PLYMOUTH, Minn., Nov. 13, 2012 /PRNewswire/ -- In advance of
upcoming investor conferences, The Mosaic Company (NYSE: MOS)
announced today an update of the near-term price and volume
guidance, as well as an update of the Company's full year effective
tax rate guidance.
Since the Company announced its fiscal second quarter guidance
on October 2, 2012, international
crop nutrient market demand has weakened, primarily as a result of
distributors delaying purchases to avoid price risk. The Company
believes this demand is simply delayed, but that sales volumes may
not pick up until calendar 2013.
"The long-term positive outlook for crop nutrient demand has not
changed; high commodity prices are driving record farm returns and
making our products more affordable than ever before. These strong
fundamentals are expected to drive record global phosphate and
potash shipments in calendar 2013," said Jim Prokopanko, President and Chief Executive
Officer. "In the short term, however, we are seeing lower than
expected shipments to the export market, in spite of very strong
demand in North America for the
fall application season. As a result, we have lowered our volume
guidance for both the Phosphates and Potash segments in the second
fiscal quarter of 2013 while also tightening the price forecasts to
the upper end of the previously announced ranges."
In potash, the delay in signing long-term supply contracts with
China and India has resulted in weakening price
expectations, leading other international buyers to delay purchases
to avoid price risk. The midpoint of the Company's previous
guidance for second quarter potash volumes of 1.6 to 1.9 million
tonnes already excluded shipments to China and India. The current guidance range of 1.3 to
1.4 million tonnes reflects lower near-term demand in other
international countries as well. In part because of the decline in
international shipments and changes in product mix, our realized
price expectations are now at the high end of the prior range, at
$435 to $450 per tonne.
In phosphates, international distributors' cautious sentiment
with respect to potash is spilling over as buyers are avoiding
phosphate price risk, and delaying purchases in spite of low
reported producer inventories. The Company has lowered second
quarter volume guidance to 2.9 to 3.1 million tonnes from 3.0 to
3.4 million tonnes. Realized prices are expected to be in the upper
end of the prior range, at $535 to
$550 per tonne.
Additionally, the Company will decrease the amount of
unrecognized tax benefits reported on the balance sheet by
approximately $200 million in the
second fiscal quarter, due to the resolution of tax audit activity.
As a result, the Company now expects its effective tax rate for
full year fiscal 2013 to be in the mid-teens, including the impact
of this benefit, and in the mid 20 percent range for the second
half of fiscal 2013.
The Company continues to expect the gross margin rate for
phosphates to be approximately flat with the first fiscal
quarter. Assuming no benefit from foreign exchange in the
potash segment cost of goods sold, low operating rates will
continue to pressure the gross margin rate in the second quarter,
currently expected to be in the low to mid 40 percent range.
All other guidance is unchanged.
Larry Stranghoener, Mosaic's
Executive Vice President and Chief Financial Officer, will discuss
the updated guidance and other items when he presents at the
Dahlman Rose & Co. Global Metals, Mining & Materials
Conference in New York City on
Wednesday, November 14, at
9:20 a.m. Eastern Standard Time. The
presentation will also be webcast on Mosaic's website at
www.mosaicco.com/investors.
About The Mosaic Company
The Mosaic Company is one of the world's leading producers and
marketers of concentrated phosphate and potash crop nutrients.
Mosaic is a single source provider of phosphate and potash
fertilizers and feed ingredients for the global agriculture
industry. More information on the Company is available at
www.mosaicco.com.
This press release contains forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of
1995. Such statements include, but are not limited to, statements
about future financial and operating results. Such statements are
based upon the current beliefs and expectations of The Mosaic
Company's management and are subject to significant risks and
uncertainties. These risks and uncertainties include but are not
limited to the predictability and volatility of, and customer
expectations about, agriculture, fertilizer, raw material, energy
and transportation markets that are subject to competitive and
other pressures and economic and credit market conditions; the
level of inventories in the distribution channels for crop
nutrients; changes in foreign currency and exchange rates;
international trade risks; changes in government policy; changes in
environmental and other governmental regulation, including
greenhouse gas regulation, implementation of the U.S. Environmental
Protection Agency's numeric water quality standards for the
discharge of nutrients into Florida lakes and streams or possible efforts
to reduce the flow of excess nutrients into the Gulf of Mexico; further developments in
judicial or administrative proceedings; difficulties or delays in
receiving, increased costs of or challenges to necessary
governmental permits or approvals or increased financial assurance
requirements; resolution of global tax audit activity; the
effectiveness of the Company's processes for managing its strategic
priorities; adverse weather conditions affecting operations in
Central Florida or the Gulf Coast
of the United States, including
potential hurricanes or excess rainfall; actual costs of various
items differing from management's current estimates, including,
among others, asset retirement, environmental remediation,
reclamation or other environmental regulation, or Canadian
resources taxes and royalties; accidents and other disruptions
involving Mosaic's operations, including brine inflows at its
Esterhazy, Saskatchewan potash
mine and other potential mine fires, floods, explosions, seismic
events or releases of hazardous or volatile chemicals, as well as
other risks and uncertainties reported from time to time in The
Mosaic Company's reports filed with the Securities and Exchange
Commission. Actual results may differ from those set forth in the
forward-looking statements.
SOURCE The Mosaic Company