Mosaic Deepens Curtailments as Phosphate Costs Widen Loss
Adjusted EBITDA fell 28% from a year earlier to $407 million.
Mosaic Co. (MOS), the phosphate and potash producer, posted a second-quarter net loss of $273 million, widening from $258 million in the prior quarter and reversing year-earlier net income of $411 million. Its operating loss narrowed sequentially to $36 million from $373 million but compared with operating earnings of $244 million a year earlier.
The results extended a four-quarter revenue decline as fertilizer volumes weakened and production costs rose. Net sales fell to $2.8 billion from $3.0 billion both sequentially and a year earlier, continuing a slide from $3.5 billion in the third quarter of 2023. Adjusted EBITDA slipped from $416 million in the first quarter and remained well below the $806 million recorded three quarters earlier.
Mosaic recorded $351 million of pretax notable charges, including a $162 million mark-to-market loss tied to Ma’aden, a $69 million noncash project write-off and a $49 million foreign-currency loss. Operating cash flow improved sequentially to $167 million from $104 million but fell 73% from a year earlier, while free cash flow swung to negative $153 million from positive $305 million.
Potash provided the strongest operating support. Sales volume declined to 2.0 million tonnes, while the average MOP selling price increased to $275 a tonne and gross margin expanded to $103 a tonne. Segment adjusted EBITDA was essentially unchanged from both comparison periods at $278 million. Production fell as Mosaic completed the Esterhazy turnaround and divested the Carlsbad mine, though the company continues to expect about 9 million tonnes of potash production in 2024.
Phosphate pricing rose, but higher sulfur, rock and conversion costs weighed on the segment. The DAP selling price climbed to $773 a tonne as sales volume fell to 1.4 million tonnes following a May production curtailment. Phosphate gross margin deteriorated to negative $4 a tonne from positive $67 a year earlier, and the operating loss widened to $104 million from $8 million. Sulfur cost used in production climbed for a fourth consecutive quarter to $522 a long ton, and Mosaic’s $705-a-long-ton third-quarter sulfur contract is expected to affect results primarily in the fourth quarter.
Mosaic deepened the phosphate curtailments in July, completely idling Faustina and operating Bartow at 40% of its targeted annual rate. The company expects third-quarter phosphate sales volume of 1.1 million to 1.4 million tonnes, compared with 1.4 million in the second quarter and 1.9 million in the first.
Mosaic Fertilizantes also faced lower volume and higher costs. Sales volume declined to 1.5 million tonnes, gross margin compressed to $4 a tonne and adjusted EBITDA fell to $60 million from $159 million a year earlier. The company is idling Brazilian commodity-fertilizer production while continuing to operate its profitable Cajati animal-feed business.
Mosaic lowered its 2024 capital-spending forecast by $50 million to $1.20 billion and set full-year selling, general and administrative expense guidance at $510 million to $530 million. Mosaic Biosciences, which recorded $25 million in quarterly sales, still expects annual sales to double from 2023’s $68 million after launching five products in the first half and planning another three to five during 2024.