* Third-quarter EPS 81 cents vs 64 cents year earlier
* Plans stock buyback; wary of possible Potash-ICL deal
* Sees 4th-qtr potash volumes of 2.3 mln-2.6 mln tonnes
By Rod Nickel and Bhaswati Mukhopadhyay
March 28 U.S. fertilizer producer Mosaic Co
reported a 26 percent rise in third-quarter profit,
driven by higher potash and phosphate volumes and said it wants
to buy back shares later this year, lifting its stock 1.3
percent on Thursday.
Mosaic also said it expects a robust U.S. planting season,
as farmers aim to maximize output to capitalize on high grain
prices. But Chief Executive Jim Prokopanko said extended winter
weather and potential spring flooding may drag the area planted
to corn below the 96 million acres Mosaic is expecting.
"We are still a long way from the game really getting
started," he said in an interview. "It's going to be weather
The U.S. Department of Agriculture on Thursday estimated
U.S. corn plantings at 97.3 million acres.
Heavy snow this winter has already hampered rail movement of
Western Canadian potash to port by Canadian National Railway Co
and Canadian Pacific Railway Ltd, Prokopanko
said. Mosaic is one of three potash miners in the Canadian
province of Saskatchewan, along with Potash Corp of Saskatchewan
and Agrium Inc.
Shares of the Plymouth, Minnesota-based company, which is
the world's largest producer of finished phosphate products, was
up 1.6 percent at 59.61 shortly after midday on the New York
Net profit attributable to Mosaic in the third quarter rose
to $344.6 million, or 81 cents per share, from $273.3 million,
or 64 cents per share, a year earlier.
The results for the latest quarter included a negative
impact from items, including antitrust settlements and
adjustments for asset retirement obligations amounting to 7
cents per share.
Net sales rose 2 percent to $2.24 billion.
Analysts had expected, on average, earnings per share of 88
cents and revenue of $2.29 billion, according to Thomson Reuters
SHARE REPURCHASE PLANNED
Mosaic, which this month announced a $1 billion, 4-year
investment in a phosphate production project in Saudi Arabia
with Ma'aden and Saudi Basic Industries Corp JSC, also
intends to buy back shares this year.
About 129 million shares of Mosaic that are held by some
shareholders of giant agribusiness company Cargill Inc
, or about 30 percent of Mosaic, will automatically
convert to common shares starting in late November, unless they
are sold earlier.
Mosaic has the means to buy anywhere from one-third of those
shares to all of them, which would cost about $7.5 billion
depending on the share price and debt costs, Prokopanko said.
"That, we think, is within our capacity," he said, referring
to Mosaic's current cash position of more than $3 billion and
unused borrowing room.
Tax restrictions on the shares expire in late May.
With so many shares in play, Mosaic could be a slightly more
attractive takeover candidate, Prokopanko said.
Meanwhile, the world's largest potash producer by capacity,
Potash Corp, has set its sights on acquiring No. 6 producer
Israel Chemicals Ltd, raising some concerns for Mosaic.
"Hypothetically we would have some issues with that,"
Prokopanko said. "We'd be curious how we'd be able to resolve
Potash Corp is a partner with Mosaic and Agrium in Canpotex
Ltd, the offshore selling agency for potash that the three
companies mine in Western Canada.
Mosaic is seeing strong demand in most of its markets and
expects inventories to draw down in coming months, Prokopanko
said. It expects global 2013 potash shipments to be at the high
end of its estimated range of 55 million to 57 million tonnes.
Mosaic said it expects to sell 2.3 million to 2.6 million
tonnes of potash in the current quarter, ranging from $350 to
$380 per tonne - down from the third quarter's $385 per tonne.
It sold 1.8 million tonnes in the third quarter that ended Feb.
28, sharply higher over the year-earlier quarter.
The company expects average selling prices for phosphates to
be flat in the current quarter, with sales volume ranging from
2.6 million to 2.9 million tonnes. It sold 2.6 million tonnes of
phosphate in the third quarter.
Key potash consumers China and India stayed out of the
market for most of 2012's second half, bruising earnings for the
big producers. China agreed to a new supply contract with
Canpotex on Dec. 31, midway through Mosaic's quarter, and a deal
was announced with India on Feb. 7.
"Inventories of potash were built up ... and now that India
and China are back in the market, it is not surprising that
management expects those producer inventories to come down,"
said analyst Jeffrey Stafford of Morningstar.