January 5, 2010 / 11:55 PM / in 8 years

UPDATE 3-Mosaic profit misses Street view, sees upturn

* Q2 net profit 24 cents/share

* Q2 revenue down 43 percent to $1.7 billion

* Shares drop 1.4 percent in post-market trading (Adds details on sales, updates share price)

NEW YORK, Jan 5 (Reuters) - Fertilizer producer Mosaic Co (MOS.N) posted slightly lower-than-expected quarterly earnings on Tuesday, hurt by currency losses, and said steady improvements in the global economy would revive the agricultural markets.

Fertilizer companies have suffered in the past year as farmers cut purchases in the face of lower crop prices, but Mosaic expects demand to rebound in the coming months, especially in Asia, where population increases and rising incomes were boosting the need for crop nutrients.

Still, the company shied away from forecasting potash sales volumes for the coming months when North American farmers begin to make their purchases.

“They’re trying to put the best spin on it as possible, but the fact that they can’t make any guidance on potash is surprising,” said, Charles Neivert, an analyst at Dahlman Rose & Co.

For the fiscal second quarter ended Nov. 30, the company posted net income of $107.8 million, or 24 cents per share, compared with $959.8 million, or $2.15 per share, in the year-ago quarter when the company recorded a $673 million gain from an asset sale.

Excluding write-offs for some assets, earnings for the quarter were 32 cents per share, below the 35 cents per share that analysts on average had forecast, according to Thomson Reuters I/B/E/S estimates.

Foreign currency transaction losses were $22.6 million, or 4 cents per share, as the U.S. dollar declined compared with the Canadian dollar, the company said.

CHINA POTASH QUESTIONS

Mosaic did not provide a forecast for potash sales, but said the market had begun to gain “traction” following the contracts signed by China for European potash supplies at $350 per tonne.

“In addition, recent increased potash application rates in the Americas driven by nutrient depleted soils and strong grain and oilseed prices bodes well for improved market demand for potash during calendar 2010,” Mosaic said in a statement.

Along with Potash Corp (POT.TO) and Agrium Inc (AGU.TO), Mosaic is a part of Canpotex, the world’s largest potash exporter. That group has not yet set its own contracts for sales to China.

“They’re obviously in negotiations with China ... and there’s got to a be level of uncertainty about how much China is going to take,” said Neivert, who estimated Mosaic contributed about 38 percent of Canpotex’s potash.

Mosaic will conduct a conference call with analysts on Wednesday.

Overall net sales for the quarter fell 43 percent to $1.7 billion from a year earlier, but were largely in line with analysts’ forecasts.

Mosaic’s potash sales rose 30 percent from the first fiscal quarter to 1 million tonnes, at an average price of $370 per tonne, but were well below the year-ago quarter’s sales of 1.7 million tonnes.

Phosphate sales rose 15 percent from the first quarter to 3.3 million tonnes at an average price of $287 per tonne.

Sales of phosphate in the fiscal third quarter are estimated to be 2.2 million to 2.6 million tonnes, at a prices of $310 to $350 per tonne.

Mosaic shares, which gained 2.3 percent during the regular session, slipped 10 cents, or less than 1 percent, to $63.05 after the earnings report. (Reporting by Matt Daily; editing by Carol Bishopric, Richard Chang and Andre Grenon)

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