Can Mosaic Get The Sustainable Price Leverage It Needs?
Stephen Simpson, CFA
Stephen Simpson, CFA
Thu, May 19, 4:50 PM
Thu, May 19, 12:41 PM
- Potash supply contracts with Chinese buyers should be settled in 2-4 weeks, setting a much-needed global price floor, Potash Corp. (POT +2.6%) CEO Jochen Tilk tells Reuters.
- The CEO expects Chinese buyers to settle first with Belaruskali and Russia's Uralkali, as is typical, followed by a contract with the Canpotex group owned by POT, Mosaic (MOS +1.5%) and Agrium (AGU -0.6%).
- Tilk also says POT's $1 annual dividend is sustainable, noting that the company's capital spending is set to decline next year.
- Now read Potash Corp.: Is this a buy point?
Wed, May 4, 2:48 PM
- Mosaic (MOS -1.6%) is lower after reporting in-line Q1 earnings and reducing guidance for FY 2016 phosphate and potash sales volumes.
- MOS says it expects Q2 total sales volumes for its phosphates segment of 2.3M-2.6M metric tons, lower than 2.8M sold in the year-ago quarter but higher than the 2.2M sold in Q4 2015; for FY 2016, MOS forecasts the realized price at $335-$355/ton and gross margin at ~10%.
- MOS sees Q2 sales volumes for the potash segment of 1.9M-2.2M metric tons compared to 2.3M last year and 1.5M in Q4 2015; for the full year, MOS forecasts a realized price of $180-$200/ton and a gross margin in the mid to high teens.
- Full-year phosphate sales volume is projected at 9M-9.75M metric tons, while full-year potash sales volume is seen at 7.5M-8M metric tons.
- MOS also cuts its 2016 capex guidance to $800M-$900M from its previous estimate of $900M-$1.1B.
- Now read Mosaic to outlast lower prices
Wed, May 4, 6:33 AM
Tue, May 3, 5:30 PM
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Fri, Apr. 22, 11:35 AM
- Mosaic (MOS +0.1%) and a group led by Vale (VALE -0.2%) and buyout firm Apollo Global Management are among suitors picked to make final bids for Anglo American’s (OTCPK:AAUKF, OTCPK:AAUKY) niobium and phosphate business in Brazil, Bloomberg reports.
- Eurochem, South32 and X2 Resources, the P-E firm founded by former Xstrata chief Mick Davis also were considering making offers for the assets, which could fetch as much as $1.5B, according to the report.
- Anglo put the Brazilian business up for sale last year as part of a wider plan to cut costs and debt amid a global rout in commodity prices.
- Now read Mosaic to outlast lower prices
Tue, Apr. 19, 12:49 PM
- Potash Corp. (POT +4.5%) and Mosaic (MOS +3.1%) are downgraded to Underweight from Equal Weight at Barclays, which says low potash prices along with pressure from new capacity will "substantially limit" earnings prospects for the two companies.
- Barclays thinks potash prices may be reaching a bottom but at a lower level than it had expected, and has grown increasingly concerned that the looming Chinese contract settlement could see a more sizable reduction - approaching $70/ton - on last year's $315/ton price given current pricing across Brazil and southeast Asia and the slow pace of imports into India.
- The firm maintains Overweight rating for Agrium (AGU +3.1%) and CF Industries (CF +5.7%) but slightly lowers its respective price targets to $94 from $96 and to $40 from $43.
- Now read Potash Corp.: More pain ahead as there is no bottom in sight
Thu, Apr. 14, 11:16 AM
- Potash (POT -2.4%), Mosaic (MOS -3.5%), Intrepid Potash (IPI -8.2%) and CF Industries (CF -1.3%) are downgraded to Underperform from Market Perform at Cowen, which cites the risk of a further deterioration in the grain environment and the belief that nutrient prices and margins still have room to fall.
- Cowen expects an increase in U.S. corn acreage to 93.6M acres from 88M acres, plus anticipated gains in Brazilian and Argentine output, to cause a sizeable drop in corn prices and 2017 corn acreage, which would weigh on ag company shares.
- The firm cuts its price targets for POT to $14 from $16, MOS to $23 from $32, and CF to $25 from $44; Agrium (AGU -3.7%) and CVR Partners (UAN -3.2%) are maintained with Market Perform ratings but with reduced price targets of $86 and $8, respectively.
- Now read Potash Corp. credit rating cut at S&P on fertilizer market weakness
Mon, Apr. 11, 6:55 PM
- Potash Corp. (NYSE:POT) and Mosaic (NYSE:MOS) are downgraded to Hold from Buy at HSBC Securities, which says sustained pressure on fertilizer prices likely will test the ability of manufacturers to weather the impact.
- Low costs and high exports likely will keep urea prices largely dependent on Chinese producers, while potash prices remain directionless due to the absence of a Chinese supply contract, which could force manufacturers to improve their cost structures, cut dividends or modify capital spending and debt levels to deal with the situation, HSBC says.
- The firm points to POT’s exposure to nitrogen fertilizer, especially ammonia, and a “less than Ideal cost base" as potential dividend payout risks, while MOS’s $100B cash buffer will help the company deal with the fertilizer pricing pressure without cutting its dividend but its relatively high potash production costs will depress earnings in a low price potash environment.
Mon, Apr. 4, 3:49 PM
- Potash (POT -3.9%) and Mosaic (MOS -4.1%) are downgraded to Sector Perform from Sector Outperform at CIBC, which says potash markets could remain soft for the foreseeable future due to price competition among the producers.
- Potash prices have continued to decline in recent weeks, meaning POT's 2016 earnings guidance announced barely two months ago already looks shaky, the firm says, adding that it believes the company will reduce the low end of its $0.90-$1.20 EPS outlook.
- CIBC also is concerned about POT's dividend, even though it already has been lowered this year; the firm calculates the payout ratio at 131% in 2016 and 78% in 2017.
- Now read How Potash can fertilize future profits in your portfolio
Wed, Mar. 16, 12:59 PM
- Mosaic (MOS -0.2%) is downgraded to Equal Weight from Overweight with a $29 price target, cut from $42, at Morgan Stanley, which expects potash to be oversupplied in the near to medium term.
- Stanley says the valuation premium of potash nutrient to phosphate has significantly contracted, and MOS's cash flow from operations has declined while there has been no reduction in the company’s capex or investment needs.
- The firm rates Potash Corp. (POT -0.1%) at Equal Weight with a $19 price target, seeing little likelihood of a meaningful recovery in potash profits, along with concerns about the company’s dividend payout ratio of nearly 100%.
Tue, Mar. 1, 12:36 PM
- Moves by potash producers from idling mines to bartering with farmers may pay off soon for the hard-hit industry, company execs tell a BMO investor conference.
- Potash Corp. (POT +3.6%) CEO Jochen Tilk says he expects potash demand to pick up after significant supply cuts, and the company is doing its part to cut capacity by recently shutting down its newest mine in New Brunswick and announcing temporary shutdowns at two other Canadian mines.
- In a bid to cope with farmers' limited access to credit in Brazil, which has hurt demand there, Mosaic (MOS +2.6%) CEO Joc O'Rourke says his company is bartering with the farmers, allowing them to use crops as collateral to borrow money for fertilizer purchases.
- Potash sells for less than $300/metric ton in the U.S. Midwest, down from nearly $450 a year ago, according to data published by Raymond James.
- Also: AGU +2.4%.
Wed, Feb. 17, 10:59 AM
- India has halted potash imports and delayed negotiations for next year's purchases until at least June, Reuters reports, as droughts have hurt demand in one of the world's biggest fertilizer consumers.
- The decision is India's first pause in potash imports in years and will be tough on suppliers already reeling from weak demand as China and Brazil also cut back on their buying.
- Spot prices of potash are at eight-year lows of ~$230/metric ton, down by more than 25% Y/Y; major suppliers to India include Uralkali, Potash Corp. (POT +5.6%), Agrium (AGU +2.3%), Mosaic (MOS +7.2%) and Uralkali.
Thu, Feb. 11, 6:52 AM
Wed, Feb. 10, 5:30 PM
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Mon, Jan. 25, 1:06 PM
- Potash Corp. (POT -6.8%) plunges to 52-week lows as J.P. Morgan analysts say lower nutrient prices likely will prompt management to cut dividend payments.
- "Our base case is that [POT] will reduce it because the dividend was set during a period of cyclical strength and a higher level of earnings and industry structure conditions that does not resemble today’s business landscape," analysts led by Jeffrey Zekauskas write, expecting POT will reduce its annual dividend to $1 from the current $1.52 and downgrading shares to Neutral from Overweight.
- Bernstein analyst Jonas Oxgaard also expects the dividend will be reduced, saying "the fear of [POT] going into financial distress and having bigger problems than paying dividends likely outweighs any reward the company is getting from the dividend at this stage."
- Also: MOS -5.5%, AGU -2%, IPI -3.2%.
The Mosaic Co. engages in the production and marketing of concentrated phosphate and potash crop nutrients for the global agriculture industry. It offers phosphate & potash based crop nutrients and animal feed ingredients. The company engages in every phase of crop nutrition development, from... More
Sector: Basic Materials
Industry: Agricultural Chemicals
Country: United States
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