April 4, 2008 / 1:52 PM / 10 years ago

UPDATE 2-Mosaic 3rd-qtr profit skyrockets; shares soar

(Adds details on results, background)

NEW YORK, April 4 (Reuters) - Crop nutrient producer Mosaic Co (MOS.N) said on Friday that quarterly earnings soared on increased worldwide demand and prices for phosphates and potash, sending shares up 11 percent.

Mosaic along with its peers have benefited in recent months from a global boom in the agricultural sector, spurred by increased food demand from developing countries and a sharp increase in corn-based ethanol production in the United States.

Net income jumped to $520.8 million, or $1.17 a share, in the third quarter ended Feb. 29, from $42.2 million, or 10 cents a share, a year ago.

Excluding items, the company earned 99 cents a share, ahead of Wall Street expectations of 95 cents.

Revenue jumped 68 percent to $2.15 billion, as the average third-quarter price for diammonium phosphate, which is used as a fertilizer, rose $241 per tonne from a year ago, while that of muriate of potash, an ingredient for fertilizer, climbed $70 per tonne.

Analysts, on average, had looked for revenues of $1.99 billion, according to Reuters Estimates.

“We are bullish on the fundamental drivers of our sector and see this momentum continuing,” said Chief Executive Jim Prokopanko, in a statement.

Shares of Mosaic advanced $11.38 to $115.90 on the New York Stock Exchange.

Mosaic also unveiled a long-term potash capacity expansion plan in Saskatchewan, Canada, in response to robust global demand for the crop nutrient.

Mosaic said the new expansions, together with ones announced in May 2007, are expected to increase its annual potash capacity by about 5.1 million metric tonnes.

Last month, Canpotex, which handles potash exports from the Saskatchewan region for Potash Corp POT.TOPOT.N, Agrium Inc AGU.TOAGU.N and Mosaic, signed a deal to supply Indian customers with potash for $625 per tonne. The 2008 contract price is more than double the year-ago price.

Russian exporters also recently signed a potash export agreement with India at the same price.

The huge potash price increase puts pressure on China, which is still negotiating its 2008 contracts with both North American and Russian exporters.

Indian customers typically negotiate yearly deals after China, the world’s largest volume importer, signs its annual contract. Chinese firms normally buy at a discount to prices paid by importers in other markets like Brazil and Southeast Asia.

But tight world potash supplies, combined with pressures to control food inflation this year, have prompted India to leapfrog ahead of China to secure annual supplies with Canpotex and Belarussian Potash Co, which trades for Uralkali (URKA.MM) and Belaruskali.

Mosaic said its potash capacity expansions would give the company total annual capacity of about 15.5 million tonnes.

The expansion is expected over the next twelve years, with the first expanded production coming on line in 2009.

“We are positioned to bring on what we believe is the lowest cost incremental capacity in the industry,” said Prokopanko, “while maintaining the flexibility to moderate the timing of these expansions as demand materializes.” (Reporting by Euan Rocha; Editing by Dave Zimmerman/Jeffrey Benkoe)

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