Compass Hit by Mild Weather and Weak Agricultural Market

Compass Minerals International Inc of Overland Park, KS has reported a 37% decrease in 2015 net earnings to US$159.2 million on sales 14% lower at US$1.1 billion. The company’’s Salt business was impacted by mild winter weather and its Plant Nutrition business was impacted by a weak agricultural market. Lower volumes in both businesses along with lower average selling price for salt drove a US$35.7 million reduction in fourth quarter earnings.

Compass’’ Salt segment had fourth quarter operating earnings of US$72.1 million on sales of US$236.1 million, down from US$104.4 million on sales of US$355.3 million in the fourth quarter of 2014. Highway deicing volume sales fell 32%, to 2.38 million tons. The average sales price for highway deicing salt decreased 14% to US$56.71/ton. The segment’s consumer and industrial sales volume fell 17% to 642,000 tons and the average price decreased 2% to US$157.79/ton.

For all of 2015, Compass’ Salt segment generated operating earnings of US$215.2 million on sales of US$849 million compared with US$291.4 million on sales of US$1.0 billion in 2014. Highway deicing sales volume decreased from 10.69 million tons to 8.85 million tons and consumer and industrial sales volume decreased 15% to 2.2 million tons. The average sales price for highway deicing products was US$58.62/ton, up from US$57.37/ton. For consumer and industrial products the average price decreased from US$149.89/ton to US$148.98/ton.

Compass’’ Specialty Fertilizer segment had fourth quarter sales of US$50.5 million compared with US$75.8 million in the prior year period. Sales volumes decreased 41%, to 62,000 tons, and the average selling price increased 15% to US$805/ton. For the full year, Specialty Fertilizers generated operating earnings of US$57.9 million on sales of US$238.4 million versus US$74.8 million on sales of US$270.2 million in 2014. The sales increase reflects a 21% decrease in sales volume, to 311,000 tons.

In response to the challenging conditions in both business units, Compass has announced steps to align inventories with market demand and is reviewing its cost structure. This is expected to result in a restructuring charge of US$4 million in the first quarter related to a workforce reduction of 150. A significant portion of this total results from investment in continuous mining at its salt mine in Goderich, ON.

 

The Mosaic Co of Plymouth, MN has reported fourth quarter net earnings of US$155 million on net sales of US$2.2 billion compared with US$361 million on sales of US$2.4 billion in the same quarter of 2014. For the full year, the company generated a net income of US$1.0 billion on net sales of US$8.9 billion versus US$1.0 billion on sales of US$9.1 billion in 2014.

Mosaic’’s Phosphates segment generated fourth quarter net sales of US$1.0 billion, down from US$1.2 billion in the same period of last year. The decrease was driven by lower sales volumes and lower finished product prices. Sales volumes in the quarter were 2.2 million tonnes versus 2.4 million tonnes in the prior year period. The average realized price was US$410/tonne versus US$447/tonne a year ago.

Jim Propanko, Mosaic’’s CEO, said, “Our Phosphates business generated stable results for most of the year, highlighting the positive fundamentals of the industry and Mosaic’s market leadership role. Lower prices in this period of seasonally weak demand and our related production curtailment, combined with a lag in realizing the benefits of lower raw materials costs, all negatively impacted margins during the fourth quarter. “Mosaic’’s actions to optimize our potash production by closing high-cost facilities and aggressively managing costs are delivering results.””

Fourth quarter net sales in Mosaic’s Potash segment totalled US$572 million down from US$763 million in the same period of 2014, reflecting lower shipments and lower average price. Volume shipments were 1.9 million tonnes, down from 2.3 million tonnes a year ago. The average MOP price was US$254/tonne down from US$295/tonne in 2014. Potash production was 1.9 million tonnes, or 70% of capacity, down from 2.6 million tonnes or 91% of operational capacity a year ago

 

Agrium Inc of Calgary, AB reported fourth quarter 2015 gross profit of US$63 million for its Potash business on sales of US$175 million compared with a loss of US$50 million on sales of US$9 million in the same period of 2014. The results reflect a significant increase in volume sales, partially offset by lower realized sales prices. Sales volumes in the quarter were 656,000 tonnes compared with 19,000 tonnes in the fourth quarter of 2014. The increase in sales volume reflects the tie-in of a one million tonne expansion at the company’’s Vanscoy, SK mine versus being out of production for most of the period in the prior year. Realized sales prices for potash in North America were US$281/tonne compared with US$375/tonne in the same period of 2014.

For all of 2014, Agrium’’s Potash business generated a gross profit of US$180 million on sales of US$515 million versus US$70 million on sales of US$391 million in 2014. The business sold 1.7 millon tonnes at an average price of US$297/tonne versus 1.3 million tonnes at US$309/tonne.

Agrium’’s Phosphate business reported a fourth quarter gross profit of US$37 million on sales of US$199 million versus a profit of US$37 million on sales of US$200 million in the 2014 period. Phosphate sales volumes increased 6.5% from 305,000 tonnes to 325,000 tonnes. The company’’s average selling price decreased from US$656/tonne to US$610/tonne. The Phosphate business generated a gross profit of US$142 million on sales of US$741 million in 2015 versus US$76 million on sales of US$701 million in 2014. The business sold 1.17 million tonnes at an average sales price of US$635/tonne versus 1.14 million tonnes at an average price of US$614/tonne in 2014.

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