Mosaic (MOS) To Report Q1 Earnings: What's In The Offing?
Zacks Investment Research | May 02, 2019 06:20AM ET
The Mosaic Company (NYSE:MOS) is set to release first-quarter 2019 results after the bell on May 6. The fertilizer maker is expected to gain from the Vale Fertilizantes acquisition and its cost management initiatives in the quarter. However, it will likely face pricing weakness in the quarter along with some pressure on volumes.
Mosaic’s shares are down around 11.6% year to date, underperforming the roughly 6.4% rise recorded by the industry .
Let’s see how things are shaping up for this announcement.
What do the Estimates Say?
Mosaic, during its fourth-quarter call, said that it expects its strong business and financial performance to continue this year. It sees balanced supply and demand for both phosphates and potash in 2019.
The company expects phosphates sales volumes in the band of 1.6-1.9 million tons for the first quarter. The segment’s gross margin is forecast in the band of $40-$50 per ton.
Potash sales volumes have been forecast in the range of 1.7-2 million tons for the first quarter and gross margin is projected in the band of $90-$100 per ton.
The company also expects sales volumes in the Mosaic Fertilizantes segment in the band of 1.3-1.6 million tons for the first quarter. The company also projects gross margin for the unit in the range of $40-$50 per ton.
The Zacks Consensus Estimate for first-quarter total revenues is currently pegged at $1,885 million, reflecting an expected decline of 2.5% from the year-ago quarter’s tally.
Factors to Consider
The Vale Fertilizantes acquisition is expected to continue to support the company’s revenues in the March quarter. The buyout has allowed Mosaic to capitalize on the rapidly growing Brazilian agricultural market. The company has completed the integration of the acquired business and realized net synergies of $158 million in 2018. It expects to achieve $275 million of annualized net synergy target in 2019.
The company should also gain from its cost management actions in the to-be-reported quarter. It is making progress in controlling its per ton SG&A expenses.
Mosaic gained from higher fertilizer prices in the last reported quarter, which drove its top line. However, the company is expected to face some pricing weakness in the first quarter. Seasonal price declines will likely affect the company’s sales and margins in the quarter.
Get The News You Want
Some pressure on phosphate sales volumes are also likely due to unfavorable impacts of the weak fall application season in North America as a result of bad weather. Volumes in the Mosaic Fertilizantes unit are also likely to be affected by seasonal sluggishness in Brazil.
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