Mosaic Company (the) · NYSE:MOS
Mosaic Company (the) — Merrill Lynch Agricultural Chemicals Conference 2007
50 slides from Mosaic Company (the)'s conference presentation, Jun 5, 2007
Slide 1: The Mosaic Company – Merrill Lynch Agricultural Chemicals Conference
Exhibit 99.1 The Mosaic Company Merrill Lynch Agricultural Chemicals Conference June 5, 2007
Slide 2: Thank you for inviting Mosaic to present
Thank you for inviting Mosaic to present at the Merrill Lynch Agricultural Chemicals Conference. 1
Slide 3: Safe Harbor Statement
Safe Harbor Statement Certain statements contained herein constitute “forward-looking statements” as that term is defined under the Private Securities Litigation Reform Act of 1995. Although we believe the assumptions made in connection with the forward-looking statements are reasonable, they do inv
Slide 4: Forward-looking statements reminder
Before we start today --- I want to remind you that this presentation contains forward-looking statements. The remarks we make are based on information and understandings we believe to be accurate as of today’s date, June 5th, 2007. Actual results are likely to differ from those set forth in the for
Slide 5: Demand Is Growing
Demand Is Growing Economic and demographic fundamentals are leading to an agricultural renaissance.
Slide 6: Overview of the strong agricultural marketplace
Let me start with a brief overview of the strong agricultural marketplace we’re operating in. A robust outlook for global nutrient use is being powered by market demand to produce more grain and oilseeds to meet the growing need for food, feed and fiber -- and now the new mouth to feed at the table
Slide 7: Grain demand growth is accelerating
Grain demand growth is accelerating Bil Tonnes World Grain Production and Use 2.2 Grain Use CAGR Source: USDA 97-02 02-07 2.0 0.9% 2.0% 1.8 1.6 1.4 1.2 1.0 0.8 0.6 70 72 74 76 78 80 82 84 86 88 90 92 94 96 98 00 02 04 06 Production Use
Slide 8: Global grain demand growth and declining inventories
Global demand growth for grain has accelerated over the last five years, with growth averaging two percent per year from 2002 to 2007. And production of grain has not kept up with demand, resulting in declining grain inventories. According to the latest U.S. Department of Agriculture statistics, far
Slide 9: It's still a food game
It’s still a food game Mil Tonnes World Nutrient Demand 180 Source: IFA 160 140 120 100 80 60 40 20 0 70 75 80 85 90 95 00 05 10 Developed Nations Developing Nations Transition Economies
Slide 10: Developing countries drive nutrient demand growth
Although biofuels capture most of the headlines today, our industry still plays mostly in a food game. The need to grow more food to feed a growing and more affluent population will remain the main driver of nutrient demand. Developing countries are the engine of nutrient demand growth. This chart s
Slide 11: Growing Global Energy Consumption
Growing Global Energy Consumption U.S. Corn Used for Fuel Ethanol Production Bil Bu Sustained high energy 6.0 50% prices are driving Source: USDA and Mosaic 5.0 energy-deficient 40% countries to develop 4.0 30% alternative sources of 3.0 fuel 2.0 20% 10% 1.0 0.0 0% 01 02 03 04 05 06 07 08 09 10 11 1
Slide 12: Ethanol as a new grain consumer
Our newest and most interesting grain consumer are for energy products, such as ethanol. Nearly every energy-deficit, or grain-surplus country, is developing a biofuels industry in response to persistently high energy prices. This is particularly true in the United States, where ethanol capacity is
Slide 13: Grain Supply Is Constrained
Grain Supply Is Constrained Food and Fuel are competing for grain. Corn and Soybean Future Prices Monthly Average of Daily Close of Nearby Options $ BU Corn $ BU Soybean 5.5 11.0 5.0 10.0 4.5 9.0 4.0 8.0 3.5 7.0 3.0 6.0 2.5 5.0 2.0 4.0 1.5 3.0 1.0 2.0 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05
Slide 14: Limited supply and high corn and soybean prices
While the use of grains and oilseeds for fuel is increasing, supply is limited. Tight stock levels have resulted in high corn and soybean prices. Corn prices are currently around $3.80 per bushel for this year’s crop and about $4 per bushel for next year’s crop. As a result, on-farm economics have d
Slide 15: Ag Supply & Demand Dynamics
Ag Supply & Demand Dynamics Bio-fuel products have added a significant new end-market competitor for crops. Crop Nutrients Food Feed Limited Supply Higher Fuel of Arable Land Yield Fiber
Slide 16: Limited arable land and higher fertilizer application
There is a limited, near-term supply of arable land to meet this increased demand for grains and oilseeds. In order to meet demand growth, farmers will need to plant more acres to corn. In the United States, farmers are expected to plant around 90 million acres of corn this spring. At nearly $4 per
Slide 17: Fertilizer Wins With These Dynamics
Fertilizer Wins With These Dynamics World Phosphate Demand World Potash Demand MMT Source: IFA MMT Source: IFA 40.0 30.0 25.0 35.0 20.0 30.0 15.0 25.0 10.0 97 98 99 00 01 02 03 04 05 06 07 08 97 98 99 00 01 02 03 04 05 06 07 08
Slide 18: Strong demand growth for phosphates and potash
These bullish agricultural fundamentals will result in strong and increased demand growth for phosphates and potash over the next several years. After a decline last year, U.S. nutrient use is projected to rebound by 9% to 23.2 million tons in the 2007 fertilizer year. Turning to the global outlook,
Slide 19: World's Top Phosphate Producer
World’s Top Phosphate Producer • World’s Largest Capacity Phosphate Fertilizer Capacity of Phosphate Fertilizer 2007 1000 tonnes • 15% Global DAP/MAP/TSP 10.0 • 56% U.S. • Largest Producer of 8.0 Feed Phosphate in U.S. 6.0 • World Scale & Efficient Operations 4.0 2.0 0.0 Mosaic OCP PhosAgro CF GCT
Slide 20: World's largest phosphate producer
We are the world’s largest phosphate producer. Our capacity for finished phosphates exceeds the combined production of the next three largest producers. We are also the largest U.S. feed phosphates producer. Mosaic ships about 34% of its phosphate production into the North American market where we h
Slide 21: DAP Prices Reach Record High Levels
DAP Prices: Reach Record High Levels $ million tonnes FOB Tampa 450 Record $435/MT 400 350 300 250 200 150 100 Source: Fertecon
Slide 22: DAP price increases and realized price lag
DAP prices increased dramatically in early 2007 due to a very tight market balance and industry inventories were at 20-year lows as of the end of April. The DAP spot export price in Tampa is currently around $427 per metric tonne compared with around $240 per tonne in December. These higher prices c
Slide 23: Phosphates Outlook
Phosphates Outlook • Tight Supply/Demand Balance • Limited New Capacity Next 3 Years • Saudi project will be needed by 2011 • Healthy North American Market • Strong Offshore Growth – Especially Brazil Turn Favorable Markets Into Strong Earnings
Slide 24: Tight phosphates market balance
The Phosphates market currently has one of the tightest market balances of the three principle crop nutrients. The recovery in North America demand, combined with strong offshore growth in places like Brazil and India, resulted in short supplies and significantly improved prices. In addition, we hav
Slide 25: Leading Global Potash Producer
Leading Global Potash Producer Potash Capacity 2008 • Potash Capacity Million tonnes Product 14.0 • 13% Global (#2) 12.0 • Five Mines 10.0 • Low-cost & Competitive 8.0 industry position 6.0 4.0 2.0 0.0
Slide 26: Second largest potash producer and Esterhazy expansion
Now moving on to Potash, Mosaic is the world’s second largest potash producer by capacity. We recently added 1.1 million tonnes of capacity to our Esterhazy potash mine, at a capital cost of $35 million. This expansion further establishes our position as a low cost producer and provides the producti
Slide 27: Mosaic Potash Expansions
Mosaic Potash Expansions Additional Expected Expected Year Capacity Cost Cost On-Line 000's MT KCL US$ millions US$/MT Status Esterhazy 2006 1,116 $35 $31 Complete Belle Plane Phase 1 2010 118 $14 $119 Underway Colonsay Phase 1 2010 227 $22 $97 Underway Belle Plane Phase 2 2012 363 $76 $209 Approval
Slide 28: Brownfield potash growth opportunities
As I previously noted, Mosaic recently completed a 1.1 million tonne per year potash capacity at our Esterhazy mine. We also have several other brownfield potash growth opportunities, which are in various phases. We are already underway on the first phases of capacity expansions at our Belle Plaine
Slide 29: Potash Pricing Trends
Potash Pricing Trends Granular MOP Prices U.S. Midwest Warehouse fob $ ST 230 Source: Green Markets 210 190 170 150 130 110 90 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07
Slide 30: Potash market and prices
The growth in demand in 2003 and 2004 resulted in the awakening of the potash market and tight supplies. Both domestic and international potash prices currently remain at strong levels relative to historical values. These prices are supported by good fundamentals in the global potash market includin
Slide 31: Potash Outlook
Potash Outlook Balanced to Tight Supply/Demand • Growing tighter over medium term Sustained Demand Growth • Modest growth in North America • Good offshore growth, especially Asia and Latin America No New Greenfield Projects Over Next 4 Years Loss of Russian mine in 2006
Slide 32: Potash market balanced to tight
Potash has traditionallybeen a very good and stable market with relatively strong margins. We expect the potash market to be balanced to tight in the near term and even grow modestly tighter over the medium term. On the demand side, we see sustained global demand growth of 3% to 4% over the next thr
Slide 33: Strategic Offshore Interests in Growing Markets
Strategic Offshore Interests in Growing Markets • Global Nutrient Assets • Brazil: 20% stake in Fosfertil, largest phosphate producer in Latin America • China: 35% Interest in DAP Plant • Argentina: New SSP plant on stream • Distribution Assets in Key Growth Countries • Product Marketing Operations
Slide 34: Offshore segment differentiates Mosaic
Our Offshore business segment differentiates Mosaic from our competitors. We have a significant global production and distribution network in key growth markets, such as in Latin America and Asia. We have SSP and feed production facilities in Brazil and NPK compound and bulk blending plants in China
Slide 35: Strong N.A. Nitrogen Position
Strong N.A. Nitrogen Position •50% Equity Stake in •Energy Efficient Saskferco Facility •Annual Capacity 1.2 •Exclusive Marketing Million Tonnes Rights
Slide 36: Saskferco nitrogen position
We also have a strong nitrogen production position in North America. This comes in the form of our 50% equity position in Saskferco. The Saskferco plant is an energy efficient, world scale facility, ideally situated in the natural gas rich region of Western Canada. It has the capacity to produce 1.2
Slide 37: The Opportunity Is Significant
The Opportunity Is Significant Phosphates Market has Broken Out
Slide 38: Phosphates market improvement and opportunity
Mosaic is one of the industry’s newest players. We’ve spent the last two and half years laying the foundation for the company. As yet, we have not produced the financial returns that either we – or our investors – expect of us. However, we are excited about recent market place changes, the significa
Slide 39: Fiscal 2008 Priorities
Fiscal 2008 Priorities • Focus on Performance • Maintain strong earnings momentum • Strategy Development • Customer Focus • Generate Cash / Pay Down Debt Fiscal 2008 Deliver Results!
Slide 40: Focus on fiscal 2008 results and debt paydown
Our focus for fiscal 2008 will be on delivering strong financial results. We aim to maintain our earnings momentum that has begun with the expected strong performance for Q4 – and then throughout fiscal 2008. As I advised previously -- we began a strategy development process earlier this year and ex
Slide 41: Fiscal 2008 Potash Guidance
Fiscal 2008 Potash Guidance • Higher Volume Likely • Exports are key • Prices Up • Modest increase in North America • Higher offshore prices • China 2008 price negotiations • Gross Margin Up Continuing Momentum
Slide 42: Potash volume and price expectations
Potash volume in fiscal 2007 is expected to be at the upper end of the range of 7.7 to 8.1 million metric tonnes. Given attractive supply and demand dynamics, the healthy North American market and the Canpotex forecast for offshore volumes, higher volumes in fiscal 2008 appear likely. This is assumi
Slide 43: Fiscal 2008 Phosphates Guidance
Fiscal 2008 Phosphates Guidance •Flat Volume • Low inventory levels • “Flat out” Production •Phosphates Selling Price • Strong year over year increase A Great Year Coming
Slide 44: Phosphates shipments and price expectations
For Phosphates, we expect to ship 9.0 to 9.3 million metric tonnes in fiscal 2007 and look for something comparable in fiscal 2008. We expect little – if any – volume to China next year, which would eliminate a drag on profitability we have experienced this year. Note also that we will begin the yea
Slide 45: Strategy Development
Strategy Development Grow Potash Capacity Improve Phosphates Cost Structure Refocus Offshore on Key Markets Develop Florida Land Vision Review Other Opportunities Nitrogen/Industrial/Byproducts
Slide 46: Preliminary strategy results
We began an extensive strategy development earlier this year and still have a lot of work to do, including defining and choosing our strategic direction. However, I would like to provide some preliminary results - that are more focused on the short term. Number one on our strategic list is to increa
Slide 47: An Investment in Mosaic
An Investment in Mosaic • Once-in-a-generation Industry Fundamentals • Exceptional Asset Base • Proven Management • Focused on Performance
Slide 48: Investment thesis summary
Finally, let me summarize the investment thesis for Mosaic at this time. Market fundamentals are very strong, probably a once-in-a-generation opportunity for this company. It is truly an exciting time in agriculture and Mosaic will participate through our exceptional asset base. We expect that you w
Slide 49: Fertile Ground: Market Potential with Margin Upside
Fertile Ground: Market Potential with Margin Upside
Slide 50: Thank you. I'll now take questions.
Thank you. I’ll now take questions. 25
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