* Fiscal Q4 EPS $1.19 vs Street forecast $1.15
* Revenue dips 1 percent to $2.82 billion
* Quarterly dividend doubled to 25 cents
* Shares up 4.2 percent in midday trading
By Ernest Scheyder
July 17 The drought devastating the U.S. corn
crop likely won't dent fertilizer sales, Mosaic Co said
on Tuesday as it reported better-than-expected quarterly
The results and bullish forecast helped push the company's
stock up 4.2 percent in midday trading.
Drought is affecting about 55 percent of the contiguous
United States, which accounts for half of the world's corn
exports. The bad weather comes just as corn should be
pollinating, and the lack of moisture harms final yields.
Just this week, U.S. Department of Agriculture slashed its
weekly corn crop condition rating by the biggest amount in
nearly a decade.
The drought is not good news for Mosaic, as farmers likely
will apply less potash and phosphate -- the company's main
products -- in August and September as corn plants die.
However, Mosaic's global reach should help offset any demand
dip from the drought, and the company expects another "good
year" for its fiscal year that began June 1, Chief Executive Jim
While the drought likely is one farmers will "tell their
grandkids about," the dip in production this year will force
them to plant more next year, and as a consequence apply more
fertilizer, he said.
"It's horrible for these farmers to be losing their crop,
but that means for the next year, probably the next two years,
they're going to have to have their foot to the accelerator and
produce more grain," Prokopanko said in an interview.
Mosaic posted net income of $507.3 million, or $1.19 per
share, for its fiscal fourth quarter, down from $649.2 million,
or $1.45 per share, a year earlier.
Analysts expected $1.15 per share, according to Thomson
Revenue fell 1 percent to $2.82 billion but beat the $2.55
billion analysts had expected.
Prices for phosphate, the second-most important fertilizer
for farmers and a key Mosaic product, fell to $494 per metric
ton in the quarter from $574 a year earlier.
Prices for potash rose to $455 per metric ton from $404 a
The company raised its annual dividend to $1 from 50 cents.
The decision has not been made yet as to whether the dividend
will be paid quarterly or annually, Prokopanko said. It was
Mosaic's second dividend increase this year.
"We were emboldened by a strong outlook we see for the next
five to 10 years ahead for the whole world food and global
nutrition story," Prokopanko said. "We felt very confident to
issue a dividend that even under the most dire of forecasts
we're going to be able to maintain."
Mosaic expects to spend $1.5 billion to $1.8 billion in its
fiscal year 2013 by expanding three Canadian potash mines.
The company is also studying whether to build a nitrogen
plant on the U.S. Gulf Coast to produce ammonia, a key
ingredient in phosphate fertilizer.
Mosaic currently makes 500,000 metric tons per year of
ammonia, and buys an additional 1 million metric tons. In-house
production of all its ammonia needs would be a boon to annual
earnings, which drop by $78 million each time ammonia prices
increase by $25 per tonne.
Prokopanko said on Tuesday that currently there are no
"insurmountable hurdles" to building the nitrogen plant, and
that once construction begins it should take about two or three
years until the plant is fully operational.
"We are going through the permitting process and various
engineering plans are being considered," he said. "At this point
it looks favorable."