(Reuters) — Mosaic Co., grappling with falling prices and profits, is looking for acquisitions that could be bargain-priced in a weak commodity sector.
The world’s largest producer of finished phosphate products expects lower selling prices for potash and phosphate in the current quarter. It has also reported fourth quarter profit that fell less than expected, and announced a US$75 million share repurchase program.
Chief executive officer Joc O’Rourke said the company is interested in acquisitions related to either potash or phosphate, but would weigh any opportunities against the benefits of further repurchases of its stock, which has fallen 50 percent over the past year.
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“The down parts of the (commodity) cycle do present opportunities,” chief financial officer Rich Mack said.
“If there is something that is extraordinarily compelling, it’s something that we could act on.”
Fertilizer producers’ profits have been hit by falling prices, largely because of weak currencies in countries such as Brazil and low grain prices. Falling currency values against the U.S. dollar have lowered production costs 17 percent in Canada, where Mosaic’s largest potash mines are located, but the savings amount to 41 percent in Belarus, where potash rival Belaruskali operates, Mosaic said.
It expects phosphate prices to fall as much as 14.6 percent to $350 per tonne in the current quarter and potash prices to fall as much as 21 percent.
Mosaic expects global phosphate shipments of 65 to 67 million tonnes this year, up from 64.4 million last year, according to BMO Nesbitt Burns. Potash shipments look slightly lower this year at 58 to 60 million tonnes, down from 60.7 million last year.
The company recently said it would cut phosphate production by up to 400,000 tonnes in the first quarter because of weak demand.
Fourth quarter net earnings fell to $155 million from $360.7 million a year earlier.
