Mosaic Co Earnings Call Nuggets: Ammonia Analysis and Factory

Mosaic Co (NYSE:MOS) recently reported its fourth quarter earnings and discussed the following topics in its earnings conference call.

Ammonia Analysis

Christopher Parkinson – Credit Suisse: You mentioned in your commentary that you are benefiting from lower sulfur and rock costs offsetting weaker phosphate product prices, but you didn’t mention ammonia. Can you just kind of run through the input costs and give some color on your expectations for the back calendar year, and also what further benefits we are set to see from a cost perspective?

Lawrence W. Stranghoener – EVP and Chief Financial Officer: You are right to observe that and make the connection over the important distinction between phosphate pricing and the gross margins. We are in fact seeing a reduction in the cost components to phosphate production. And I’m going to ask our Chief Operating Officer Joc O’Rourke to talk about some of the specifics and the dynamics he’s seeing in those markets. Joc?

James ‘Joc’ O’Rourke – EVP – Operations and COO: Thanks, Chris. Yes, we’re certainly seeing lower prices in all of our raw materials. Ammonia has come down about 20%, sulfur is down significantly and is moving down as we speak and rock costs are also moving down. However the one thing we need to point out is there is about a quarter lag between when we see the change in prices and when it meets cost of goods sold. So what we expect to see is the despite the lowering price, we should see our margins stay relatively flat because of the prices of raw materials. Thanks.

Ammonia Factory

Vincent Andrews – Morgan Stanley: Could you give an update on the ammonia plant and whether you are going to go forward with that or not.

James T. Prokopanko – President and CEO: It’s a project we continue to study and review as fast as we do our work. We continue to see both additions to the list of plants that may be built, as well as deletions. I’m going to ask Larry Stranghoener our CFO to speak to where we are at on that project.

Lawrence W. Stranghoener – EVP and Chief Financial Officer: Vincent good morning. We’re in the final stages of our analysis. We’re going through a very detailed front end engineering program to make sure that when we make a decision we will be fully informed as Jim alluded to. We’re closely watching trends in supply and demand for ammonia longer-term, supply and demand for natural gas longer-term we’re making sure we understand all the cost of this project before we make a final decision. So look for an announcement before the end of this calendar year for sure.

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