Challenged by a weak farm economy in the U.S., a strong dollar and delayed contracts abroad, the Mosaic Co. reported first-quarter 2016 net earnings of $257 million, down from $295 million in the first quarter of 2015.
Sales were also down, dropping to $1.67 billion for the quarter compared to $2.14 billion last year, but beating the $1.56 billion expected by analysts.
Company officials said the changes reflected lower prices as well as lower potash sales volumes.
The Plymouth-based company is a global producer of phosphate and potash crop nutrients for agricultural operations.
Fertilizer companies have been struggling with falling prices and have slowed production, mainly because of low grain prices and weak currencies in Brazil and other countries.
“We expect a recovery in the second half of the year,” said Joc O’Rourke, president and chief executive in an interview. “That all being said, we’ve taken the decisive actions to really drive [down] our costs and structure our business to be ready for whatever the cycle brings us.”
Some of the largest changes were in the company’s potash business, O’Rourke said. Prices have fallen by $80 per ton compared with a year ago, he said, in part because of ample inventories and deferred purchasing by China and other countries.
“We have matched our production rates with our sales and global demand, and we’ve reduced our cost to produce,” O’Rourke said.
Pent-up demand, he said, will likely develop later this year as inventories decline in major markets such as India and in Brazil, despite its recent political and economic turmoil.
O’Rourke said that the U.S. market for crop nutrients is mature, stable and consistent, but is at a low point in its cycle primarily because of surplus grain, low commodity prices and declining farmer income. He noted that corn and soybean prices have stabilized recently and are trending upward, creating a positive outlook for stronger fertilizer sales in the U.S. later this year.
The company also reported earnings of 73 cents per share during the January-to-March period, compared with 80 cents a year earlier.
Adjusted earnings per share totaled 14 cents, in line with analysts surveyed by Thomson Reuters.
The stock’s 52-week trading range is $22.02 to $47.68, and shares closed on Wednesday at $27.11, down 40 cents for the day.