The Mosaic Company reported net income of $1.2bn, making a 67% YoY decrease, along with an Adjusted EBITDA of $2.8bn, down 56% YoY for FY23. Mosaic’s revenue declined by 28% YoY to $13.7bn negatively affected by lower YoY fertilizer prices. The company’s gross margin decreased from 30% in 2022 to 16% in 2023. In the phosphate segment, revenue dropped by 18% to $1,070mn in 4Q23, while the gross margin fell by 40% YoY to $139mn, and Adj EBITDA was down 26% YoY to $259mn. Despite a 1% YoY increase in phosphate sales volumes, a 24% YoY decline in DAP price contributed to the revenue drop. The phosphate operating rate stood at 60% in 4Q23. Ammonia costs decreased by 44% and sulfur costs were down 56% YoY in 4Q23. Potash revenue declined by 33% YoY to $758mn in 4Q23, with Adj Gross Margin down by 53% YoY and Adj EBITDA down 56% YoY to $322mn. Potash sales volumes increased by 38% YoY to 2.577mt in 4Q23, and the company achieved a 90% operating rate for potash. MOP cost was down 13% YoY to $66/t on higher production volumes. The revenue decline in the potash segment was driven by a 58% drop in MOP prices and a 52% decline in average potash finished price to $294/t. Mosaic Fertilizantes reported a 38% decline in net sales, but the margin improved to $94mn, and Adj EBITDA reached $111mn in 4Q23, up from $29mn a year ago. In FY23, the company decreased revenue from phosphate sales by 24%YoY to $4,724mn, with Adj EBITDA of $1,227mn, down 45% YoY due to a 29% decline in DAP price partially offset by a 7% volume growth. Potash revenue was down 38% YoY to $9,280mn, while Adj EBITDA declined by 53% YoY due to a 52% drop in potash selling price in FY23. Mosaic Fertilizantes’ net sales declined by 31% YoY to $5,685mn and Adj EBITDA dropped 69% YoY to $327mn. Brazilian MAP price was 30% lower YoY. The company’s FY23 revenue reached $13,696mn in FY23, but high feedstock prices and high-cost inventories resulted in only 14% YoY lower cost of sales, and Adj EBITDA dropped by 56% YoY to $2,761mn in FY23. The company’s capex was c.$1.4bn in 2023, while capital return to shareholders reached $1.1bn, including $756mn of share repurchases.
Mosaic anticipates strong fertiliser shipments, nearly reaching record levels in 2024. According to Mosaic, phosphate demand remains robust and supply is tight, suggesting a sustained strong market in the near future. This trend is driven by under-fertilisation over the past two years, favorable fertilizer affordability, and positive farmers’ economics. The global grain and oilseed stocks-to-use ratio remains at c.16%, historically low. While corn and soybean stock-to-use ratios are increasing, these crops account for c.29-30% of phosphate and potash consumption. Fertilizer shipments to Brazil are expected to increase YoY to 45-47mt in 2024. Global phosphate shipments are projected to range from 74-77 mt, while MOP shipments are forecasted to be between 69-72mt, both showing a YoY increase. However, the potash economics have not yet improved, leading the company to cut production at Colonsay. Mosaic expects capex to be $1.2mn in 2024, $200mn lower than the previous year. In the phosphate segment, the company expects sales volumes of 1.6-1.8mt and a realised price at the plant in the range of $580-605/t in1Q24. The company targets $150 mn annual savings in SG&A. We are maintaining our Hold rating and adjust our 12-month target price from $41.5 to $36.2 per share.
14 Mar 2024
The Mosaic Company - company update
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The Mosaic Company - company update
- Published:
14 Mar 2024 -
Author:
Marina Alekseenkova -
Pages:
6
The Mosaic Company reported net income of $1.2bn, making a 67% YoY decrease, along with an Adjusted EBITDA of $2.8bn, down 56% YoY for FY23. Mosaic’s revenue declined by 28% YoY to $13.7bn negatively affected by lower YoY fertilizer prices. The company’s gross margin decreased from 30% in 2022 to 16% in 2023. In the phosphate segment, revenue dropped by 18% to $1,070mn in 4Q23, while the gross margin fell by 40% YoY to $139mn, and Adj EBITDA was down 26% YoY to $259mn. Despite a 1% YoY increase in phosphate sales volumes, a 24% YoY decline in DAP price contributed to the revenue drop. The phosphate operating rate stood at 60% in 4Q23. Ammonia costs decreased by 44% and sulfur costs were down 56% YoY in 4Q23. Potash revenue declined by 33% YoY to $758mn in 4Q23, with Adj Gross Margin down by 53% YoY and Adj EBITDA down 56% YoY to $322mn. Potash sales volumes increased by 38% YoY to 2.577mt in 4Q23, and the company achieved a 90% operating rate for potash. MOP cost was down 13% YoY to $66/t on higher production volumes. The revenue decline in the potash segment was driven by a 58% drop in MOP prices and a 52% decline in average potash finished price to $294/t. Mosaic Fertilizantes reported a 38% decline in net sales, but the margin improved to $94mn, and Adj EBITDA reached $111mn in 4Q23, up from $29mn a year ago. In FY23, the company decreased revenue from phosphate sales by 24%YoY to $4,724mn, with Adj EBITDA of $1,227mn, down 45% YoY due to a 29% decline in DAP price partially offset by a 7% volume growth. Potash revenue was down 38% YoY to $9,280mn, while Adj EBITDA declined by 53% YoY due to a 52% drop in potash selling price in FY23. Mosaic Fertilizantes’ net sales declined by 31% YoY to $5,685mn and Adj EBITDA dropped 69% YoY to $327mn. Brazilian MAP price was 30% lower YoY. The company’s FY23 revenue reached $13,696mn in FY23, but high feedstock prices and high-cost inventories resulted in only 14% YoY lower cost of sales, and Adj EBITDA dropped by 56% YoY to $2,761mn in FY23. The company’s capex was c.$1.4bn in 2023, while capital return to shareholders reached $1.1bn, including $756mn of share repurchases.
Mosaic anticipates strong fertiliser shipments, nearly reaching record levels in 2024. According to Mosaic, phosphate demand remains robust and supply is tight, suggesting a sustained strong market in the near future. This trend is driven by under-fertilisation over the past two years, favorable fertilizer affordability, and positive farmers’ economics. The global grain and oilseed stocks-to-use ratio remains at c.16%, historically low. While corn and soybean stock-to-use ratios are increasing, these crops account for c.29-30% of phosphate and potash consumption. Fertilizer shipments to Brazil are expected to increase YoY to 45-47mt in 2024. Global phosphate shipments are projected to range from 74-77 mt, while MOP shipments are forecasted to be between 69-72mt, both showing a YoY increase. However, the potash economics have not yet improved, leading the company to cut production at Colonsay. Mosaic expects capex to be $1.2mn in 2024, $200mn lower than the previous year. In the phosphate segment, the company expects sales volumes of 1.6-1.8mt and a realised price at the plant in the range of $580-605/t in1Q24. The company targets $150 mn annual savings in SG&A. We are maintaining our Hold rating and adjust our 12-month target price from $41.5 to $36.2 per share.