Mosaic Company (MOS) is down over 56% in the past 5-year period, with a drop of 36% in thelast year alone. The company has been on a downturn for years, and analysts suggest that the company’s stock may have bottomed out in recent weeks.
The industry suffered further as commodity prices slumped, causing potassium, phosphate and nitrogen(three vital fertilizer nutrients) to fall in price, too.
During the company’s second-quarter conference call, the company disclosed the average selling price of potash and phosphate, the company’s main products. The prices fell 36% and 24% respectively.
Mosaic posted a net loss of $10 million on the quarter compared to a profit of $391 million during the same quarter a year prior. The loss is the company’s first in over a decade, and a loss caused the company’s stock to fall as investor sentiment waned further.
CEO Joc O’Rourke stated, “While the environment is challenging, we see signs of stabilization in the second half of the year.” The CEO pointed to fertilizer prices bottoming out, and he reaffirmed that there is a solid demand for the company’s products. Talks with China and India took much longer than expected, which caused part of the company’s profitability troubles last quarter.
The talks have been finalized, allowing the company to continue to improve its bottom line.
Amid the CEO’s optimism were words of caution that phosphate and potash prices will be slightly lower in the third quarter of the year before an expected rebound in the fourth quarter. Full-year 2016 guidance was revised, with sales and administrative expenses falling to $330 – $350 million. Brine management costs were revised up from $150 – $170 million to $160 – $180 million.
Capital expenditures were raised by $50 million from $750 – $850 million to $800 – $900 million.
Lower expenses are a positive for investors, and an uptick in forecasted prices marks another positive for Mosaic moving into 2017.
