Top Stories
Top Stories
Wires

UPDATE 2-Mosaic cuts profit view; cites bad weather, weak phosphate margins

Shanti S Nair

(Adds background, analyst quote, share movement, revenue estimate)

Aug 6 (Reuters) - U.S. fertilizer company Mosaic Co cut its full-year earnings forecast and posted a lower-than-expected profit, as rains and flooding in the United States hit its volumes and phosphates margins, sending its shares down as much as 12.3%.

Severe flooding in the U.S. farm belt across Iowa, Nebraska, South Dakota and several other states delayed spring farming and has hit agricultural companies like Mosaic, which sell fertilizers directly to farmers.

The weather woes are piling pressure on companies that are already grappling with the trade war between Washington and Beijing that has cut shipments of American farm products to China.

Mosaic cut its 2019 adjusted profit forecast, for the second time, to between $1.10 and $1.50 per share, from $1.50 to $2.00 per share, to reflect lower than expected sales volumes in the first half and a slower recovery of phosphates margins.

BMO Capital markets analyst Joel Jackson said he was concerned that there could be more guidance cuts, while RBC analyst Andrew Wong said he was surprised by the lower sales volumes and the higher phosphate segment operating costs.

Phosphates sales volumes fell 4.3% to 2.2 million tonnes in the second quarter, while potash fell 8.3% to 2.2 million tonnes.

Mosaic also said it would temporarily curtail potash production at Colonsay mine in Saskatchewan. In June, it had closed its Plant City phosphates facility in Florida, as it looks to cut costs amid weak global phosphate market conditions.

However, the company expects higher grain price to drive fertilizer demand significantly higher this fall.

"We expect the current North American inventories to be reduced sharply through an anticipated strong fall application season, and we see much stronger fundamentals for agriculture and fertilizer emerging in 2020," Chief Executive Officer Joc O'Rourke said on a conference call with analysts.

In a similar vein, bigger rival Nutrien Ltd had also missed earnings estimate and cut its full-year profit outlook last week, but then forecast that U.S. farmers would plant the most amount of acres of corn in seven years in 2020.

Mosaic reported a net loss of $233.1 million, or 60 cents per share, in the three months to June 30, including a charge related to the Plant City facility closure.

Excluding items, it earned 12 cents per share, below analysts' expectations of 29 cents, according to Refinitiv IBES data.

Net sales fell 1.3% to $2.18 billion and missed estimates of $2.32 billion.

Including session's loss, Mosaic's shares have fallen more than 25% this year. (Reporting by Shanti S Nair in Bengaluru; Editing by Shailesh Kuber)