Specialty chemicals player
The Mosaic Company
) posted forecast-topping numbers in the fourth quarter of fiscal
2012, raised dividend and its shares gained 5.13%.
The company's profits plunged almost 22% year over year to
$507.3 million ($1.19 per share) due to lower phosphate pricing. On
an adjusted basis (excluding one-time items), Mosaic's earnings of
$1.25 per share surpassed the Zacks Consensus Estimate of
For the full year, Mosaic's earnings came in at $4.42 per share,
as against $5.62 a year ago. Adjusted earnings of $4.50 per share
also came in ahead of the Zacks Consensus Estimate of $4.46.
Revenues in the quarter came in at $2,820.5 million, slightly
down from last year but ahead of the Zacks Consensus Estimate of
$2,577 million. For fiscal 2012, revenues jumped 12% year over year
to $11,107.8 million, beating the Zacks Consensus Estimate of
Mosaic's phosphate business generated revenues of $1.8 billion in
the quarter, 5% lower than last year. The decline was a result of
lower phosphate prices, which fell to $494 per ton in the fourth
quarter from $574 last year. As a result, the segment's gross
margin fell to 18% from 25% last year. The segment sales volumes
were 2.9 million tons in the quarter, marginally up from 2.8
million tons last year.
Mosaic expects its phosphates business to sell 2.5 to 2.8 million
tons in the first quarter of fiscal 2013. The company also expects
an improvement in average selling price, which is expected to be in
the range of $510 to $535 per ton. However, it expects the
segment's gross margin to remain flat in the first quarter on the
back of an increase in the price of ammonia and a shift in product
mix towards more blends due to seasonality.
The company's potash business turned in a strong performance in the
quarter, as revenues rose 6% from last year to $1 billion. Although
sales volumes in the fourth quarter declined to 2 million tons from
2.2 million tons in the year-ago period, a bump in average selling
prices enabled the segment to post a jump in revenues.
The segment's sales were hindered to the tune of 100,000 tons
due to a Canadian rail strike, but an increase in the average
selling price to $455 per ton from $404 a year ago cushioned the
decline in sales volumes. However, higher costs and lower operating
rates led to a decline in the gross margin, which fell to 59% from
63% last year.
Mosaic expects sales from the potash segment to be in the range of
1.8 to 2.2 million tons in the first quarter. However, it expects
the average price to drop in the range of $415 to $440 per ton due
to seasonal price declines in North America and an increase in
Mosaic generated $1.2 billion of cash from operations in the
fourth quarter, up from $973 million last year. The increase was
driven by a decrease in North American phosphate inventory and a
jump in customer prepayments. Cash and cash equivalents were $3.8
billion as on May 31, 2012, slightly down from $3.9 billion as on
May 31, 2011.
Mosaic's capital expenditure in the quarter was $449 million.
The company is also progressing steadily on its brownfield potash
expansion plans at the three mines in Saskatchewan, Canada. Mosaic
expects to spend $1.5 to $1.8 billion in fiscal 2013 on these
projects as well as on measures that will improve operating
Prompted by the strong liquidity position, Mosaic's Board has
decided to double the annual dividend to $1 per share. The increase
in dividend will be implemented with the next regularly declared
dividend on July 19, 2012.
Mosaic, which competes with
Potash Corp. of Saskatchewan, Inc.
), currently holds a Zacks #3 Rank, which translates into a
short-term (1 to 3 months) Hold rating.
MOSAIC CO/THE (MOS): Free Stock Analysis Report
POTASH SASK (POT): Free Stock Analysis Report
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