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Last Update: 02-Oct-12 09:11 ET
Mosaic shares fall 3% following miss on earnings
Mosaic (MOS $56.12 -1.89) reported first quarter earnings of $1.01 per share, including $0.02 in unfavorable items, $0.15 worse than the Capital IQ consensus of $1.16, while revenues fell 18.7% year/year to $2.5 billion versus the $2.68 billion consensus. Mosaic's gross margin for Q1 was $747 million, or 30 percent of net sales, compared to $848 mln, or 28 percent of net sales, a year ago. Q1 operating earnings were $610 million, a decrease of 16 percent compared to $730 million a year ago. The decreases in gross margin and operating earnings were primarily driven by lower phosphate net sales. "During the quarter our production was impacted by longer annual maintenance shut-downs and challenges posed by hurricanes, and our sales were further impacted by low beginning inventories and low Mississippi River levels. As a result, demand for our products outpaced our ability to produce and deliver; we expect better execution in the quarters ahead." Guidance: Total sales volumes for the Potash segment are expected to range from 1.6 to 1.9 million tonnes for Q2. Reaching the upper end of the potash volume range will depend upon shipments to India and China. Mosaic's realized MOP price, FOB plant, for Q2 is estimated to range from $420 to $450 per tonne. Total sales volumes for the Phosphates segment are expected to range from 3.0 to 3.4 million tonnes for Q2. Achieving the top end of the phosphates volume range will depend upon a strong fall application season as well as improved execution. Mosaic's realized DAP price, FOB plant, for Q2 is estimated to range from $520 to $550 per tonne, reflecting tight market dynamics. Segment gross margin percentage in Q2 is expected to be about flat with the first fiscal quarter. The Q2 operating rate in the Potash segment is expected to be above 70 percent of operational capacity. The company's operating rate at its North American phosphate operations is expected to exceed 80 percent of operational capacity during Q2.
