) profit for first-quarter 2014 slipped as it saw lower pricing
for phosphate and potash. The Minnesota-based fertilizer maker's
profits slid around 43% year over year to $217.5 million or 54
cents per share from $379.8 million or 89 cents a share a year
ago. Earnings per share also missed the Zacks Consensus Estimate
of 58 cents.
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Revenues fell roughly 14% year over year to $1,986.2 million, but
managed to beat the Zacks Consensus Estimate of $1,976 million.
Declines across phosphate and potash businesses dented the top
line in the quarter. Inclement weather also weighed on the
Mosaic's shares, which lost around 17% over a year, were down
Revenues from Mosaic's larger Phosphate segment slipped 16% year
over year to $1.3 billion in the quarter, hit by lower finished
product prices. Average selling price fell 16% to $414 per ton in
the quarter from $491 last year. The segment's gross margin fell
to $207 million from $253 million a year ago as lower pricing
more than offset a decline in raw material costs. Segment sales
volumes were flat year over year at 2.7 million tons.
Potash division's sales fell 11% year over year to $733 million
in the quarter as a 29% fall in prices more than offset higher
shipment volumes. Sales volumes rose to 2.4 million tons from 2
million tons in the year-ago quarter while selling price fell to
$267 per ton from $376 per ton a year ago. Gross margin slid to
$212 million from $397 million last year.
Mosaic exited the quarter with cash and cash equivalents of $2.5
billion, down 53% sequentially. Long-term debt was flat
sequentially at $3 billion at the end of the quarter. Mosaic's
capital expenditure was $275 million in the reported quarter.
Operating cash flow moved up 8% year over year to $627 million in
Mosaic bought back 36 million shares during the reported quarter.
The company has now repurchased or committed to buyback roughly
52 million shares, representing 12% of its outstanding shares at
the end of 2013.
Moving ahead, Mosaic envisions improving margins in its phosphate
business, stable pricing for potash and strong volumes for both
nutrients in the second quarter.
Mosaic sees sales volume for its phosphates business to be
between 3.1 and 3.4 million tons in the second quarter compared
with 2.9 million tons achieved a year ago. Average selling price
for the quarter is expected to be in the range of $430 to $460
per ton. The segment's gross margin for the quarter is expected
to be in the high teens. Operating rate is expected to be in the
mid 80% range.
Mosaic expects sales volume from its potash business in the range
of 2.2 to 2.5 million tons in the second quarter versus 2.4
million tons a year ago. Average selling price for the quarter is
expected in the range of $250 to $275 per ton. The segment's
gross margin is expected to be in the high 20% range. Operating
rate has been forecast in the mid-80% range.
Mosaic, in Mar 2014, completed its takeover of
) phosphate business for $1.4 billion. The acquisition will bring
Mosaic's annual phosphates capacity to roughly 11.5 million tons
and provide meaningful operational synergies.
Moreover, the recently announced acquisition of
) fertilizer distribution business is expected to accelerate
Mosaic's existing growth plans in Brazil and expand its annual
distribution capability in one of the world's rapidly growing
Mosaic also progressed with its phosphate joint venture project
in Saudi Arabia with construction started in the reported
quarter. The company expects capital expenditure, including the
Saudi Arabia project, to be in the band of $1.2 billion to $1.4
billion for 2014.
Mosaic is a Zacks Rank #3 (Hold) stock.
A better-ranked stock in the fertilizer space is
CVR Partners, LP
), sporting a Zacks Rank #1 (Strong Buy).