Quarterly Net Earnings Nearly Quadruple to $1.2 Billion; Diluted EPS Grew to $2.65; Strong Earnings Growth Expected to Continue
PLYMOUTH, Minn., Oct. 1 /PRNewswire-FirstCall/ -- The Mosaic Company
(NYSE: MOS) announced today net earnings of $1.2 billion, or $2.65 per share,
for the first quarter ended August 31, 2008. These results compare with net
earnings of $305.5 million, or $0.69 per share, for the quarter ended August
31, 2007.
HIGHLIGHTS
-- Operating earnings were $1.5 billion, or 36.0% of net sales, up from
$449.6 million, or 22.4% of net sales last year.
-- The average diammonium phosphate(DAP) selling price was $1,013 per
tonne, which was substantially higher than in both the fourth quarter and the
first quarter of fiscal 2008.
-- The average muriate of potash (MOP) selling price was $488 per tonne,
which was substantially higher than in both the fourth quarter and the first
quarter of fiscal 2008.
-- Foreign currency transaction gains were $86.7 million, or $0.13 per
share, compared to a loss of $19.4 million, or $0.03 per share, a year ago.
-- Net unrealized mark-to-market derivative losses impacted gross margin
by $114.8 million, or $0.18 per share, compared to net unrealized derivative
losses of $30.1 million, or $0.05 per share, a year ago.
-- Cash flow from operating activities was $561.5 million for the first
quarter of fiscal 2009 compared to $438.4 million last year.
-- Mosaic intends to reduce planned phosphate concentrates production by
500,000 to one million tonnes over the next several months, in response to
high inventory levels.
-- Mosaic expects strong year-over-year earnings growth to continue
throughout fiscal 2009.
Net sales in the first quarter of fiscal 2009 were $4.3 billion, an
increase of $2.3 billion, or more than double the amount in the same period a
year ago.
Mosaic's gross margin for the first quarter fiscal 2009 was $1.6 billion,
or 38.1% of net sales, compared with $521.8 million, or 26.0% of net sales, a
year ago. First quarter operating earnings were $1.5 billion, compared with
$449.6 million for the first quarter of fiscal 2008. Financial performance
during the quarter continued to benefit from higher selling prices compared to
the prior year. The significant increase in selling prices was due to strong
agricultural fundamentals and positive fertilizer supply and demand factors.
Mosaic also recognized a foreign currency transaction gain of $86.7 million.
These positive factors were partially offset by higher raw material costs in
the Phosphates segment, increases in Canadian resource taxes and royalties in
the Potash segment, and aggregate net unrealized mark-to-market derivative
losses of $114.8 million primarily in the Potash and Phosphate segments.
'We delivered another quarter of record results,' said Jim Prokopanko,
Mosaic's President and Chief Executive Officer. 'Against the backdrop of
volatile global markets, we are well positioned financially, strategically and
operationally to serve our customers worldwide and execute on the strong,
long-term fundamentals in the agricultural sector.'
Phosphates
Net sales in the Phosphates segment were $2.6 billion for the first
quarter, more than double net sales of $1.2 billion a year ago. Phosphates'
first quarter gross margin was $1.0 billion, or 38.8% of net sales, compared
with $353.5 million, or 29.9% of net sales, for the same period a year ago.
Operating earnings were $950.8 million, an increase of $640.6 million compared
with $310.2 million in the same period last year. Operating earnings growth
in the first quarter of fiscal 2009 was driven by increases in selling prices.
These price increases more than offset a 7% decrease in sales volumes to 2.1
million tonnes, higher sulfur and ammonia costs, and net unrealized mark-to-
market derivative losses of $74.6 million. The decline in sales volumes was
primarily due to North American customer carry-over inventories from this
Spring.
The average first quarter DAP selling price, FOB plant, was $1,013 per
tonne, which is a $606 per tonne increase compared with a year ago and a $259
per tonne increase compared with the fourth quarter of fiscal 2008. This
strong upward price momentum leveled off toward the end of the quarter,
causing the average realized price to fall slightly below Mosaic's guidance
range.
Potash
Net sales in the Potash segment totaled $976.4 million for the first
quarter, more than double net sales of $411.8 million a year ago. The Potash
segment's gross margin increased to $503.2 million in the first quarter, or
51.5% of net sales, compared with $126.6 million a year ago, or 30.7% of net
sales. Operating earnings were $477.8 million during the first quarter, or
quadruple the operating earnings in the same period last year. The increase
in operating earnings was primarily a result of higher selling prices. This
increase was partially offset by significantly higher Canadian resource taxes
and royalties, net unrealized mark-to-market derivative losses of $41.8
million, and the impact of a 9% decrease in sales volumes.
The average first quarter MOP selling price, FOB plant, was $488 per
tonne, which is a $324 per tonne increase compared with a year ago and a $153
per tonne increase compared with the fourth quarter of fiscal 2008. Realized
prices at the end of the first quarter were significantly higher than the
average for the quarter and have continued to increase since the end of the
quarter.
The Potash segment's total sales volume was 1.9 million tonnes for the
first quarter which was lower compared with year-ago first quarter volume of
2.1 million tonnes. The decline in sales volumes was primarily due to lower
beginning inventory levels available to meet customer demand, despite
comparable production volumes.
Offshore
The Offshore segment's net sales totaled $1.0 billion during the first
quarter, or more than double the amount for the same period a year ago. This
increase was mainly due to higher selling prices. Gross margin increased to
$180.6 million in the first quarter, or 17.2% of net sales, compared to $51.1
million, or 10.3% of net sales, for the same period last year. Offshore first
quarter operating earnings of $159.0 million were up $128.9 million compared
with a year ago, the result of higher selling prices and the benefit from
positioning lower cost inventories in a period of rising selling prices.
Other
Selling, general, and administrative expenses (SG&A) were $90.0 million in
the first quarter, or 2.1% of net sales, compared to $66.6 million last year,
or 3.3% of net sales. The increase in SG&A expenses was primarily the result
of higher share-based and other compensation expense, and higher external
consulting and professional fees.
A foreign currency transaction gain of $86.7 million was recorded for the
first quarter compared to a loss of $19.4 million for the same period a year
ago. This non-cash gain is the result of the effect of a weakening Canadian
dollar on significant U.S.
