Mosaic Looks at Asia, Brazil Deals as Fertilizer Cycle Turns

May 06, 2014 4:10 pm ET

(Updates with closing share price in last paragraph.)

May 6 (Bloomberg) -- Mosaic Co., the largest U.S. producer of phosphate fertilizer, is considering acquisitions in China, India and Brazil after declines in the price of crop nutrients.

“In any commodity, you don’t want to buy at the peak of the market,” Chief Executive Officer Jim Prokopanko said today in a telephone interview. “We’re coming out of a cyclical trough in both potash and phosphate and that is the time to do your acquisitions.”

The Plymouth, Minnesota-based company is looking to widen its fertilizer-distribution business in markets with the greatest potential for growth, he said. It agreed to buy distribution assets in Brazil and Paraguay from Archer-Daniels- Midland Co. for $350 million last month. In March, Mosaic completed its $1.4 billion purchase of CF Industries Holdings Inc.’s phosphate-fertilizer business.

“You’ve got to have the right balance between production and a certain amount of base-load distribution capacity in these key markets,” Prokopanko said.

The price of diammonium phosphate, a tradeable form of phosphate, is down 12 percent over the past year in the U.S., according to data from Green Markets. Phosphates are vital for photosynthesis in plants.

Potash, which helps crops resist drought and is also produced by Mosaic, has slumped after the withdrawal by Russia’s OAO Uralkali from a marketing venture last year.

Mosaic today reported first-quarter net income of 54 cents a share, compared with 89 cents a year earlier, with sales dropping 14 percent to $1.99 billion. Profit was less than the 59-cent average of 11 analysts’ estimates compiled by Bloomberg.

The company is cutting more than 500 jobs over the next 12 months as part of cost-cutting measures, it said on a conference call.

Mosaic fell 2.1 percent to $48.66 in New York.