(Reuters) — U.S. fertilizer company Mosaic Co. reported a 79 percent plunge in quarterly profit on Tuesday as phosphate and potash prices fell.
Last summer’s breakup of the Belarusian Potash Co. caused a sharp drop in the price of the crop nutrient potash and a slide in grain prices has also weighed down phosphate and other fertilizers.
Net earnings for the fourth quarter slid to $129 million, or 30 cents per share, the Plymouth, Minnesota-based company’s second-smallest quarterly profit in four years. A year earlier, it earned $616 million, or $1.44 per share.
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Revenue dropped eight percent to $2.2 billion.
The results included one-time items that weakened earnings by six cents per share.
Analysts, on average, expected Mosaic to earn 42 cents a share on sales of $1.86 billion, according to Thomson Reuters.
Shares rose 0.8 percent to $47.20 before normal trading hours, as Mosaic also said it will buy back $1 billion of its shares, topping up a $2 billion repurchase program announced in December.
Rival Potash Corp of Saskatchewan Inc. in late January reported its smallest quarterly profit in four years and produced 2014 forecasts that were well below Wall Street expectations.
A return to larger potash profits looks “a ways off”, due to industry over-capacity, but phosphate prospects are more promising, said analyst Mark Gulley of BGC Financial Research.
“Mosaic’s a tale of two cities. Phosphate’s looking OK, potash not so much.”
Buyers responded to weak prices by buying larger fertilizer volumes in the quarter.
Mosaic sold a record 3.4 million tonnes of phosphate in the fourth quarter, exceeding guidance of 2.5 to 2.9 million tonnes, at an average price of $381 per tonne of diammonium phosphate, within the guidance range but a 28 percent drop year over year.
The company sold 1.9 million tonnes of potash in the quarter, hitting the top end of its guidance range of 1.5 to 1.9 million tonnes, at an average realized price of $303 per tonne.
That price fell within Mosaic’s guidance range but was 30 percent cheaper than a year earlier.
Chief executive Jim Prokopanko said prices are already rebounding in phosphates and look to improve later this year in potash.
Mosaic forecast first-quarter phosphate sales volumes of 2.3 to 2.6 million tonnes, down from 2.7 million tonnes a year ago.
It expects to earn a realized diammonium phosphate price of $390 to $420 per tonne.
Potash sales volumes look to range between 2.3 and 2.7 million tonnes in the current first quarter, Mosaic said, up from two million tonnes a year earlier. The company forecast a first quarter average realized price of $245 to $275 per tonne.
