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$MOS General Update: Mosaic Company today released its 2014 Sustainability Report titled, "Leading with Purpose," which outlines company's sustainability progress & new 2020 sustainability targets. The report's data has been assured, & its water, waste, energy and greenhouse gas emissions information is externally verified by third-party reviewers
$MOS said that it is idling its Plant City, Florida concentrates plant for an indefinite period of at least one year. The move is aimed at ensuring minimal market disruption from new capacity additions, including Mosaic's Saudi Arabian joint venture, and is expected to result in higher phosphate margins and lower capital requirements.
For 4Q17, $MOS' total Phosphate sales volumes are expected to be 2.3 - 2.6MM tonnes, compared to 2.5MM tonnes last year. Potash sales volumes are projected to be 1.9 - 2.2MM tonnes, vs 2MM tonnes last year. Meanwhile, sales volumes for International Distribution segment are expected to be 1.5 - 1.8MM tonnes, vs 1.9MM tonnes in 4Q16.
$MOS' earnings soared in 3Q17 to $227MM, or $0.65 per share from $39MM, or $0.11 per share in the prior-year quarter, boosted by certain special items including gains from forex transactions and sale of land. However, net sales remained stagnant at $2Bil, as phosphate sales volumes were below the company's expectations for the quarter.
$MOS said the Vale Fertilizantes acquisition is an important strategic transaction. It gives $MOS significant interest in North and South America and has lots of interconnectivity with its phosphate operations globally. $MOS targets to achieve $95MM in operational and tax-related synergies on an annual basis.
$MOS recorded $12MM in equity earnings from the Ma'aden Wa'ad Al Shamal JV in 2Q17. The earnings resulted from strong sales of ammonia during a seasonally high period for ammonia prices. The Wa'ad Al Shamal project is likely to produce about 0.5MM tonnes of product in 2017, with potential modest upside depending on the rampup of the mega-project.
During 2Q17, $MOS posted net sales of $975MM in the Phosphates segment, essentially flat with last year. GM was $76MM or 8% of net sales. Net sales in the Potash segment were $468MM and GM was 23% of net sales. Net sales in the International Distribution segment were $583MM and GM was 7% of net sales.
For FY17, $MOS expects Capex to be $800-850MM. Potash sales volumes are expected to be 8.1-8.6MM tonnes. Phosphates sales volumes are expected to be 9.5-10MM tonnes while International Distribution sales volumes are expected to be 6.75-7.25MM tonnes in FY17.
For 3Q17, $MOS expects total sales volumes for the Phosphates segment to range from 2.2-2.5MM tonnes. Total sales volumes for the Potash segment are expected to range from 1.9-2.2MM tonnes. Total sales volumes for the International Distribution segment are expected to range from 2.3-2.6MM tonnes in 3Q17.
$MOS reported a net income of $97MM or $0.28 per share in 2Q17 compared to a net loss of $10MM or $0.03 per share in 2Q16. Net sales were $1.8Bil, up from $1.7Bil last year, with higher sales volumes offsetting lower phosphates realized prices.
$MOS said that it has changed the depreciation method from straight line method to units of production method for certain mining assets to more appropriately reflect the utility of these assets. The company expects to use these assets for a longer period of time in the future.
$MOS said that the Chinese contract is becoming less relevant over time and the conditions are significantly different this year than other years. $MOS expects India to be ahead of China again this year like last year and the company doesn't assume a whole bunch of Chinese products in its 2Q17 outlook.
For 2Q17, $MOS sees total sales volumes for the Phosphates segment of 2.3-2.6MM tonnes. Total sales volumes for the Potash segment are expected 2.0-2.3MM tonnes. Total sales volumes for the International Distribution segment are touted at 1.4-1.7MM tonnes for the second quarter of 2017, compared to 1.4 million tonnes last year.