAP selling price was $1,083/tonne FOB, up $70/tonne compared with the first quarter of fiscal 2009, the company said.

Mosaic forecast in a December earnings preview that its second-quarter profits would be lower on declining sales, yet on Monday it said net sales in the second quarter increased $811.1m – or 36.9% – to $3.0bn year-over-year.

The company said also said in December it would curtail phosphate output by up to 1m tonnes during the rest of the 2009 fiscal year.

Mosaic's earnings disclosure came after the close of the New York Stock Exchange, where its stock rose 2.2% on Monday to $37.67.

The share price is substantially down from its 52-week peak of $163.25/share in June 2008.

($1 = €0.72)

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By: Ryan Hickman
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