Mosaic’s Profits Up, but Costs Higher

THE ASSOCIATED PRESS September 23, 2011, 11:57AM ET
Mosaic posts higher profit, but misses view
Fertilizer giant Mosaic Co. said Friday that stronger sales in its fiscal first quarter pushed its profit up by 77 percent.

The earnings nevertheless missed Wall Street expectations and the company’s shares fell $2.84, or 4.7 percent, to $57.27 in midday trading.

For the three months ended Aug. 31, the company reported net income of $526 million, or $1.17 per share, up from $297.7 million, or 67 cents per share, a year ago.

On average, analysts expected earnings of $1.25 per share, according to FactSet.

Revenue rose to $3.08 billion from $2.19 billion. Analysts expected lower revenue of $2.85 billion.

Gross margin as a percentage of sales rose to 27.5 percent from 23.1 percent. The company said the increase was driven by improvements in phosphates and potash margins. Operating earnings rose to $729.6 million, up from $410.3 million.

Citi analyst P.J. Juvekar noted that it’s possible that “ongoing legal issues” and the shutdown of a phosphate rock mine may have increased the Mosaic’s costs in the quarter. But Juvekar also noted that the market remains favorable for Mosaic, given the tight corn and soybean markets and elevated grain prices that are pushing up farmer incomes.

Earlier this week, Standard & Poor’s said that it will add Mosaic, based in Plymouth, Minn., to the S&P 500 index after the market closes Friday. One requirement for entering the S&P index is that at least half of a company’s shares must be available to the public.

On Thursday, Mosaic said one of its shareholders, the Margaret A. Cargill Trust, plans to sell 18 million of its 42 million shares of the company, with an option to sell another 2.7 million shares if the sale goes well. The move is the latest step in unwinding ties between Mosaic and Cargill Inc.