MOS 2009 Q3 Earnings - by Better Trades

In a report released after the closing bell on Tuesday April 7, the world's leading producers and marketers of concentrated phosphate and potash crop nutrients, Mosaic Co. (MOS) made it known that the company's profits for the 3rd quarter tumbled excessively as weakened sales figures weighed heavily on the bottom-line.

Coming in well below analysts' expectations, Mosaic recorded net income for the quarter of $58.8M, or $0.13 per share, in sharp contrast to the previous year's 3rd quarter net income of $520.8M, or $1.17 per share, a drop in earnings of nearly 89%.

Results were affected by the company's lack of sales, lower production volumes, decreased phosphate selling prices and higher raw material costs. During the period, overall sales for the company slipped from $2.147B to $1.376B, a decline in revenues of almost 36% year-over-year.

On average, analysts were anticipating the fertilizer maker to post quarterly earnings of $0.24 per share on total revenues of $1.89B.

"Despite the turmoil in commodity markets, we remain confident that long-term agricultural fundamentals are excellent. This is a self-correcting cycle because demand for crop nutrients can only be deferred for so long," stated Jim Prokopanko, Mosaic's president and CEO.

Prokopanko went on to add, "Large crops are still required to secure the world's food supply and crop nutrients will play an essential role in achieving that objective. We are well positioned financially and strategically to serve our customers and create value for our shareholders."

Glancing further into the company's report, Mosaic recorded a lower gross margin for the quarter, posting 10% of net sales, or $140.3M, compared to last year's gross margin of 34%, or $727.9M, of net sales. Mosaic contributes the overall declines in financial data to a change in buyer sentiment influenced by lower grain prices, a build-up of inventories in the distribution supply chains, and the global economic slowdown.

Within the company's segmented businesses, potash sales slipped more than 12% over last year's results, falling from $547.3M to $480.8M, as overall sales volume of potash dropped to 0.8M tons, versus last year's sales of 2.1M tons.

Inside the phosphate segment, Mosaic saw a 50% fall-off in sales year-over-year, from $1.258B to $552.4M, as volume dropped from 2.2M tons to 1.1M tons. Phosphates also recorded an operating loss for the quarter of $123.9M, in contrast to a profit the year prior of $442.7M. Results were once again affected by higher raw material costs and lower selling prices.

Through the first nine months of the company's fiscal year, Mosaic has posted net income of $2.203B, or $4.94 per share, up nearly 81% from last year's nine-month tally of $1.22B, or $2.74 per share. Year-to-date sales have also advanced, increasing from $6.346B to $8.705B, a jump of more than 37%.

Looking ahead to the company's upcoming 4th quarter, Mosaic is projecting phosphate sales volumes to come in higher than 3rd quarter results. However, they predict that results will come in below the previous year's totals in sales volume. As for potash, the company remains concerned about weakening demand and sales volumes and should be comparable with 3rd quarter results.

Tuesday's trading session saw shares of MOS drop more than 4% by the day's close. In after hours trading, Mosaic stock traded down nearly 6%. By the close of Wednesday's trading, MOS shares were trading higher, adding 6.2%, or $2.67, to close at $45.61 per share.

Over the past year, Mosaic shares have traded as low as $21.94 per share, back in November, and as high as $163.25 per share, reached back in mid-June of 2008.

By Better Trades