(Mosaic earnings report article updated with Mosaic and Potash Wednesday stock movements.)
PLYMOUTH, Minn. (
reported earnings Tuesday that missed Wall Street targets, but the company nonetheless continued to pound the same bullish theme that has
After Tuesday's closing bell, the company reported net earnings for its fiscal second quarter of 24 cents a share. That included a charge of 8 cents a share to pay for restructuring costs. Analysts polled by Thomson Financial were looking for per-share earnings of 35 cents.
Mosaic's revenue amounted to $1.7 billion, in line with estimates.
Compared to a year ago, Mosaic's results were ugly -- net income down 88%, revenue down 43% -- underscoring how far the fertilizer industry has fallen since the financial crisis and the bursting of the asset bubble in commodities.
But much like its peer
-- and like investors who have bid up agricultural shares since the summer, and like many of the Wall Street analysts who cover fertilizer companies -- Mosaic sounded optimistic notes in its press release announcing quarterly results, reiterating that it sees an ongoing recovery in its two crop-nutrient businesses: potash and phosphate.
"Phosphate demand is rebounding nicely, and we anticipate positive comparative volume trends over the balance of fiscal 2010," said Jim Prokopanko, CEO of Mosaic, in a statement.
As for potash, Prokopanko said that although "orders remained soft, sales activity picked up toward the end of the quarter and we see this trend continuing into calendar 2010."
Mosaic said demand for potash among farmers has started to "gain traction." For that observation, the company cited last month's settlement of contracts between Russian potash producers and buyers in China, which set a price of $350 a ton. The price "visibility" afforded by that contract has been
, including a
analyst, who upgraded shares of Mosaic rival Potash just on Tuesday morning.
Still, visibility wasn't heightened enough for Mosaic to provide specific potash sales projections. Since the crash, the company has ceased its policy of offering, each quarter, volume and price forecasts for the nutrient, and the silence continued on Tuesday. Mosaic has said it won't again issue potash guidance until "market conditions normalize."
Mosaic did make phosphate projections, however. It expects sales volumes to range from 2.2 million to 2.6 million tons in the fiscal third quarter and average selling prices to range between $310 to $350 a ton.
Squeezed during the recession by tumbling crop prices, farmers essentially stopped buying potash, prices for which had risen to stupendous highs in early 2008 -- and the resulting collapse of the potash market could be seen in the company's gross margins. During the quarter, Mosaic's potash segment accounted for 43% of net sales, down from 59% in the year-ago period.
The market has hardly punished Mosaic shares since it reported results, with investors choosing to focus on -- and wager on -- recovery.
have risen sharply over the last month or so. On Wednesday, the day after Mosaic released earnings, its stock set yet another 52-week high intraday and closed at $65.57, up 3.8% from the previous session.
Potash shares, meanwhile, were also carried higher Wednesday, closing at $123, up nearly 4%. On Tuesday, the company's shares also jumped, by 5.5%, helped by the Credit Suisse upgrade.
-- Written by Scott Eden in New York
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Scott Eden has covered business -- both large and small -- for more than a decade. Prior to joining TheStreet.com, he worked as a features reporter for Dealmaker and Trader Monthly magazines. Before that, he wrote for the Chicago Reader, that city's weekly paper. Early in his career, he was a staff reporter at the Dow Jones News Service. His reporting has appeared in The Wall Street Journal, Men's Journal, the St. Petersburg (Fla.) Times, and the Believer magazine, among other publications. He's also the author of Touchdown Jesus (Simon & Schuster, 2005), a nonfiction book about Notre Dame football fans and the business and politics of big-time college sports. He has degrees from Notre Dame and Washington University in St. Louis.