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The Mosaic Company Rises Despite Weak Earnings

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The Mosaic Company (NYSE: MOS) is up Thursday despite posting weak third quarter fiscal 2013 results.

The Plymouth, Minnesota-based firm's EPS rose 26.5 percent year-over-year to $0.81. However, it fell short of the $0.88 per share analysts expected.

Third quarter revenue finished up two percent at $2.24 billion, but missed the Wall Street consensus of $2.54 billion.

$7 Billion Joint Venture With Ma'aden and SABIC

On March 19, Mosaic announced it entered into a heads of agreement with Ma'aden and the Saudi Basic Industries Corporation (SABIC) under which the parties intend to enter a joint venture to develop integrated phosphate production facilities in Saudi Arabia.

The project is worth approximately $7 billion and will be known as the Wa'ad Al Shammal Phosphate Project. Under the deal, Mosaic and its partners would develop a mine and chemical complexes to produce animal feed, fertilizers, food-grade purified phosphoric acid and sodium tripolyphosphate for sale worldwide. The facilities are expected to be operational in late 2016.

Mosaic would make a cash investment of up to $1 billion over four years and acquire a 25 percent ownership stake.

New $700 Million Facility in Louisiana?

In December, Mosaic announced it was beginning front-end engineering and design work on a potential $700 million ammonia production facility at its Faustina location in the St. James Parish of Louisiana.

If the project is ultimately seen through, it is expected to nearly triple the agricultural chemical company's production of ammonia at the said location. All of the additional ammonia would be destined for Mosaic's fertilizer plants in Florida.

Construction would begin in 2014 and the facility would likely be operational in early 2016.

Mosaic intends to make a final decision on the project in mid-2013.

Guidance

Mosaic expects total potash sales of 2.3 to 2.6 million tons during the fourth quarter at a realized MOP price of $350 to $380 per ton. It believes gross margin will be 40 to 45 percent in this segment.

As for phosphates, the company anticipates selling 2.6 to 2.9 million tons at a DAP price of $475 to $505 per ton. Gross margin is expected to finish on par with third quarter results.

Market Reaction

After five consecutive days of losses and despite its weak earnings, Mosaic is on an upswing to round out the week. The stock is hovering around the $59.50 mark in the morning hours of trading.

Mosaic is up approximately 1.5 percent on Thursday.

Posted-In: Ma'aden SABICEarnings News Guidance Best of Benzinga

 

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