05 November 2013 22:16 [Source: ICIS news]
HOUSTON (ICIS)--Mosaic has decided to sell its operations in Argentina and Chile because the company was not seeing the level of returns to support its investment in the South American countries, the fertilizer producer said on Tuesday.
Speaking during the company’s Q3 earnings conference call, Mosaic officials for the first time since last week’s announcement discussed the company’s decision to divest its phosphate fertilizer facility in Argentina and its distribution operations in Chile.
Mosaic CEO Jim Prokopanko said the company’s strategy was no longer compatible with the market realities, and therefore, the best decision was to seek out a buyer for its assets in both nations.
Analysts have noted that overall, there has been lackluster growth in sales volumes for Mosaic, despite the company’s annual report dated on 31 May that showed the producer had earned $258.3m (€191.1m) in net sales in Argentina and $116.5 in Chile.
“We intend to sell our assets in Argentina and Chile and exit our distribution business there. Our business model simply did not match with the markets’ demand, which is primarily a barter market and our profitability was not sufficient to justify continued investment,” said Prokopanko.
Mosaic Chief Financial Officer Larry Stranghoener said the majority of company assets in both locations are in the form of inventory and that with the crop season underway the values of those products are at the peak pricing period.
“It’s their prime season right now so inventory values are quite high. The SSP [single super phosphate] plant is a relatively small part of the asset value but could be in fact the most attractive asset we have for sale,” said Stranghoener.
($1 = €0.74)
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