(Reuters) —Mosaic says it will eliminate more than 500 jobs in the next year after reporting a larger-than-expected 43 percent drop in quarterly profit.
The fertilizer sector has been under pressure since last summer’s breakup of one of the world’s biggest potash traders, Belarusian Potash Co., led to a steep drop in prices. Transportation problems in North America also dogged the industry during the frigid winter.
Chief executive officer Jim Prokopanko said the company will shed 550 to 560 jobs, using layoffs, attrition, early retirement and eliminating contractors.
It said in October that it aimed to cut $500 million in costs during the next five years, bolstering its status as a low-cost phosphate producer and reducing its relatively high cost of producing potash.
“We feel we can reduce the spending because we have a sounder enterprise overall,” Prokopanko said.
“We’ve allowed ourselves to grow when times were good. Now we think we can be just as productive with fewer people.”
Prokopanko said more than half of the jobs to be eliminated are not directly involved in production, but he would not say how the cuts break down between the phosphate and potash segments.
The company will shed another 200 jobs from previously announced asset sales in South America and the United States.
Mosaic’s job cuts follow Potash Corp’s move in December to slash its workforce by 18 percent, or more than 1,000 jobs.
Prokopanko said the potash market looked oversupplied for the next three years as demand grows only modestly just as producers have expanded capacity.
“It could be, just (based on) purely supply and demand, some tough sledding,” he said.
Prokopanko said the company will not halt expansion of its mine in Esterhazy, Sask., but would not comment directly when asked if Mosaic may close or sell other potash mines.