The company has announced a series of actions to temporarily lower production in both phosphates and potash to match demand in 2019 and expects those efforts will position the company to capitalise on opportunities in 2020.
Mosaic reported a net loss of US$44 million for 3Q19, and adjusted net earnings, after notable items, of US$29 million. The company reported diluted earnings per share (EPS) of negative US$0.11, and adjusted EPS of US$0.08. Adjusted EPS was negatively impacted by certain tax accruals and other operating expenses totalling US$0.12 per share, indicating run-rate earnings of US$0.20 per share. The current period net loss includes a negative US$81 million, US$0.19 per share, impact from notable items, primarily from a loss on foreign currency. For the period, adjusted EBITDA was US$366 million.
- The company accelerated development of the Esterhazy K3 potash mine by an additional year, allowing the closure of the K1 and K2 shafts and elimination of brine management costs by mid-2022, as well as lower cost of production.
- The company expects to exceed its previously announced synergy target for Mosaic Fertilizantes of US$275 million in 2019, by up to US$50 million. In addition, the company announced a new target of US$200 million in incremental annual EBITDA growth through ongoing business transformation efforts beginning in 2020 and ending by 2022.
- Year-to-date, Mosaic has repurchased 7.1 million shares of its common stock for US$150 million. During 3Q19, the company repurchased 5.8 million shares for US$125 million. The company previously announced plans to repurchase up to US$250 million of its common stock under an existing share repurchase authorisation.
- Mosaic Fertilizantes completed tailings dam remediation activities and returned the Tapira and Araxá phosphate mines in Brazil to full production in September, a month ahead of the original schedule announced in March. All necessary activities to comply with the new tailings dam requirements in Brazil are now complete and the company received new required safety certifications as of September 2019 to continue full operations.
- The company revised its full-year adjusted EBITDA guidance to US$1.4 to US$1.5 billion and adjusted EPS guidance to US$0.50 to US$0.60, primarily reflecting the impact of historically low potash sales volumes due to delays in Canpotex shipments to India and China, and expectations that phosphates margins and pricing remain consistent with September 2019 levels, US$10 to US$15 per tonne lower than 3Q19 average.
Temporarily idled capacity
- The Colonsay, Saskatchewan potash mine was temporarily idled in August. In 4Q19, the Esterhazy, Saskatchewan potash mine will be temporarily idled, bringing the company’s total 2019 potash curtailment to 600 000 t. The curtailment is not expected to impact the pace of development at the Esterhazy K3 mine project.
- On 1 October, the company announced that it would reduce phosphates production by approximately 500 000 t in 2019 by temporarily idling its operations in Louisiana.
- These actions are expected to accelerate the reduction of fertilizer inventories remaining after a weak spring application season in the US. All three facilities are available to resume production when demand improves.
“While the challenging market environment has persisted longer than we had anticipated, the actions we are taking give us an improved platform to deliver value and shareholder returns,” said Mosaic President and CEO Joc O’Rourke. “We are seeing volumes move in North America and believe that strong volumes will lead to improved pricing. We believe that the bottom of the market is in and that 2020 will be a much stronger year for Mosaic and the customers we serve.”
Read the article online at: https://www.worldfertilizer.com/potash/05112019/the-mosaic-company-releases-3q19-results/