Mosaic's stock jumped more than 5 percent Thursday after the company reported fourth-quarter earnings that beat analysts' expectations, despite being hit by the effects of a strong dollar and low grain prices.
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, mainly because of low grain prices and weak currencies in Brazil and other countries. For Mosaic, that meant fourth-quarter net earnings of $155 million, down from $361 million during the same period in 2014.
The company also reported adjusted earnings of 53 cents per share during the October-to-December period, compared with 87 cents a year earlier. Net sales fell 9 percent to $2.16 billion, down from $2.38 billion last year.
Analysts surveyed by Thomson Reuters had expected earnings per share of 44 cents for the quarter and slightly lower revenue of $1.9 billion.
Company President and CEO Joc O'Rourke said the fourth-quarter results reflect the cyclical and seasonal nature of agriculture and the fertilizer business.
"Clearly, farm economics are under a little pressure, but more relevant to us are the huge macroeconomic impacts of currency changes around the world," he said in an interview.
For the year ending Dec. 31, Mosaic reported net sales of $8.9 billion, down from $9.1 billion the previous year, and 2015 earnings of $2.78 per share, compared to $2.68 per share the year before.
Although the headwinds have been challenging, O'Rourke said he's upbeat about the prospects for 2016. The price declines will make fertilizer more affordable for farmers, he said, and growers should also benefit from lower energy costs.
"Ultimately, we still believe that the food market will continue to grow, and the grain markets will recover," O'Rourke said. "They're so weather-dependent that we don't see it as the same long-term negative scenario as the metals market or the other hard commodities are facing."
The current quarter is likely to remain lackluster for fertilizer sales and volume, O'Rourke said. However, there are signs that markets will strengthen later in 2016 and could lead to near-record demand for Mosaic's phosphate, and strong but not growing demand for potash.
In the meantime, Mosaic announced last week that it plans to reduce production in its phosphate business by up to 400,000 tons in the first quarter of 2016 because of weak demand.
Production levels in recent years have averaged 2.2 million tons during the first three months of the year. The slowdown will occur by rotating plant shutdowns, the company said, and adjusting the production levels will match immediate demand and help the company better manage its margins.
In a research note, Goldman Sachs analyst Adam Samuelson said that the curtailment, along with similar recent forecasts and guidance from two other major fertilizer manufacturers, indicate a weak first-quarter outlook for Mosaic investors. Goldman upgraded the stock to neutral last month, and JPMorgan analysts downgraded it to neutral three weeks ago.
Mosaic also announced Thursday a $75 million share repurchase program that will occur during the next six to eight weeks, with more potentially to follow. The company repurchased about 15.6 million of its shares for nearly $698 million in 2015.
The stock's 52-week trading range is $22.02 to $53.83, and shares closed on Wednesday at $24.75, up $1.33 for the day.