The Mosaic Co (MOS, Financial) released its 8-K filing on August 6, 2024, reporting a net loss of $162 million for the second quarter of 2024. Adjusted earnings per share (EPS) came in at $0.54, falling short of the analyst estimate of $0.70. The company also reported revenues of $2.8 billion, which missed the estimated $3,425.14 million.
Company Overview
Formed in 2004 by the combination of IMC Global and Cargill's fertilizer business, The Mosaic Co (MOS, Financial) is one of the largest phosphate and potash producers in the world. The company's assets include phosphate rock mines in Florida, Brazil, and Peru, and potash mines in Saskatchewan, New Mexico, and Brazil. Mosaic also operates a large fertilizer distribution operation in Brazil through its Mosaic Fertilizantes business, which the company acquired from Vale in 2018.
Performance and Challenges
The Mosaic Co (MOS, Financial) reported a net loss of $162 million, or $(0.50) per diluted share, for the second quarter of 2024. This compares to a net income of $369 million in the same period last year. The current period results were significantly impacted by notable items totaling $334 million, mainly from foreign currency transaction loss, unrealized loss on derivatives, and a withholding tax impact.
Revenues for the quarter totaled $2.8 billion, down 17% from the year-ago period, primarily reflecting the impact of lower selling prices. The gross margin rate in the second quarter was 14%, down from 17% in the same period last year.
Financial Achievements
Despite the challenges, The Mosaic Co (MOS, Financial) made significant progress on cost-saving initiatives and strategic projects. Phosphate production volumes increased by almost 100,000 tonnes sequentially, and the company achieved a 15% reduction in cash costs per production tonne since the end of 2023. Additionally, Mosaic has returned $298 million of capital to shareholders in the first six months of 2024, including $160 million in share repurchases.
Segment Performance
| Segment | Q2 2024 | Q1 2024 | Q2 2023 |
|---|---|---|---|
| Potash Sales Volumes (million tonnes) | 2.3 | 2.2 | 2.2 |
| Potash Operating Earnings (millions) | $174 | $198 | $328 |
| Phosphate Sales Volumes (million tonnes) | 1.7 | 1.6 | 1.9 |
| Phosphate Operating Earnings (millions) | $133 | $40 | $146 |
| Mosaic Fertilizantes Sales Volumes (million tonnes) | 2.2 | 1.7 | 2.4 |
| Mosaic Fertilizantes Operating Earnings (millions) | $61 | $42 | $(20) |
Analysis and Outlook
The Mosaic Co (MOS, Financial) continues to face challenges from lower selling prices and notable financial impacts. However, the company has made strides in cost reduction and strategic growth initiatives, particularly in its phosphate and potash segments. The completion of key projects and the focus on cost-saving measures are expected to provide long-term benefits.
Looking ahead, Mosaic anticipates robust demand in North America and solid in-season demand in Brazil. The company expects sales volumes in the third quarter to be in the range of 2.1-2.3 million tonnes for potash and 1.7-1.9 million tonnes for phosphate. Despite the current challenges, the long-term outlook for the global potash and phosphate markets remains favorable.
Explore the complete 8-K earnings release (here) from The Mosaic Co for further details.
