UPDATE 2-Mosaic looks for bargain buys as fertilizer sector slumps

Thu Feb 11, 2016 10:47am EST
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(Recasts with M&A interest, spike in stock)

By Kanika Sikka and Rod Nickel

Feb 11 (Reuters) - U.S. fertilizer company Mosaic Co , grappling with falling prices and profits, is looking for acquisitions that could be bargain-priced in a weak commodity sector.

The world's largest producer of finished phosphate products on Thursday forecast lower selling prices for potash and phosphate in the current quarter. The Plymouth, Minnesota-based company also reported fourth-quarter profit that fell less than expected, and announced a $75 million share repurchase program.

Its shares jumped nearly 5 percent in early trading on the New York Stock Exchange.

Chief Executive Joc O'Rourke said the company is interested in acquisitions related to either potash or phosphate, but would weigh any opportunities against the benefits of further repurchases of its stock, which has fallen about 50 percent over the past year.

"The down parts of the (commodity) cycle do present opportunities," Chief Financial Officer Rich Mack said on a call with analysts. "If there is something that is extraordinarily compelling, it's something that we could act on."

Fertilizer producers' profits have been hit by falling prices, largely due to weak currencies in countries such as Brazil and low grain prices. Falling currency values against the U.S. dollar have lowered production costs 17 percent in Canada, where Mosaic's largest potash mines are located, but the savings amount to 41 percent in Belarus, where potash rival Belaruskali operates, Mosaic said.

It expects phosphate prices to fall as much as 14.6 percent to $350 per tonne in the current quarter and potash prices to fall as much as 21 percent.   Continued...