UPDATE 2-Mosaic profit plunges 70 pct on weaker prices, sales
Nov 5 (Reuters) - Mosaic Co reported sharply lower third-quarter earnings on Tuesday as prices of its potash and phosphate fell and buyers took a cautious stance, and the U.S. fertilizer company said prices may remain weak into 2014.
Shares of Mosaic, the world's largest producer of finished phosphate products and North America's second-biggest potash producer, dropped 2.7 percent in premarket trading.
Mosaic in September cut its third-quarter sales and price outlook for potash and phosphate because crop nutrient markets softened after the breakup of Belarusian Potash Co, which triggered a price slide.
A delayed U.S. crop harvest also pushed back traditional autumn fertilizer applications, said Mosaic Chief Executive Jim Prokopanko.
He said North American demand for crop nutrients looked strong for the rest of 2013, but pricing might be challenging in 2014.
Mosaic, based in Plymouth, Minnesota, forecast fourth-quarter potash sales of 1.5 million to 1.9 million tonnes, compared with 1.4 million tonnes a year earlier. It said it expects phosphate sales of 2.5 million to 2.9 million tonnes, compared with 2.8 million tonnes a year earlier.
The implications of Mosaic's fourth-quarter guidance suggest lower-than-expected earnings and potential stock weakness, Scotiabank analyst Ben Isaacson said in a note.
The company plans to run its potash mines below 65 percent of capacity overall in the fourth quarter, allowing for maintenance at its Esterhazy, Saskatchewan, mine, and will run its phosphate operations at about 80 percent of capacity.
Net earnings for the third quarter fell 70 percent to $124 million, or 29 cents per share, from $417 million, or 98 cents per share, a year earlier.
Net sales were down 27 percent to $1.9 billion. Analysts' average forecast was $1.970 billion.
The results included a charge of 22 cents per share from Mosaic's decision, announced Tuesday, to sell certain assets and operations. It said it would sell its salt operation, close its small potash mine at Hersey, Michigan, and exit distribution businesses in Argentina and Chile.
Mosaic's adjusted earnings per share were 51 cents, below analysts' average forecast of 55 cents, according to Thomson Reuters I/B/E/S.
Rival Potash Corp of Saskatchewan Inc in late October reported its weakest quarter in three years and cut its full-year outlook.
Mosaic sold 1.38 million tonnes of potash in the third quarter, below its guidance of 1.45 to 1.65 million tonnes and down from 1.8 million tonnes a year earlier. Its average selling price for muriate of potash was $342 per tonne, topping guidance of $330 to $340 but down 24.5 percent year over year.
The company sold 2.7 million tonnes of phosphate, hitting the top end of its guidance range of 2.6 to 2.7 million tonnes, but down from the year-ago level of 2.9 million tonnes. Mosaic's average selling price for diammonium phosphate was $436 per tonne, within the guidance range of $430 to $440 but down sharply from $533 per tonne a year ago.