Mosiac released fourth quarter and full year fiscal 2013 financials today that reflect weakness in P&K pricing both for 2013 and for the coming year. Strong demand from the U.S. and Brazil are expected to partially offset declining sendouts to India and China, and while P&K prices are expected to continue to move lower near-term, phosphate production will remain above 85% of capacity.
China is expected to re-negotiate their K contract with Canpotex by the end of this quarter. It was a hold out in late 2012 that lowered global K pricing and because of the ensuing oversupply, which remains in place today, K production will slip below 75% of capacity.
"Our focus on planning and execution paid off, with Mosaic achieving record potash and strong phosphate shipments during the quarter," said Jim Prokopanko, President and Chief Executive Officer of Mosaic. "Mosaic delivered outstanding results despite difficult external factors such as the late and compressed North American spring planting season, and additional logistical challenges. The long-term outlook for Mosaic remains compelling, and we are executing well to capture the opportunity."
Net earnings for fiscal Q4 2013 fell from 507 million the previous year to $486 million, to a new share price averaging 5 cents below last year at $1.14. This did, however, beat analysts projections of $1.13, and that penny difference has Mosaic calling it a win.
"We are beginning to see the benefits of the expansion projects that we started five years ago," Prokopanko said. "We continue to forecast calendar 2013 will be a near record year for potash shipments, and that the world will need our new capacity. Our decision to defer the next phase of the expansions is primarily a reflection of the current construction cost environment though we will continue to monitor the global supply and demand outlook for potash. We expect the delay will result in higher returns for these projects."
Despite stock prices and net earnings trailing compared to year-ago, Mosaic is optimistic and sees a balanced P market as price positive for end users. Production and sendouts have been all but flat in the past few years and in the current market, even with retail prices falling, Mosaic is certain they can provide plenty of product in the fall at-or-below today's price.