Mosaic’s profit plummets 89% in third quarter

Lower sales and production along with higher costs for materials and reduced selling prices were to blame for Mosaic Co.’s (MOS-N) dismal third-quarter 2009 earnings, the producer of concentrated phosphate and potash crop nutrients said.

The Plymouth, Minnesota-based fertilizer giant reported net earnings crashed 89% to US$58.8 million, or 13¢ per diluted share for the third quarter ended Feb. 28, 2009, down from US$520.8 million or US$1.17 per share posted in the third quarter ended Feb. 28, 2008.

Net sales in the third quarter of fiscal 2009 tumbled to US$1.4 billion, a drop of US$771.7 million or 36% compared with the year-earlier period. Gross margins declined to US$140.3 million, or 10% of net sales, compared with US$727.9 million, or 34% of net sales, a year ago.

In its potash segment, net sales reached US$480.8 million, a drop from US$547.3 million a year-earlier. Gross margins in the third quarter were US$206.6 million or 43% of sales compared with US$209.1 million or 38% of net sales a year earlier.

The company forecasts potash sales in the fourth quarter will remain weak but believes the global phosphate market “appears to have stabilized.”

Jim Prokopanko, Mosaic’s president and chief executive officer, said he remained confident that long-term agricultural fundamentals are strong despite turbulence in the commodity markets.

“Large crops are still required to secure the world’s food supply and crop nutrients will play an essential role in achieving that objective,” Prokopanko said in a prepared statement announcing the quarterly results.

Mosaic said that over the longer term, the use of grain and oilseed will go up “at a faster pace than historical trends” due to population growth, rising per capita income and greater bio-fuel production.

“This will require additional harvested area and steady increases in yields, which can be accomplished through more intensive and balanced crop nutrient use and improved crop genetics,” the company said in its news release.

At presstime in New York, Mosaic was trading at US$43.70 per share. The fertilizer giant has traded between US$21.94 and US$163.25 per share over the last year and has 444.1 million shares outstanding.