Mosaic is one of the world's leading producers and marketers of concentrated phosphate and potash crop nutrients for the global agriculture industry."Our second quarter results demonstrate that Mosaic is leveraging the robust agricultural economy and delivering record results," stated Jim Prokopanko, Mosaic’s President and Chief Executive Officer yesterday.
They announced their Q2 figures (ended 30/11/07)yesterday ...
Mosaic reported impressive and record results, including net earnings of $394.0 million, or $0.89 per diluted share , an increase of $328.1 million compared to the same period a year ago. These second quarter results included the following:
Net sales in the second quarter of fiscal 2008 were $2.2 billion, an increase of $673.4 million, or 44% compared with the same period a year ago.
Mosaic's gross margin for the fiscal 2008 second quarter was $623.1 million, or 28.4% of net sales, compared with $160.5 million, or 10.5% of net sales a year ago - i.e.nearly trebled. Second quarter operating earnings were $529.6 million, compared with $90.7 million for the second quarter in fiscal 2007 ... refelected in their current share price shown above.
* Cash flow from operations of $542.5 million and the prepayment of $450 million of long-term debt.
* An average diammonium phosphate (DAP) price of $417 per tonne, a $174 per tonne increase (+ 40%) compared with a year ago and a $10 per tonne increase compared with the first quarter of fiscal 2008.
* An average potash selling price of $171 per tonne, up $29 per tonne from a year ago (+ 17%) and an $11 per tonne increase from the first quarter of fiscal 2008.
* A foreign currency transaction loss of $52.4 million, or $0.09 per share, compared to a gain of $19.8 million, or $0.03 per share, a year ago.
* A tax benefit of $35.9 million, or $0.08 per share, relating to certain tax matters specific to the second quarter.
Phosphate and potash fundamentals remain exceptionally strong with year end 2007 prices at record (and rising) prices. Further increases in grain and oilseed prices during the last several weeks have bolstered farm incomes worldwide - leading to strong nutrient demand prospects for 2008....and higher consumer food prices along the way.
Potash, supplies struggle to keep up with accelerating demand as evidenced by the extremely low stocks held by North American producers at the end of the fall season. This situation likely will persist until additional capacity comes on line during the next few years. Market prices are continuing to increase significantly for shipments into all major markets during the first half of 2008.
The phosphate situation is similar to that of potash. U.S. producers reported holding the lowest inventories of DAP/MAP in modern history at the end of the North American fall season. More importantly, large increases in market prices for phosphate rock and phosphoric acid in 2008 will dramatically boost costs for non-integrated producers who likely account for almost one-third of global phosphate production.
Higher inputs of course mean higher sales costs for the product .. (although over the last 5 years the farmer has had to sell a steady 23/24 bushels of corn for the cost of 1 acre supply of potash so the poyash / phosphate cost has stayed the same % of the selling price)
Although this graph with historical prices in adjusted 2007 $ prices shows that actual costs have declined as productivity has improved.
A sobering reflection on the long term decline in the international value of the US$
See also posting on urea (nitrogen) fertilisers Wednesday, June 20, 2007 US swapping oil security for fertiliser insecurity and higher farm and food costs
All charts above from Mosaic presentation. Good stock pick by Stocks of Interest and useful article.
Another to watch - Agrium