MOS Mosaic Company

   By Austen Hufford 
 

Mosaic Co. said profit and revenue fell in its first quarter as prices for its main fertilizer lines fell.

Mosaic said its results were hurt by lower prices of its two main products, potash and phosphate fertilizers, and as volumes fell.

"The potash market is off to a slow start in 2016 with delayed buying activity, particularly in China and India," Chief Executive Joc O'Rourke said. "As a result, shipment volumes were at the low end of our expectations and we operated our facilities at reduced rates."

Sales of potash, a potassium-based fertilizer, slipped to $572 million in the quarter from $763 million last year. Sales of phosphate fertilizers declined to $909 million from $1.2 billion a year before.

Phosphate production fell to 75% of operational capacity from 79% a year ago as potash production fell to 77% of operational capacity from 93%.

The agriculture sector faces challenges for years to come, and farmers have already been grappling with years of declining prices for major crops as supplies expand worldwide. The company had previously brushed off concerns that a steep decline in prices for corn, soybeans and other crops in the last two years would spur farmers to save money by curtailing their fertilizer usage.

For the quarter, Mosaic posted a profit of $256.8 million, or 73 cents a share, down from $294.8 million, or 80 cents a share, a year prior. Excluding items, such as foreign currency transaction and derivatives, earnings slipped to 14 cents a share from 70 cents a year ago.

Sales slipped 22% to $1.67 billion. Analysts polled by Thomson Reuters had projected an adjusted profit of 14 cents a share on revenue of $1.56 billion.

Still, the company expects results to improve in the coming quarters.

"While the outlook for the first half of 2016 is muted, we see stronger markets and anticipate better results in the second half," Mr. O'Rourke said. "We expect improved profitability to be driven by lower raw material costs, combined with an acceleration in shipment volumes."

For 2016, Mosaic cut the top end of its sales guidelines, now expecting total phosphates sales in the range of 9 million to 9.75 million tons, cutting 250,000 tons of the top of the range. It expects Potash volumes of between 7.5 million and 8.0 million, down from the 7.5 million to 8.5 million range announced previously.

Write to Austen Hufford at austen.hufford@wsj.com

(END) Dow Jones Newswires

May 04, 2016 08:56 ET (12:56 GMT)

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