Mosaic (MOS) Misses Q3 Views; Invests in Bayovar Phosphate Project

April 1, 2010 6:45 AM EDT
Mosaic Co. (NYSE: MOS) reports Q3 EPS of $0.50, which includes items and may not compare to the analyst estimate of $0.63. Revenue for the quarter was $1.73 billion, which compares to the estimate of $1.81 billion.

UPDATE: Click here to see some highlights from Mosaic's Q3 results.

Separately, Mosaic entered into an agreement with Vale S.A. and Mitsui & Co., Ltd. related to a proposed joint venture that will own the Bayovar phosphate rock mine being constructed by Vale in Peru. Terms of the agreement include a 35 percent economic interest in the Bayovar phosphate rock mine along with a commercial offtake supply agreement that would give Mosaic the right to purchase 35 percent of the phosphate rock produced from the Bayovar mine. The Bayovar rock will be used in Mosaic's global phosphate operations. Total consideration to be paid by Mosaic to Vale for its stake in the joint venture will be $385 million.

Total phosphate sales volumes were 2.5 million tonnes, up 52 percent compared to last year, and the average diammonium phosphate (DAP) selling price was $336 per tonne. Potash sales volumes rebounded from a year ago to 1.9 million tonnes and the average muriate of potash (MOP) selling price was $356 per tonne.

Commenting on its outlook, the company stated "This quarter, the global phosphate market continued its recovery. DAP prices have increased significantly from the lows of the past few quarters and North American producer inventories remain lean and well below the three-year average. Customers have met the rapid price increases for phosphates during the quarter with some caution and margin expansion may be constrained by higher raw material costs.

The potash market showed significant improvement over the weak sales volumes of both the year ago quarter and the prior quarter. North American producer inventories have fallen since November 2009 and are now below the three-year average. In addition, several key international contracts provide an indication that MOP prices have stabilized. North American dealers are increasingly willing to purchase potash in anticipation of spring planting."

Total sales volumes for the Phosphates segment will be modestly constrained by low inventory levels and are expected to range from 2.4 to 2.8 million tonnes for the fourth quarter of fiscal 2010. Mosaic's realized DAP price, FOB plant, for the fourth quarter of fiscal 2010 is estimated to be $420 to $460 per tonne.

Total sales volumes for the Potash segment are expected to range from 1.9 to 2.3 million tonnes for the fourth quarter of fiscal 2010. Mosaic's realized MOP price, FOB plant, for the fourth quarter of fiscal 2010 is estimated to be $325 to $365 per tonne.

Capital spending for fiscal 2010 is expected to range from $0.9 billion to $1.0 billion, slightly lower than previously estimated.

Selling, general and administrative expenses are estimated to range from $330 million to $350 million in fiscal 2010, lower than previously estimated, and the effective income tax rate is estimated to approximate 30% for the year.

You May Also Be Interested In





Related Categories

Earnings, Guidance, Mergers and Acquisitions

Related Entities

Raising Prices