Mosaic Company (the) · NYSE:MOS
Mosaic Company (the) — Credit Suisse Global Ag Productivity Conference 2010
43 slides from Mosaic Company (the)'s conference presentation, Mar 8, 2010
Slide 1: Credit Suisse Global Ag Productivity Conference
Exhibit 99.1 Credit Suisse Global Ag Productivity Conference Jim Prokopanko, President and Chief Executive Officer March 9, 2010
Slide 2: Opening remarks on Mosaic and crop nutrient outlook
Good morning, 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 Elaine Yip for coverage of the sector and sponsoring t
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, March 9, 2010. Actual results are likely to differ from those set forth in the forward-lookin
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 strategy
At Mosaic, our focus is on shareholder value creation, driven by the unquestionable long-term demand for our products. As a global leader in nutrients, Mosaic will benefit from the expanding worldwide need for food, feed and fuel. At the core of our strategy is a plan to solidify our resource base a
Slide 7: Leading Global Potash Producer
Leading Global Potash Producer •Potash Fertilizer Capacity Mosaic MOP production • 14% Global • 39% 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: Mosaic's position in potash
Let’s first talk about our Potash segment. Mosaic is one of the world’s top producers of potash with an estimated 14% 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. 4
Slide 9: Rebounding Potash Demand
Rebounding Potash Demand Mil Tonnes World MOP Demand 60 Source: Mosaic 50 40 30 20 10 0 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09F 10F Low & High Range Slide 5
Slide 10: Potash demand rebound in 2010
Following the well documented drop in potash demand last year, we believe potash demand will rebound sharply in calendar 2010. The nutritional value of potash is critical to optimize crop yields and increase food production and we believe the nutrient has been under-applied historically. We project
Slide 11: Growth Opportunities - Our Potash Expansions
Growth Opportunities - Our Potash Expansions Note: The projected annual capacity includes approximately 1.3 million tonnes that we currently produce under a third party tolling agreement at our Esterhazy, Saskatchewan potash mine that will revert to us when the tolling agreement expires. Slide 6
Slide 12: Potash capacity and expansion program
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, our ongoing expansions are expected to increase annual capacity by over five million tonnes by 2020, ensuring that we
Slide 13: Expansions Improve Mosaic's Cost Structure
Expansions Improve Mosaic’s Cost Structure Industry Cost Curve MOP delivered US cornbeltweighted average cost as of June 30, 2009* Mosaic Average 0 10 20 30 40 50 60 Mil tonnes * Excludes Canadian resource taxes and royalties for all Canadian potash producers Source: Mosaic Slide 7
Slide 14: Potash industry 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 should improve as our expansions come on line. The expected increase in sales and production volumes will leverage
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 14% Globally 59% U.S. World scale & efficient operations World capacity approximates 76 Mil tonnes million tonnes (DAP/MAP/TSP
Slide 16: Phosphate segment overview
Now, let’s turn to our Phosphate segment. As a large, vertically integrated producer, our Phosphate business possesses its own attractive set of attributes. We have substantial company-owned rock reserves, granulation capacity, and a worldwide supply chain and distribution network. We have the large
Slide 17: Phosphate Demand Recovery
Phosphate Demand Recovery Mil Tonnes World Processed Phosphate Demand 60 DAP, MAP and TSP Source: Mosaic 50 40 30 20 10 0 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09F 10F Low & High Range Slide 9
Slide 18: Phosphate market recovery and prices
Demand and price momentum in phosphates had been strong until demand came to an abrupt halt early last year. Raw material costs reset, lowering selling prices and causing buyers to back away from the market. This is a story most of you know well. Now, the phosphates market is recovering nicely. This
Slide 19: Industry Leading Cost Structure in Phosphate
Industry Leading Cost Structure in Phosphate Industry Cost Curve DAP FOB plant/port weighted average cost as of June 30, 2009 Mosaic U.S. Average 0 5 10 15 20 25 30 Mil tonnes Source:Mosaic Slide 10
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 maintain that position, as I will discuss further. 10
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: Three phosphate strategic priorities
In order to strengthen our competitive advantage, we focus 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 and geographic access to sulfur and ammoni
Slide 23: Distribution Assets Aligned with Global Demand
Distribution Assets Aligned with Global Demand Slide 12
Slide 24: Global distribution network
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 Cash and Cash Equivalents Less Debt * * See appendix for reconciliation of Cash and Cash Equivalents
Slide 26: Capital allocation and Fosfertil sale
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
Business Outlook
Slide 28: Outlook for agricultural markets
Now I will give a few thoughts on the outlook for the agricultural markets. 14
Slide 29: Growing Global Affluence + Fuel
Growing Global Affluence + Fuel Slide 15
Slide 30: Long-term agricultural fundamentals
Long term agricultural fundamentals continue to look positive. We believe several macro trends will continue to place increasing pressure on the global food supply. Increasing population is stretching the world’s arable land. On a per capita basis, arable land has been steadily declining. In additio
Slide 31: Growing Grain & Oilseed Use
Growing Grain & Oilseed Use Bil Tonnes World Grain and Oilseed Production and Use 2.8 Source: USDA and Mosaic 2.7 2.6 2.5 2.4 2.3 2.2 2.1 2.0 99/00 00/01 01/02 02/03 03/04 04/05 05/06 06/07 07/08 08/09 09/10 10/11 10/11 10/11 Production Use L M H 2010/11 Scenario Assumptions Low Medium High Harveste
Slide 32: Grain and oilseed production and use
Here we show the increase in grain and oilseed production and use over the past decade. As you can see, use has grown slowly, but consistently. History has proven that economic slowdowns don’t have a large negative impact on food consumption – people need to eat whatever the economic climate. On the
Slide 33: More Cushion but Stocks Still Not at Secure Levels
More Cushion but Stocks Still Not at Secure Levels Mil Tonnes Days of Use World Grain and Oilseed Stocks 650 120 Source: USDA and Mosaic 600 110 550 100 500 90 450 80 400 70 350 60 300 50 250 40 99/00 00/01 01/02 02/03 03/04 04/05 05/06 06/07 07/08 08/09 09/10 10/11 10/11 10/11 Stocks Days of Use L
Slide 34: Grain stocks and forecast assumptions
Back-to-back bumper crops have built global grain and oilseed stocks and calmed agricultural markets. 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 ratio to remain at a relatively lo
Slide 35: Farm Economics
Farm Economics Key assumptions ISU application rate recommendations 2009 and 2010 crops sold at CBOT closing prices on March 4, 2010 less basis Fertilizer prices for 2003 - 2009 are from USDA. 2010 fertilizer prices are based on current spot wholesale prices Slide 18
Slide 36: Farmer profitability and nutrient affordability
Farmer economics remain relatively strong despite the recent downward trend in grain markets. The graph at the left shows farmer profitability. Grain prices remain at relatively high levels as compared to historical prices. At the same time, input prices have reset. This has allowed farmers to remai
Slide 37: Growth Expected to Resume
Growth Expected to Resume Mil Tonnes World Nutrient Use 190 Source: IFA November 2009 180 170 160 150 140 130 120 110 95 96 97 98 99 00 01 02 03 04 05 06 07 08E 09F 10F Changes in World Fertilizer Consumption 2007/08 2008/09E 2009/10F 2010/11F Nitrogen 3.2% -1.5% 1.6% 2.6% Phosphate 0.1% -10.5% 3.0%
Slide 38: Nutrient use rebound expectations
Following the drop in nutrient use in 2008 and 2009, we expect use to rebound significantly beginning this year. Over the next several years, the International Fertilizer Industry Association projects crop nutrient use to increase 12% over the peak 2007 period. Agronomic science points to the need f
Slide 39: 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 Encouraging recent market trends Slide 20
Slide 40: Closing key points
In closing, I would like to emphasize several key points about Mosaic. First, we have managed well through a challenging year while keeping a focus on long term value creation. Second, we are an established industry leader with vertically integrated operations, a strong balance sheet and a broad int
Slide 41: Thank you!
Thank you!
Slide 42: Closing and questions
Thank you for your time this morning. I appreciate you listening to Mosaic’s story and our outlook for the future. Now I’d be happy to take questions. 21
Slide 43: Appendix: Cash and Cash Equivalents Less Debt Reconciliation
********* ********* ******* Appendix: Cash and Cash Equivalents Less Debt Reconciliation ****** ****** $ in billions ****** Period Ended Cash and Cash Equivalents Short-Term Debt Current Maturities Long-Term Debt Total Debt Net (Debt) Cash ****** August 31, 2007 $ 0.60 $ 0.20 $ 0.50 $ 1.60 $ 2.20 $
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