Mosaic reported that 3Q17 earnings per diluted share were US$0.65, which included a positive impact of US$0.22 from notable items. Mosaic also provided a strategic update, identifying cumulative cash flow improvements of over US$1 billion by the end of 2020.
The President and CEO of Mosaic, Joc O’Rourke, said: “Mosaic is taking proactive steps to accelerate business performance.
“While these decisions are difficult and have impacts on our employees, today's actions put Mosaic in a strong position to benefit as market dynamics improve.”
Mosaic has also reported that its net sales in 3Q17 were US$2 billion, flat with last year, with lower phosphate sales volumes offset by higher international distribution volumes and higher realised potash prices. Operating earnings during the quarter were US$214 million, compared to the US$70 million in 3Q16, regardless of the US$26 million negative impact in phosphates from Hurricane Irma.
Cash flow provided by operating activities in 3Q17 was US$136 million. This is compared to US$88 million in 3Q16. CAPEX, meanwhile, totalled US$198 million in the quarter. The company's total cash and cash equivalents, excluding restricted cash, were US$686 million and long-term debt was US$3.8 billion as of 30 September 2017. Subsequent to quarter end, Mosaic completed a lease finance transaction for an ammonia tug and barge, and received approximately US$200 million in cash.
The Executive Vice President and CFO of Mosaic, Rich Mack, said: “We delivered solid operational performance across our three businesses during the third quarter, and demand for our products continues to be strong.
"Once the pending Vale Fertilizantes acquisition closes, we intend to prioritise our excess cash flow toward debt repayment so that we can return to our targeted leverage ratios. The comprehensive set of actions announced today is an important part of our deleveraging plan and protecting our balance sheet.”
O’Rourke added: “Hurricane Irma's impact aside, Mosaic's strong operational performance and better price realisation benefited margins during the quarter.
“Our decision to idle Plant City is expected to result in lower capital spending and higher gross margins going forward.
“Potash results reflect excellent cost control and constructive market dynamics with continued margin improvement from last year's levels.
“The combination of strong demand, lean channel inventories and minimal production from new capacity next year underpins our constructive near-term potash outlook. Over the longer-term, we expect the completion of our Esterhazy K3 project to further improve Mosaic's position as a low cost global potash producer.
“Once the acquisition of Vale Fertilizantes is complete, we expect to transform our vertically integrated business in Brazil into an upstream and downstream fertilizer powerhouse.
“We have plans to achieve a US$275 million annual run-rate improvement in cash flow in Brazil by the end of 2020, which spans the entire value chain, focusing on operational efficiencies, go-to-market strategies, corporate overhead, procurement and others. We are excited about the acquisition and are confident in our ability to deliver on these targets.
“We are taking proactive steps to minimise disruption to the phosphates market as it absorbs new capacity additions.
“Combined with our plans to transform the Brazil business, Mosaic is in an excellent position to capitalise on the long-term secular trends and create value for all of our stakeholders.”