Mosaic Company (the) · NYSE:MOS
Mosaic Company (the) — UBS Global Agricultural Chemicals and Seed Conference (May 2010)
41 slides from Mosaic Company (the)'s conference presentation, May 5, 2010
Slide 1: UBS Global Agricultural Chemicals and Seed Conference
UBS Global Agricultural Chemicals and Seed Conference Jim Prokopanko, President and Chief Executive Officer May 5, 2010
Slide 2: Opening remarks
Good afternoon-everyone. I’m delighted to have the opportunity to speak with you today about Mosaic, the outstanding long-term outlook for the crop nutrient industry and our strong market position in both Potash and Phosphates. We’d like to thank Don Carson for coverage of the sector and sponsoring
Slide 3: Safe Harbor Statement
Safe Harbor Statement This presentation contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements include, but are not limited to, statements about future financial and operating results. Such statements are based upon the current
Slide 4: Forward-looking statements reminder
Before I proceed, I need to remind you that our presentation contains forward-looking statements. The remarks I make are based on information and understandings we believe to be accurate as of today’s date, May 5, 2010. Actual results are likely to differ from those set forth in the forward-looking
Slide 5: Strategic Focus
Strategic Focus Deliver value for shareholders Focus on Potash and Phosphate • Grow Potash • Strengthen Phosphate Maintain a strong balance sheet Slide 3
Slide 6: Shareholder value creation and strategy
At Mosaic, our focus is on shareholder value creation, driven by the unquestionable long-term demand for our products. Our mission is to help the world grow the food it needs. As a global leader in crop nutrients, Mosaic will benefit from the expanding worldwide need for food, feed and fuel. We are
Slide 7: Leading Global Potash Producer
Leading Global Potash Producer •Potash Fertilizer Capacity Mosaic MOP production share • 10% Global • 41% North America • Five mines Competitive industry position World capacity approximates 74 million tonnes (all potash products) Mil tonnes Source: Fertecon / Mosaic Slide 4
Slide 8: Potash segment overview
Let’s first talk about our Potash segment. Mosaic is one of the world’s top producers of potash with an estimated 10% of global market share. Potash is produced in only 12 countries in the world, and agricultural giants such as China, India and Brazil depend on imports.
Slide 9: Rebounding Potash Demand
Rebounding Potash Demand Slide 5
Slide 10: Potash demand rebound commentary
Following the well documented drop in potash demand last year, we have seen a sharp rebound this spring season and expect continued strength through the remainder of this year. The nutritional value of potash is critical to optimize crop yields and increase food production. We believe this nutrient
Slide 11: Growth Opportunities - Our Potash Expansions
Growth Opportunities - Our Potash Expansions Estimated Current Tolling Future Capacity Agreement Expansions Capacity Esterhazy 4.0 1.3 1.8 7.1 Belle Plaine 2.8 2.0 4.8 Colonsay 1.8 1.3 3.1 8.6 1.3 5.1 15.0 US Mines 1.8 1.8 Total 10.4 1.3 5.1 16.8 Note: The projected annual capacity includes up to an
Slide 12: Potash reserves and expansion program
The world will need substantially more potash this decade. Mosaic has the capacity to meet the increasing demands from the agricultural market. We currently own enough mineral reserves to run our potash mines for over 100 years. In addition, we think the best way to provide additional potash is thro
Slide 13: Expansions Improve Mosaic's Cost Structure
Expansions Improve Mosaic’s Cost Structure Slide 7
Slide 14: Potash cost curve commentary
The global potash industry has a relatively flat cost curve. This chart shows estimated cost per tonne for all major potash producers. Mosaic’s potash cost structure is competitive and will improve as our expansions come on line. The expected increase in sales and production volumes will leverage th
Slide 15: World's Largest Integrated Phosphate Producer
World’s Largest Integrated Phosphate Producer •Phosphate Fertilizer Capacity World’s largest capacity of finished phosphate fertilizer Mosaic U.S. phosphate production share 13% Globally 57% U.S. World scale & efficient operations World capacity approximates 80 Mil tonnes million tonnes (DAP/MAP/TSP
Slide 16: Phosphates segment overview
Now, let’s turn to our Phosphates segment. Our substantial asset base and geographic reach are unmatched in the industry. As the largest vertically integrated producer in the world, our Phosphates business possesses its own attractive set of attributes. We have substantial company- owned rock reserv
Slide 17: Phosphate Demand Recovery
Phosphate Demand Recovery Slide 9
Slide 18: Phosphate market fundamentals commentary
Phosphate fundamentals remain constructive and we expect the phosphate market to remain snug for several years. Strong demand has driven down North American producer stocks --despite an increase in operating rates. We project stocks to continue to drop during the remainder of the current fertilizer
Slide 19: Industry Leading Cost Structure in Phosphate
Industry Leading Cost Structure in Phosphate Slide10
Slide 20: Phosphate cost curve commentary
Unlike the potash industry, the phosphate industry cost curve is steeper – and you can see that Mosaic is one of the world’s low cost producers. We are working on a number of operational fronts to improve and secure that position, as I will discuss further.
Slide 21: Phosphate Strategic Priorities
Phosphate Strategic Priorities Strengthen our competitive position Leverage scale and location Low cost rock Cost advantaged sulfur, competitive ammonia Procurement leverage Operational excellence Maintenance practices Capital deployment Energy use and co-generation capacity Improve coordination of
Slide 22: Phosphate strategic priorities commentary
In order to strengthen our competitive advantage, we are focusing on three strategic priorities: First, we are working on several initiatives to leverage our scale and geographic location. We have a strong competitive position due to low rock and conversion costs as well as preferential geographic a
Slide 23: Distribution Assets Aligned with Global Demand
Distribution Assets Aligned with Global Demand Slide 12
Slide 24: Distribution network commentary
Mosaic also has a distribution network without peer in our industry – allowing us to move our products where and when needed, efficiently and cost-effectively. Our industry leading North American distribution capabilities are bolstered by strong networks in prime growth regions such as Asia and Lati
Slide 25: Strong Financial Position
Strong Financial Position * See appendix for reconciliation of Cash and Cash Equivalents less Debt
Slide 26: Capital allocation and strategy commentary
As we have discussed, our overall strategy is to capitalize on attractive long-term agriculture fundamentals by investing in and reengineering our potash and phosphate businesses. Through the ups and downs of the markets we serve, we have created long term value through sound capital allocation deci
Slide 27: Business Outlook
\ er oe Business Outlook
Slide 28: Agricultural market outlook intro
Now I will give you a few thoughts on the outlook for the agricultural markets.
Slide 29: Growing Grain & Oilseed Use
Growing Grain & Oilseed Use 2010/11 Scenario Assumptions Low Medium High Change in Harvested Area -0.5% -0.5% -0.5% Yield (Deviation from 10-year Trend) Largest Negative 0 Largest Positive Demand Growth 0.0% 1.0% 2.0% Slide 15
Slide 30: Long-term agricultural fundamentals commentary
Long term agricultural fundamentals continue to look positive. The overall food security story has not changed. Economic development, improving diets, weather and political instability will continue to stress the global food supply. To meet food and fuel demands, grain production will need to increa
Slide 31: More Cushion but Stocks Still Not at Secure Levels
More Cushion but Stocks Still Not at Secure Levels 2010/11 Scenario Assumptions Low Medium High Change in Harvested Area -0.5% -0.5% -0.5% Yield (Deviation from 10-year Trend) Largest Negative 0 Largest Positive Demand Growth 0.0% 1.0% 2.0% Slide 16
Slide 32: Grain and oilseed stocks commentary
Back-to-back bumper crops have built global grain and oilseed stocks and calmed agricultural markets. Over the past couple of years, supply has responded to higher prices and good weather. Our base forecast assumes a trend yield and a slight decrease in harvested area. We expect the stock to use rat
Slide 33: Farm Economics
Farm Economics Key assumptions Iowa State University application rate recommendations Fertilizer prices for 2003 -2009 are from USDA. 2010 fertilizer prices are based on current spot wholesale prices Slide 17
Slide 34: Farmer economics commentary
Farmer economics remain healthy despite the recent downward trend in grain markets. Grain prices remain at relatively high levels as compared to historical prices. At the same time, input prices have fallen from their high levels of the last two years.This has allowed farmers to remain profitable. T
Slide 35: Growth Expected to Resume
Growth Expected to Resume Slide 18
Slide 36: Nutrient use rebound commentary
Following the drop in nutrient use in 2008 and 2009, we expect use to rebound significantly this year. By the 2013/14 fertilizer year, the International Fertilizer Industry Association projects crop nutrient use to increase 11% over the peak 2007/08 period. There has been a lot of debate about the p
Slide 37: Key Takeaways
Key Takeaways Focus on value creation Global leader with vertically integrated operations Potash growth projects at attractive capital costs Phosphate growth options in rock reserves and acquisitions Positive agricultural market outlook Slide 19
Slide 38: Closing key points commentary
In closing, I will emphasize a few key points about Mosaic. First, we are successfully executing our strategic plan, focusing on long term value creation. Second, we are an established industry leader with vertically integrated operations, a strong balance sheet and a broad international presence. O
Slide 39: Thank you
Thank you
Slide 40: Closing remarks and questions
Thank you for your time this afternoon. I appreciate you listening to Mosaic’s story and our outlook for the future. Before I open the floor to questions, I’d like to mention that UBS is hosting a potash tour at our Colonsay site on May 26 th. Contact Don Carson if you are interested. Now I’d be hap
Slide 41: Appendix: Cash and Cash Equivalents Less Debt Reconciliation
Appendix: Cash and Cash Equivalents Less Debt Reconciliation $ in billions Cash and Cash Current Period Ended Equivalents Short-Term Debt Maturities Long-Term Debt Total Debt Net (Debt) Cash February 29, 2008 1.1 0.2 - 1.4 1.7 (0.5) May 31, 2008 2.0 0.1 - 1.4 1.6 0.4 August 31, 2008 2.2 0.1 0.1 1.3
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