Slide 1: Mosaic's Role: More Essential Than Ever
Exhibit 99.1 Mosaic’s Role: More Essential Than Ever Larry Stranghoener, Executive Vice President and CFO February 10, 2009
Slide 2: Welcome and thanks
Good morning everyone. Thank you all for attending. I’d like to thank Bob Koort at Goldman Sachs for this opportunity to meet with you and share our story and our viewpoints about our future.
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 – February 10, 2009. Actual results are likely to differ from those set forth in the forward-l
Slide 5: Strategic Focus
Strategic Focus Deliver value for shareholders Focus on Potash and Phosphate •Grow Potash •Strengthen Phosphate Expand Offshore distribution Maintain a strong balance sheet
Slide 6: Key strategic priorities
Our focus on key strategic priorities will, we believe, produce outstanding results for our shareholders.We plan to focus on our core businesses – potash and phosphates –where we are established industry leaders. We plan to grow our potash business through our previously announced expansions. This i
Slide 7: Positioned for Significant Growth
Positioned for Significant Growth Capitalizing on improved long-term fundamentals Generated strong cash flow, reduced debt & achieved investment grade status Executing on Mosaic strategy An Industry Leader Emerges – Prepared for Long-Term Growth… As Well as the Near-Term Downturn
Slide 8: Positioned for significant growth
Mosaic is positioned for significant growth and has taken the steps necessary to capitalize on attractive long-term agriculture fundamentals. We are especially proud of our strong cash generation – an area of focus since day 1 – which allowed us to pay down a significant amount of debt and achieve i
Slide 9: Fiscal 2009 – A Challenging Year
Fiscal 2009 – A Challenging Year Maintain balance sheet strength Focus on phosphate margins – not prices Manage production levels to meet market demand Focus on operational discipline and risk management
Slide 10: Fiscal 2009 challenging year discussion
Fiscal 2009 has been a challenging year. And although market conditions remain soft we will maintain a highly disciplined approach to managing our business. The benefits of strengthening our balance sheet and building a large cash position are now obvious, providing us with significant financial fle
Slide 11: Value Creation – Cash Flow Drivers
Value Creation – Cash Flow Drivers Sales: volume, price, business mix Operating margin: costs & expenses Working capital: receivables, inventory & payables Cash taxes Capital expenditures Capital structure Supported By Strong Governance & Controls
Slide 12: Cash flow levers for value creation
Mosaic is positioned financially, strategically and operationally to serve our customers worldwide and execute on the strong, long-term fundamentals of the agricultural sector. We are also focused on value creation for you, our shareholders. Ultimately that means cash, and listed are the levers we c
Slide 13: Cash Flow from Operations
Cash Flow from Operations Cash Provided by Operating Activities $1,200 $1,000 $800 $600 $400 $200 $0
Slide 14: Operating cash flow track record
All of the value drivers work together to produce operating cash flow. Our track record on this front has been excellent, though we are showing less robust results this fiscal year. And, as we have indicated, third quarter operating cash flow may be negative, largely due to near term working capital
Slide 15: Cash Allocation Priorities
Cash Allocation Priorities Invest to maintain/grow existing business • Growing proportion of growth/opportunity projects • Disciplined capital allocation process Maintain liquidity buffer • To protect against cyclical downturn • To allow pursuit of strategic opportunities Shareholder distributions •
Slide 16: Cash allocation priorities discussion
There has been no change to our cash allocation priorities. We will use the operating cash flow we generate first to grow our business through internal investments, and will ensure a highly disciplined review and approval process for these investments. We plan to maintain a large liquidity buffer, w
Slide 17: Return on Invested Capital
Return on Invested Capital 50.0% 40.0% 36.5% 30.2% 30.0% 20.0% 10.0% 8.0% 2.3% 0.0% FY06 FY07 FY08 12 Mos Nov08
Slide 18: Return on capital discussion
Effective pulling of all value levers also drives strong return on capital. You see here the great progress and strong results we have achieved on return on invested capital, reflecting the rewarding investments we are making across the enterprise. Next I’ll spend a few minutes reviewing each of our
Slide 19: Value Driver: Potash Revenue
Value Driver: Potash Revenue MOP Price $600 $500 $400 $300 $200 $100 $0 FY2006 FY2007 FY2008 Q1 FY09 Q2 FY09 Annual Quarterly Potash Sales Volume 8.0 6.0 4.0 2.0 - FY2006 FY2007 FY2008
Slide 20: Potash price and volume trends
Here you see the price and volume trends for our potash business, for the last few years as well as the last two quarters. The price momentum in this business is well-known, and we expect our realized prices to decline only slightly in the third quarter – and that will be due to a greater percentage
Slide 21: Leading Global Potash Producer
Leading Global Potash Producer •Potash Fertilizer Capacity Million tonnes product 0 5 10 15 Mosaic potash production PotashCorp • 14% Global • 38% U.S. Mosaic • Five mines Belaruskali Low-cost & competitive industry position Kali & Salz Silvinit World capacity approximates 73 Uralkali million tonnes
Slide 22: Potash business overview
Let me share some more details about our potash business. Simply put, it’s an exceptional business. Potash is produced in only 12 countries in the world and agricultural giants such as China, India and Brazil are all import dependent. Today, Mosaic is one of the world’s top producers of potash with
Slide 23: Leading Global Potash Producer
Leading Global Potash Producer •Potash Fertilizer Capacity Million tonnes product 0 5 10 15 Mosaic potash production PotashCorp • 14% Global • 38% U.S. Mosaic • Five mines Belaruskali Low-cost & competitive industry position Kali & Salz Silvinit World capacity approximates 73 Uralkali million tonnes
Slide 24: Potash capacity and demand
And with the imminent reversion of a 1.3 million tonne tolling -- agreement, by our estimate in the fourth quarter of fiscal 2010, our capacity improves in size and scale. Furthermore, because of historically low application rates in developing countries, potash has been enjoying strong demand in ke
Slide 25: Growth Opportunities - Our Potash Expansions
Growth Opportunities - Our Potash Expansions 16 14 12 Growth 10 from 10.4 to 16.8* 8 6 4 million 2 tonnes - * The projected annual capacity includes approximately 1.3 million tonnes (as shaded in blue) that we currently produce under a third party tolling agreement at Esterhazy. We estimate this cap
Slide 26: Potash expansion discussion
One of the value drivers for potash is our capacity expansions at our existing Saskatchewan mines. Collectively these expansions are expected to increase Mosaic's annual capacity by over five million tonnes, ensuring we maintain a position as one of the premier potash companies in the world. Equally
Slide 27: Shift in Business Mix (sales tonnes)
Shift in Business Mix (sales tonnes) Phosphates Phosphates 51% 40% Potash Potash 49% 60% Present Future
Slide 28: Business mix shift toward potash
Our business mix will shift in coming years in favor of potash due to our expansions and tolling expiration that we just discussed. We are already a bigger potash player than most people realize and we expect to drive this high margin business to a greater share of our total volume in years to come.
Slide 29: Value Driver: Phosphates Revenue
Value Driver: Phosphates Revenue DAP Price $1,200 $1,000 $800 $600 $400 $200 $0 FY2006 FY2007 FY2008 Q1 FY09 Q2 FY09 Annual Quarterly Phosphate Sales Volume 10.0 8.0 6.0 4.0 2.0 - FY2006 FY2007 FY2008
Slide 30: Phosphate price and volume trends
Turning to our Phosphate business, here price momentum has been strong as well – though this came to an abrupt halt and reversal in the past couple months. The supply and demand factors that I’ll speak more about shortly will determine where prices settle and how they might move from there; our view
Slide 31: World's Largest Integrated Phosphate Producer
World’s Largest Integrated Phosphate Producer •Phosphate Fertilizer Capacity Million tonnes product World’s largest capacity of 0 3 6 9 12 finished phosphate fertilizer Mosaic phosphate Mosaic production market share 15% Globally OCP 59% North America World scale & efficient PhosAgro operations GCT
Slide 32: Phosphate vertical integration advantage
The Phosphate business possesses its own attractive attributes due to its sheer size and the benefits of vertical integration – our owned rock reserves - granulation capacity – and a world wide supply chain and distribution network. Note that we have the largest global capacity of finished phosphate
Slide 33: Phosphates – Operational Cost Savings
Phosphates – Operational Cost Savings Energy – capture and convert Logistics and transportation network
Slide 34: Phosphate cost efficiencies
The size and scale of our phosphate business produces significant cost efficiencies. We are continually enhancing efficiencies, and in turn, lowering costs. For example, we spend roughly $120 million on electricity each year to operate our plants and mines. The phosphate chemical process generates a
Slide 35: Offshore Assets Aligned with Global Demand
Offshore Assets Aligned with Global Demand Canada 4 Mines United States 7 Mines 4 Phosphate Plants China 2 Warehouse & Blender 2 Production/Warehouse Thailand India 1 Warehouse & 1 Warehouse Blender Argentina 1 Warehouse & Blender 1 Production/Warehouse Brazil 7 Warehouse & Blender 2 Production/Ware
Slide 36: Offshore production and distribution network
Our North American based Phosphate and Potash businesses are bolstered by our production assets and distribution network in prime growth regions, such as Asia and Latin America. We have agronomists, sales teams, and staff with the operational expertise that know how to serve customers and run our su
Slide 37: Market Outlook
Market Outlook
Slide 38: Outlook for our business
Now let me shift to the outlook for our business.
Slide 39: Growing Global Affluence + Fuel
Growing Global Affluence + Fuel USA: China: Ethanol growth Middle class to 15 billion growth from 130 gallons by 2015 million to 690 million by 2025 The 2009 mandate for ethanol is India: 9 billion gallons Middle class growth from 50 million in 2008 to 580 million by 2025 Source: McKinsey
Slide 40: Population and middle class demand drivers
The fundamental demand driver for our business is population growth, especially the growth of the middle class in developing economies. Strong economic growth in a number of rapidly developing countries is creating a large and increasingly affluent middle class who demand more protein-rich and grain
Slide 41: Growing Grain & Oilseed Use
Growing Grain & Oilseed Use World Grain and Oilseed Use Bil Tonnes 2.75 Source: USDA and Mosaic 2.50 2.25 2.00 1.75 1.50 1.25 1.00 Actual Actual for US Ethanol Forecast Forecast for U.S. Ethanol
Slide 42: Grain and oilseed demand growth
Combine the boost from biofuels with the growth in the global middle class and you get growing global demand for grain and oilseeds. According to USDA estimates, global grain and oilseed demand has recently been increasing 2.5 percent per year – twice the historical rate. Note that there have only b
Slide 43: Record Crop Needed in 2009
Record Crop Needed in 2009 Mil Tonnes World Grain and Oilseed Stocks Percent 650 34% Source: USDA and Mosaic (for 09/10 estimates) 600 31% 550 28% 500 25% 450 22% 400 19% 350 16% 300 13% 250 10% 99/00 00/01 01/02 02/03 03/04 04/05 05/06 06/07 07/08 08/09 09/10 09/10 09/10 L M H Stocks Percent of Use
Slide 44: Crop and stocks outlook
Farmers have responded to this demand by growing bin-busting crops during the last two years. Yet, this has not built stocks to secure levels. You can see from the cross hatched bar that inventories are projected to increase this year but stocks as a percentage of use – noted by the yellow line - ar
Slide 45: Crop Nutrient Markets Re-Calibrate
Crop Nutrient Markets Re-Calibrate Factors Affecting Current Market Broad and sharp commodity sell-off Global economic slowdown Global credit constraints High inventory levels Leading to Change in buyer sentiment Weak volume and softening prices Inventory valuation risk throughout supply chain Produ
Slide 46: Market recalibration discussion
Though we expect the long-term fundamentals in our business are intact and compelling, the current market environment continues to be soft, and the crop nutrient market is re-calibrating. A confluence of factors in the past several months have caused demand – especially for phosphates – to weaken. W
Slide 47: Key Drivers for DAP Pricing
Key Drivers for DAP Pricing DAP Prices $ Tonne Quarterly Averages of Weekly Published Spot DAP fob Tampa 1,200 Source: Fertecon 1,000 Near-Term Drivers: Pipeline inventory 800 Raw materials China exports Global demand 600 400 200 Q1 07 Q2 Q3 Q4 Q1 08 Q2 Q3 Q4 Q1 09 Q2 Q3
Slide 48: DAP price and volume outlook
These factors have especially impacted the phosphates business. DAP prices have taken a sharp dive from historically high levels due to the reasons just noted and the sharp decline in raw material costs. This chart shows the average DAP price for the second quarter – note that recent spot prices are
Slide 49: Attractive Phosphate Market Margins
Attractive Phosphate Market Margins DAP Market Margin Quarterly Averages Calculated from Weekly Published Spot Prices $ Ton for a Central Florida Plant 800 Source: Fertecon, Green Markets, Mosaic 700 600 500 400 300 200 100 Q1 07 Q2 Q3 Q4 Q1 08 Q2 Q3 Q4 Q1 09 Q2 Q3 *Spot DAP price less spot sulfur a
Slide 50: Phosphate market margin discussion
It is important to note that price tells only half the story in phosphates. Equally important are raw material costs, primarily sulfur and ammonia, and phosphate rock. Costs for sulfur, ammonia and rock had escalated dramatically over the past year as demand for these materials surged and natural ga
Slide 51: Key Drivers for MOP Pricing
Key Drivers for MOP Pricing MOP Prices $ Tonne Quarterly Averages of Weekly Published Spot MOP c&f Brazil 1,150 Source: ICIS 1,000 Near-Term Drivers: 850 China contract India demand 700 FX impact Buyer sentiment 550 400 250 100 Q1 07 Q2 Q3 Q4 Q1 08 Q2 Q3 Q4 Q1 09 Q2 Q3
Slide 52: Potash pricing outlook
In our potash business, the dramatic price increases of the past 12-15 months were the result of surging demand. Producers struggled to keep up, and producer inventories remained at historic lows until recently. Upward price momentum and sales volume have slowed in the past couple months and we have
Slide 53: Growth Expected to Resume in '09
Growth Expected to Resume in ’09 Mil Tonnes World Nutrient Use 180 Source: IFA November 2008 170 160 150 140 130 120 110 95 96 97 98 99 00 01 02 03 04 05 06 07 08E 09F
Slide 54: Long-term nutrient demand
We see solid long-term nutrient demand, driven by the very strong traditional drivers of population and income growth. We believe in the food story and think that’s a story that will play out as expected. This demand growth requires significant supply increases. And frankly, for phosphates and potas
Slide 55: Key Takeaways
Key Takeaways Crop nutrient outlook remains positive Global demand for food, feed and fuel Mosaic well positioned to deliver value
Slide 56: Closing key points
Notwithstanding current market disruptions, we are pleased and proud to be in the business at this time. We serve an ever more important role to help meet the world’s growing demand for food and fuel. In closing, I want to emphasize three key points. First, we continue to have a great deal of confid
Slide 57: Thank you
Thank you
Slide 58: Appendix: Non-GAAP Financial Measure Reconciliation
Appendix: Non-GAAP Financial Measure Reconciliation Return on Invested Capital Our return on invested capital (“ROIC”) is a measure of value creation and how effectively we allocate capital in our core operations. We believe ROIC is a metric that is most closely correlated with stockholder value. We
Slide 59: Appendix: Non-GAAP Financial Measure Reconciliation
Appendix: Non-GAAP Financial Measure Reconciliation Net Operating Profit After Tax Return On Invested Capital (ROIC) Calculation Trailing 12 months Fiscal Years ended May 31 ended November 30 2006 2007 2008 2007 Operating earnings $ 101.9 $ 616.3 $ 2,806.7 $ 4,058.4 - Taxes at effective tax rate on