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The Mosaic Company reports 4Q19 and full year 2019 results

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World Fertilizer,

The Mosaic Company reported a net loss of US$1.07 billion for full year 2019, reflecting noncash charges from previously announced asset portfolio optimisation decisions as well as a goodwill impairment, all related to challenging industry conditions around the world. The full year 2019 loss per share was US$2.78. Adjusted EBITDA for the year was US$1.35 billion and adjusted earnings per share (adjusted EPS) was US$0.16.

Weather conditions, including the wettest year in North America in almost 50 years, negatively impacted North American spring and fall applications and sales volumes, which in turn pressured prices. In response to these conditions, the company made aggressive decisions to improve its cost structure and balance production with customer demand. These previously announced actions, including the permanent closure of Plant City phosphates operations, the acceleration of Esterhazy K3 production and the extended idling of the Colonsay potash mine, combined with the Phosphates segment goodwill impairment, led to US$1.46 billion in noncash charges.

For 4Q19, Mosaic reported a net loss of US$921 million, and adjusted EBITDA of US$202 million, inclusive of US$1.1 billion of previously announced noncash charges.

The company reported a net loss per share of US$2.43 and adjusted net loss per share of US$0.29.

Mosaic’s net sales in 4Q19 were US$2.1 billion, compared to US$2.5 billion last year, driven by lower sales volumes and lower phosphate prices.

“In this challenging environment we acted decisively, executed well and strengthened the company’s operations for the future, all while delivering record safety results,” said President and CEO Joc O’Rourke. “Our actions to manage our portfolio of assets and lower our cost structure, our reduced inventories and the expected strong global fertilizer demand in 2020 leave us with tremendous opportunity to capitalise on the improving trends we’ve seen early this year.”

Mosaic has decided to return its phosphate operations to full production, as good December and January demand in North America depleted the company’s phosphate inventories. In addition, concerns about product availability have changed market sentiment and are driving strong global demand for phosphates.

2020 market outlook

2019 was a challenging year for the fertilizer industry. In phosphates, demand was impacted by weather, resulting in high inventories. Recent trends are more favourable, with global inventories falling and the market tightening. The company has seen more than a US$65/t improvement from the lowest priced sales in December to sales recently booked.

China is expected to be a key swing factor for phosphate market fundamentals in 2020. Much of the phosphate production in Hubei province has been curtailed or idled due to the coronavirus epidemic. This decline in supply, as well as limited new capacity elsewhere in the world, is expected to contribute to a continued tightening of phosphate market fundamentals.

In potash, production curtailments that began in the second half of 2019 are bringing the market into balance in 2020. Buyer activity has stalled in anticipation of a China contract, which typically sets a benchmark for global prices. The company expects strong demand in the Northern Hemisphere for spring, followed by the typical surge in activity in the Southern Hemisphere in the third quarter.

Global demand for grains and oilseeds remains strong and thus farm economics remain robust. As a result, the company expects strong global fertilizer demand in 2020.

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