Mosaic Company (the) · NYSE:MOS
Mosaic Company (the) — Goldman Sachs Fifteenth Annual Agricultural Biotech Forum (February 2011)
45 slides from Mosaic Company (the)'s conference presentation, Feb 9, 2011
Slide 1: The Mosaic Company
Exhibit 99.1 The Mosaic Company Goldman Sachs Fifteenth Annual Agricultural Biotech Forum February 9, 2011 Larry Stranghoener Executive Vice President and Chief Financial Officer
Slide 2: Opening remarks
Good morning everyone. I’m delighted to have the opportunity to speak with you today about Mosaic, our strong market position in both potash and phosphate and the outstanding long-term outlook for the crop nutrient industry. We’d like to thank Bob Koort and Lindsey Drucker Mann for coverage of the s
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 strategic plans and other statements about future financial and operating r
Slide 4: Forward-looking statements reminder
Before I proceed, I would like to remind you that our presentation contains forward-looking statements. The statements include, but are not limited to, statements about future financial and operating results. They are based upon management’s beliefs and expectations as of today’s date, February 9, 2
Slide 5: Important Information
Important Information In connection with the proposed Split-Off, a registration statement on Form S-4 that has been filed with the Securities and Exchange Commission includes a preliminary proxy statement/prospectus for the stockholders of The Mosaic Company. The Mosaic Company will mail the final p
Slide 6: Proxy statement/prospectus information
Slide three summarizes important information about the proxy statement/prospectus that we have filed with the SEC in preliminary form and that you should read when available in final form.
Slide 7: Introduction
Introduction • Strategic overview – Mosaic is the leading P&K company in the world – Orderly distribution of shares held by Cargill • Business overview – Potash growth through expansions – Largest integrated phosphate producer – low cost and geographic advantage • Market outlook – Crop nutrient mark
Slide 8: Review of strategy and agenda
This morning I will first review Mosaic’s strategy. We are very upbeat about the long-term fundamentals of our business and continue to position ourselves for the growth of this sector. I’ll also provide a brief overview of the recently announced plan to work with Cargill for an orderly distribution
Slide 9: Leader in Potash and Phosphate
Leader in Potash and Phosphate WORLD’S LARGEST P&K COMPANIES Mosaic PotashCorp Belaruskali Israel Chemicals OCP K+S Silvinit K2O P2O5 Uralkali GCT Yuntianhua 0 1 2 3 4 5 6 7 8 9 MILLION TONNES PRODUCTION, 3 YEAR AVERAGE Source: IFA, company reports and Mosaic estimate 5
Slide 10: Leading producer positioned for growth
As the leading producer of potash and phosphate, there is no company better positioned to capture the growth in crop nutrient markets. Farmers need to plant record areas and harvest ever increasing yields to meet the world’s accelerating appetite for grains and oilseeds. That implies strong growth i
Slide 11: Strategic Overview
Strategic Overview As a global leader in crop nutrients, Mosaic is positioned to benefit from attractive long- term agricultural fundamentals: Potash – grow volume – Brownfield expansion program Phosphates – grow value – Leverage scale and geographic location – Extend phosphate reserves Global distr
Slide 12: Focus on shareholder value creation
At Mosaic, our focus is on shareholder value creation, driven by the attractive fundamentals of our business. Our mission is to help the world grow the food it needs. We run our business with a long-term view – and this view is compelling! We are executing well on our strategy. In Potash, we are gro
Slide 13: Transaction Benefits
Transaction Benefits Enhances long-term strategic and financial flexibility by facilitating exit of majority shareholder Increases Mosaic’s public float – improving attractiveness of stock Greater stock liquidity, removes Cargill overhang, satisfies public float criteria for potential future inclusi
Slide 14: Cargill transaction overview
As most of you know, Mosaic and Cargill recently agreed to a transaction that will result in the distribution of Cargill’s 64% stake in Mosaic to Cargill’s shareholders and debt holders. This transaction will enhance Mosaic’s long-term strategic and financial flexibility by facilitating the exit of
Slide 15: Recapitalization and Split-Off
Recapitalization and Split-Off Cargill’s 286 million Mosaic shares will be recapitalized into three new classes to comply with IRS rules regarding tax free split-offs. Cargill will then distribute all shares to debt holders and participating Cargill shareholders in a split off transaction. Amount of
Slide 16: Three-step distribution overview
Now, let me give you a very brief overview of the transaction. The distribution will take place in three steps. Slide seven illustrates the first two steps. Slide eight summarizes the third step. First, Mosaic will recapitalize its shares into three classes. Of Cargill’s 286 million shares, an estim
Slide 17: Orderly Distribution
Orderly Distribution Formation Offerings Post – Formation Offerings Up to approximately 107 million shares Beginning 2 ½ years from closing, 1/3 from debt/equity exchange, 49.5 million shares remaining after formation offerings shares from Charitable Trusts. held by Charitable Trusts and other Cargi
Slide 18: Third step: orderly distribution of shares
In the third step, we have planned for an orderly distribution of all 286 million shares to occur over the next several years. These shares will be distributed to the public markets in a series of registered secondary offerings. The first offering, which we expect to be the largest, will occur at th
Slide 19: A Leading Global Potash Producer
A Leading Global Potash Producer World capacity MURIATE OF POTASH CAPACITY approximates 74 million MILLION TONNES KCL tonnes (all potash PotashCorp products) Mosaic Belaruskali Mosaic FY10 MOP Silvinit production share ICL – 12% Global Uralkali – 38% North America K+S Qinghai World scale & efficient
Slide 20: Potash market position
First, let’s talk about potash. Mosaic is one of the world’s top producers of potash with an estimated 12% of global market share. Potash is produced in only 14 countries in the world, and agricultural giants such as China, India and Brazil depend on imports.
Slide 21: Potash – Grow Volume
Potash – Grow Volume Projected additional annual capacity of 5.1 million tonnes Multiple projects spanning a decade Reversion of 1.3 million tonnes currently produced for a third party under a tolling agreement expected soon 11
Slide 22: Potash demand and brownfield expansions
The world will need substantially more potash this decade. In the long term, we forecast demand growth of 3.5 – 4% per year. We believe the best way to meet long-term demand growth is through brownfield expansions at existing mine sites. Our ongoing expansions in Canada are expected to increase annu
Slide 23: Potash Capacity Expansions
Potash Capacity Expansions ESTIMATED PEAKING CONSTRUCTION PROJECTED CAPACITY INVESTMENT CAPACITY COMPLETION ($ IN BILLIONS) (MILLION TONNES) (FISCAL YEAR) MILLION TONNES IN PROCESS 18 Belle Plaine 0.5 0.6 2012 16 Colonsay 0.7 0.7 2014 14 Esterhazy 2.0 1.8 2011-17 12 FUTURE 10 Belle Plaine 1.4 2016-1
Slide 24: Potash expansion program progress
Our potash expansion program consists of nearly a dozen separate, multi-year projects at our three Canadian mines. We have made good progress on a number of these projects and we can adjust the pace of these projects in response to supply/demand dynamics. We expect this additional capacity to begin
Slide 25: Rebounding Potash Demand
Rebounding Potash Demand Positive potash market WORLD MOP DEMAND fundamentals: MILLION TONNES 60 Producers running hard to 50 keep up 40 Lean inventories 30 Healthy farmer economics 20 Expect 2011 global 10 shipments of 53 to 56 million 0 tonnes 00 01 02 03 04 05 06 07 08 09 10F 11F CALENDAR YEAR So
Slide 26: Potash market tight outlook
Turning to demand, the potash market is very tight and we expect 2011 global shipments to rival the record of 2007. Producers are running hard to keep up with strong demand and inventories remain low. The strong North American fall season was a catalyst for potash demand and we see this trend contin
Slide 27: World's Largest Phosphate Producer
World’s Largest Phosphate Producer World capacity FINISHED PHOSPHATE CAPACITY approximates 80 million MILLION TONNES tonnes (DAP/MAP/TSP) Mosaic YTH Mosaic FY10 phosphate OCP production share Kailin – 13% Global IFFCO – 56% North America PhosAgro Wengfu World scale & efficient GCT operations Euroche
Slide 28: Phosphate low-cost position
Now, let’s move to phosphate. Mosaic produces more phosphate crop nutrient and animal feed products than any other company in the world by a wide margin. We rank among the lowest cost producers in the industry today due to: •The tight vertical integration of our phosphate rock mining and processing
Slide 29: Phosphates – Grow Value
Phosphates – Grow Value Leverage scale and location – Low cost producer – Cost advantaged sulfur, competitive ammonia – Procurement leverage Operational excellence – Maintenance practices – Capital deployment – Energy use and co-generation capacity – Improve coordination of sales and operations plan
Slide 30: Four strategic priorities for Phosphates
In order to strengthen our competitive advantage, we are focusing on four strategic priorities for our Phosphates business: 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 a
Slide 31: Record Phosphate Demand
Record Phosphate Demand Positive phosphate market WORLD PROCESSED PHOSPHATE DEMAND MILLION TONNES fundamentals: 70 Strong demand 60 Lean inventories 50 40 Healthy farmer economics 30 Expect 2011 global shipments of 59 to 61 million 20 tonnes 10 0 00 01 02 03 04 05 06 07 08 09 10F 11F CALENDAR YEAR S
Slide 32: Phosphate market fundamentals
Phosphate fundamentals are constructive and we expect the phosphate market to remain snug for several years. In 2011, we expect record demand coupled with supply uncertainties to keep this market tight during the remainder of this fertilizer year. Large shipments to both domestic and offshore destin
Slide 33: Solid Financial Position
Solid Financial Position TOTAL CASH AND CASH EQUIVALENTS LESS DEBT* $ IN BILLIONS 3 2 1 - (1) (2) (3) 31-May-06 31-May-07 31-May-08 31-May-09 31-May-10 30-Nov-10 PERIOD END * See appendix for reconciliation of Cash and Cash Equivalents less Debt 17
Slide 34: Capital allocation and strategy
As we have noted, our overall strategy is to capitalize on attractive long-term agricultural 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 decisio
Slide 35: Accelerated Grain and Oilseed Use
Accelerated Grain and Oilseed Use WORLD GRAIN AND OILSEED PRODUCTION AND USE Disappointing global BILLION TONNES harvests 2.8 Strong agricultural 2.6 commodity prices 2.4 Need to re-stock crop 2.2 nutrients in the distribution pipeline and in 2.0 many farm fields 1.8 00/01 02/03 04/05 06/07 08/09 10
Slide 36: Market outlook: grain and oilseed use
Let me finish with a few thoughts on the market outlook which look great from any angle we can see. As you can see, grain and oilseed 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 regardl
Slide 37: Stocks Remain at Low Levels
Stocks Remain at Low Levels WORLD GRAIN AND OILSEED STOCKS DAYS OF USE MILLION TONNES Days of use remains at 700 120 low levels 600 100 Stocks still not at secure 500 80 levels 400 60 2011 new crop prices 300 40 signaling farmers to 200 expand planted area and 20 100 intensify cropping 0 0 practices
Slide 38: Low global grain and oilseed stocks
Dramatic improvement in production has not translated into improving stocks. World grain and oilseed stocks continue to remain at low levels. We believe global grain and oilseed stocks still are not at levels secure enough to withstand weather or other shocks over a period of time. Over this past ye
Slide 39: Farmer Economics
Farmer Economics Farmer profitability remains CROP NUTRIENT AFFORDABILITY IN THE U.S at healthy levels: CROP NUTRIENT PRICE INDEX/CROP PRICE INDEX Grain prices high relative 3.0 to historical prices 2.5 Input costs well below 2.0 their highs Average 1.5 Similar conditions for 1.0 cotton, rice and pa
Slide 40: Grain pricing and farm profitability
Another factor we keep an eye on is grain pricing. Farm profitability remains at healthy levels. Grain prices are at relatively high levels compared to historical prices. At the same time, farmer input costs have fallen from their high levels of 2008 and 2009. This has allowed farmers to remain prof
Slide 41: Key Points
Key Points Cargill distribution will give us additional flexibility to pursue M&A and shareholder distributions in the future Potash brownfield expansions on track to add five million tonnes additional capacity Largest integrated phosphate producer – low cost, geographic advantage and expanding rese
Slide 42: Recap of key points
Let me recap with a few key points. First, Cargill’s exit as majority shareholder will give us additional flexibility to pursue strategic opportunities and shareholder distributions. We will ensure this exit is accomplished in an orderly manner. Second, expected potash demand growth requires that we
Slide 43: Thank you
Thank you
Slide 44: Questions
Thank you for your time today. Now, I will be glad to answer any questions you may have.
Slide 45: Reconciliation of Cash and Cash Equivalents less Debt
Appendix Reconciliation of Cash and Cash Equivalents less Debt Cash and Cash Current As of Period End Short-Term Debt Long-Term Debt Total Debt Net (Debt) Cash Equivalents Maturities 31-May-06 173.3 152.8 69.3 2,388.1 2,610.2 (2,436.9) 31-May-07 420.6 138.6 403.8 1,818.1 2,360.5 (1,939.9) 31-May-08
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