Wednesday, December 22, 2010

Mosaic Co. (NYSE: MOS): Q2 Earnings Preview 2011

Mosaic Co. (NYSE: MOS) is scheduled to release its fiscal second-quarter financial results after the closing bell on Tuesday, January 4, 2011. Analysts, on average, expect the company to report earnings of 91 cents per share on revenue of $2.44 billion. In the year ago quarter, the company reported earnings of 32 cents per share on revenue of $1.71 billion.

Mosaic Co. engages in the production and marketing of concentrated phosphate and potash crop nutrients for the agriculture industry worldwide. The company serves customers in more than 40 countries. It is leading producer of potash in North America, with nearly 40 percent market share. It is the second-largest global potash producer, with a global market share of 13%. Mosaic is also the world’s largest integrated phosphate producer. Its share of the world phosphate production is 13 percent while its share of the US production is 58 percent.

In the preceding fiscal first quarter, the Plymouth, Minnesota-based company's net income was $297.7 million, or 67 cents a share, from $100.6 million, or 23 cents a share, in the year-earlier quarter. Revenue grew to $2.19 billion from $1.46 billion in the same quarter last year. Analysts, on average, had expected earnings of 71 cents a share on revenue of $1.96 billion. Gross margin as a percent of net sales improved to 23 percent, compared to 15 percent in the prior year.

The demand for both phosphates and potash continues to expand globally, placing Mosaic in a unique position to capitalize in markets worldwide. Fertilizer demand continues to strengthen and market segment sentiment has improved due to the rally in grain prices, lean producer inventories and the need to refill a de-stock pipeline.The broad-based rally in agricultural commodity prices translates into profitable farm economics and record or near-record farm income around the world. Rallies in a broad array of agricultural commodity prices during the last few months are fueling an increasingly positive outlook for phosphate and potash demand. Phosphate prices have increased sharply. And potash prices have begun to move up. Given the positive demand outlook, P and K markets is likely remain tight until new capacity comes on later this decade.

For the second quarter of fiscal 2011, the company expects total phosphate sales volumes of 3.3 million tons to 3.6 million tons and an average DAP selling price of $430 to $460 per ton. The company anticipates total potash sales volumes of 1.6 million tons to 1.9 million tons at average MOP selling price of $310 per ton to $340 per ton.

In terms of stock performance, Mosaic shares have gained nearly 10% since the beginning of the year. 

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