Feb 7 (Reuters) – Mosaic Co reported a better-than-expected quarterly profit as it kept a tight leash on costs, and the company slashed its annual dividend as it expected only a “gradual” improvement from a prolonged slump in the fertilizer market.
The company’s shares were down 6.6 percent at $29.90 in light premarket trading on Tuesday.
The world’s largest producer of finished phosphate products said it would cut its annual dividend by 45.4 percent to 60 cents per share, effective with the next declaration.
A capacity glut and soft crop prices have pushed potash and phosphate prices to multi-year lows.
Read Also
In South Korea’s ‘apple county’, farmers beg not to be sacrificed for US trade deal
South Korean apple farmers, who account for about a third of the roughly 14,000 households in the sleepy rural area of Cheongsong county, worry that their way of life could be under threat from an influx of cheap U.S. imports.
“While we are confident the market bottom is behind us, the pace of improvement is expected to be gradual,” chief executive officer Joc O’Rourke said in a statement.
Potash MOP (muriate of potash) cash production costs dropped 28 percent in the fourth quarter from a year earlier, while phosphate conversion costs fell 15 percent.
Net earnings attributable to Mosaic fell to $12 million, or 3 cents per share, in the three months ended Dec. 31, from $155 million, or 44 cents per share, a year earlier.
On a per share basis, the company recorded a charge of 23 cents, compared with 16 cents a year earlier.
Excluding items, the company earned 26 cents per share, according to Thomson Reuters I/B/E/S, handily beating estimates of 13 cents.
Plymouth, Minnesota-based Mosaic’s net sales fell to $1.86 billion, but was slightly above analysts’ average estimate of $1.80 billion.
Mosaic recently bought Vale SA’s fertilizer business for $2.5 billion, the latest in the global fertilizer market as companies seek ways to beat the slump in prices.
The deal, which makes the Brazilian iron ore miner the biggest shareholder in the U.S. company, is expected to close in late-2017.
