Mosaic's MOS profits jumped in second-quarter 2015, helped by higher phosphate sales volumes, increased potash pricing and the company’s cost-cutting actions.
Mosaic logged a profit of $390.6 million or $1.08 per share in the reported quarter, surging roughly 57% from $248.4 million or 64 cents a share a year ago. Earnings, barring one-time items, were $1.05 per share, topping the Zacks Consensus Estimate of 91 cents.
The Minnesota-based company’s revenues rose roughly 2% year over year to $2,487.5 million in the quarter as a decline in the potash unit was more than offset by gains in other businesses. Sales, however, missed the Zacks Consensus Estimate of $2,687 million.
Segment Highlights
Revenues from Mosaic’s Phosphates segment rose roughly 8% year over year to $1.4 billion in the quarter as higher volumes more than offset lower finished product prices. The segment’s gross margin rose around 9% to $296 million, aided by a decline in phosphate rock costs.
Segment sales volumes went up roughly 8% year over year to 2.8 million tons. Average selling price fell around 3% to $450 per ton in the quarter from $465 per ton last year.
Potash division sales slipped around 4% year over year to $730 million in the quarter as higher prices were more than offset by lower volumes. Sales volumes fell roughly 8% year over year to 2.3 million tons while selling price went up roughly 5% to $280 per ton from $267 per ton a year ago. Gross margin jumped 30% year over year to $295 million, aided by lower cost of production and higher pricing.
Revenues from the International Distribution segment rose around 17% year over year to $637 million on higher volumes. Gross margin fell around 15% to $29 million. Selling price fell around 5% to $427 per ton while volumes climbed roughly 25% to 1.5 million tons.
Financials
Mosaic ended the quarter with cash and cash equivalents of $2,209.9 million, down around 7% year over year. Long-term debt climbed roughly 25% over year to $3,761.8 million. Mosaic’s capital expenditures were $227 million in the reported quarter. Operating cash flow was $583 million in the quarter, down around 27% year over year.
Outlook
Mosaic, which is among the top fertilizer makers along with Potash Corp. POT, Agrium AGU and CF Industries CF, expects its phosphates business to gain from strong demand and stable input costs. The company also expects to gain from its strategic actions.
Mosaic expects phosphates sales volumes in the band of 2.1 to 2.4 million tons for the third quarter compared with 2.2 million tons achieved a year ago. Average selling price for the quarter is expected to be in the band of $435 to $455 per ton. The segment’s gross margin for the quarter is expected to be in the low-20% range. Operating rate is expected to be in the mid-80% range
Potash sales volumes have been forecast in the range of 1.6 to 2 million tons for the third quarter versus 1.8 million tons a year ago. Average selling price for the quarter is expected in the range of $260 to $280 per ton. The segment’s gross margin is expected to be in the low-20% range. Operating rate has been forecast in the mid-60% range.
Sales volumes for the International Distribution segment are expected in the band of 1.9 to 2.2 million tons for the third quarter compared with 1.4 million tons a year ago. Segment gross margin is expected to be in the range of $20 to $26 per ton for the quarter.
For 2015, Mosaic now expects phosphates sales volumes in the band of 9.5 million to 10 million tons versus 9 million to 10 million tons expected earlier. Potash sales volumes are now expected in the range of 8.2 million to 8.6 million tons for the year, down from the earlier view of 8.5 million to 9 million tons. Sales volumes target for the International Distribution segment has been revised to 6 million to 6.5 million tons from 6 million to 7 million tons.
Capital expenditures and investments are now expected in the range of $1.1 billion to $1.3 billion versus $1.1 billion to $1.4 billion expected earlier.
Mosaic currently has a Zacks Rank #4 (Sell).
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