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The Mosaic Company reports 4Q18 and full year 2018 results

Published by , Assistant Editor
World Fertilizer,

The Mosaic Company reported 4Q18 and full year 2018 results and announced an increase of its annual dividend target to US$0.20/share.

Mosaic’s net sales in the 4Q18 were US$2.5 billion, compared to US$2.1 billion last year, primarily driven by the acquisition of Vale Fertilizantes and higher realised prices, partially offset by a decline in phosphates sales volumes. Operating earnings during the quarter were US$258 million, compared with US$127 million a year ago, as margin per tonne increased in potash, phosphates, and Mosaic Fertilizantes.

Cash flow provided by operating activities in the 4Q18 was US$191 million compared to US$411 million in the prior year, primarily as a result of unfavorable working capital changes. Capital expenditures totalled US$328 million in the quarter. Cash flow provided by operating activities for full year 2018 was US$1.45 billion, compared to US$936 million in 2017. Mosaic’s total cash and cash equivalents, excluding restricted cash, were US$848 million and long-term debt was US$4.5 billion as of December 31, 2018.

“Mosaic generated strong cash flow in 2018, and we expect another good year ahead", said President and Chief Executive Officer Joc O'Rourke."The 100% targeted dividend increase we announced today exemplifies our positive outlook.”

Net sales in the phosphates segment were US$926 million for the 4Q18, slightly down from US$1.0 billion last year, driven by a 25% decline in sales volumes, partially offset by higher average realised sales prices. Lower sales volumes reflect lower production volumes due to the idling of the Plant City facilities, and negative weather-driven impacts to the North America fall application season. Gross margin was US$151 million, or 16% of net sales, compared to US$133 million, or 13% of net sales, for the same period a year ago. The increase in the fourth quarter gross margin per tonne to US$81 from US$53 in the prior year period was primarily driven by higher realised sales prices and a greater proportion of premium MicroEssentials sales, partially offset by higher ammonia and sulfur costs.

Mosaic’s North American finished phosphate production was 2.1 million t, or 87% of operational capacity, compared to 2.3 million t, or 79% of operational capacity, during the 4Q17. Mosaic’s Plant City, Florida chemical plant was temporarily idled on December 10, 2017, remained idled through the end of 2018, and is currently excluded from operating capacity.

Net sales in the potash segment totalled US$592 million for the 4Q18, up from US$496 million last year, driven by higher average realised sales prices and higher sales volumes. Gross margin was US$202 million, or 34% of net sales, compared to US$114 million, or 23% of net sales a year ago. The improvement in gross margin per tonne to US$88 from US$51 in the prior year period is primarily driven by higher average realised sales prices, partially offset by increased Canadian Resource Taxes.

Potash production for the 4Q18 was 2.6 million t, or 99% of operational capacity, up from 87% last year.

Net sales in the Mosaic Fertilizantes segment were US$969 million for the 4Q18, up from US$520 million last year, driven by higher average realised selling prices and the acquisition of production assets from Vale Fertilizantes. Gross margin was $118 million, or US$56/t, compared to US$32 million, or US$23/t for the same period a year ago. The year-over-year increase in gross margin per tonne was driven by improved distribution margins as well as inclusion of the acquired production business.

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