August 4, 2015 / 12:00 PM / 3 years ago

UPDATE 2-Fertilizer maker Mosaic beats quarterly profit estimates

(Adds interview with incoming CEO)

By Shubhankar Chakravorty and Rod Nickel

Aug 4 (Reuters) - U.S. fertilizer company Mosaic Co reported a much higher-than-expected quarterly profit on Tuesday, helped by strong phosphates sales and improved potash prices.

Mosaic’s shares rose 2.8 percent to $43.96 in New York.

Second-quarter net earnings climbed 57 percent to $390.6 million, or $1.08 per share.

On an adjusted basis, Mosaic, the world’s largest producer of finished phosphate products, earned $1.05 per share, above the average analyst estimate of 89 cents, according to Thomson Reuters I/B/E/S.

Net sales rose 2 percent to $2.5 billion, in line with expectations.

Joc O’Rourke, currently chief operating officer, takes over as chief executive on Wednesday, succeeding Jim Prokopanko. The move completes the changing of the guard at North America’s biggest fertilizer companies, following Potash Corp of Saskatchewan, Agrium Inc and CF Industries .

O’Rourke, 54, said in an interview that the company will keep its capital priorities of first sustaining existing businesses, followed by maintaining its dividend and growing internally; acquisition opportunities; and returning cash to shareholders.

Opportunities to buy potash companies may become more scarce if Potash Corp succeeds in buying K+S, O’Rourke said.

“The (potash) industry is reasonably concentrated and a lot of M&A-type growth is going to be difficult, and particularly if this next move by our one competitor is done,” he said.

Potash Corp said last week that if it acquires K+S, it hopes to export potash from the German miner’s Western Canada mine through Canpotex, its sales partnership with Mosaic and Agrium.

Prokopanko said Mosaic would not object.

Mosaic said its joint venture to produce phosphate in Saudi Arabia with Ma’aden will cost $500 million more to build than expected, for a total of $8 billion.

Phosphates sales rose 8 percent to 2.8 million tonnes in the second quarter, while the average realized diammonium phosphate price fell 3.2 percent to $450 per tonne.

Mosaic expects to sell 2.1 million to 2.4 million tonnes of phosphates at $435-$455 per tonne in the current quarter.

North America’s second-biggest potash producer said second-quarter potash sales fell 8 percent to 2.3 million tonnes from a year earlier, while the average realized potash price rose 5 percent to $280 per tonne.

Mosaic expects to sell 1.6 million to 2.0 million tonnes of potash at an average $260-$280 per tonne in the third quarter.

Mosaic narrowed its 2015 phosphate sales forecast to 9.5 million to 10 million tonnes from 9 million to 10 million.

The company cut its potash sales forecast for the year to 8.2 million to 8.6 million tonnes from 8.5 million to 9.0 million. (Reporting by Rod Nickel in Winnipeg, Manitoba and Shubhankar Chakravorty in Bengaluru; Editing by Maju Samuel and Phil Berlowitz)

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