Mosaic Company (the) · NYSE:MOS
Mosaic Company (the) — Conference Presentation (November 2008)
39 slides from Mosaic Company (the)'s conference presentation, Nov 3, 2008
Slide 1: Mosaic's Role More Essential Than Ever
Exhibit 99 Mosaic’s Role:: Mosaic’s Role More More Essential Essential Than Than Ever Ever Larry Stranghoener Executive Vice President and CFO November 4, 2008
Slide 2: Welcome and opening remarks
Good morning everyone. Thank you all for attending and I’d like to express my gratitude to Per Haagensen at Fondsfinans for this opportunity to meet with you and share our accomplishments of the past couple years and our viewpoints about our future. 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 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 – November 4th, 2008. Actual results are likely to differ from those set forth in the forward-
Slide 5: Mosaic: Who We Are
Mosaic: Who We Are Mission: We help the world grow the food it needs. Global producer of crop nutrients #1 Phosphate producer in the world #3 Potash producer in the world Vertically integrated Mining, production, distribution Financial highlights for last 12 months ending August 31, 2008 Revenue of
Slide 6: Background on The Mosaic Company
Unquestionably we are facing historic events in both the financial and commodity markets, with much yet to be sorted out. That said, we are staying focused and true to our mission of helping to feed the world. We believe we are well positioned financially, strategically and operationally to serve ou
Slide 7: Leading Global Potash Producer
Leading Global Potash Producer Mosaic potash production Potash Capacity market share 14.0 14% Globally 12.0 38% North America 10.0 Five mines 8.0 Low-cost & competitive 6.0 industry position 4.0 2.0 0.0 World capacity approximates 73 million tonnes (all potash products) 4
Slide 8: Potash as a core business
Let’s turn to one of our core businesses – potash. 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 an esti
Slide 9: Potash capacity growth from 10.4 to 15.5 million tonnes
We See Tonnes More in Potash 16 14 12 Growth 10 from 10.4 8 to 15.5 million 6 4 2 tonnes - The projected annual capacity includes approximately1.3 million tonnes (as shaded in blue) that we currently produce under a third party tolling agreement at Esterhazy. This agreement will expire within the ne
Slide 10: Saskatchewan potash expansions
We announced expansions to our existing Saskatchewan potash mines as one of our key strategic priorities this past April. Upon completion of these expansions, we estimate our total annual potash capacity will approximate 15.5 million metric tonnes. This amount does not include the 1.3 million metric
Slide 11: Key Drivers for MOP Pricing
Key Drivers for MOP Pricing $ tonne MOP Prices Quarter Averages of Weekly Published Spot MOP c&f Brazil 1,150 Source: ICIS 1,000 Near-Term Drivers: China contract 850 India demand Supply constraints 700 Brazil slowdown Buyer sentiment 550 400 250 100 Q1 07 Q2 Q3 Q4 Q1 08 Q2 Q3 Q4 Q1 09 6
Slide 12: Potash price increases and drivers
The dramatic potash price increases of the past 12-15 months are the result of surging demand. Producers have struggled to keep up, and producer inventories remain at historic lows. Upward price momentum has slowed in the recent past, however, and future price movements will be determined by several
Slide 13: World's Top Phosphate Producer
World’s Top Phosphate Producer World’s largest capacity Phosphate Fertilizer Capacity of phosphate fertilizer 10.0 Mosaic phosphate 8.0 production market share 15% Globally 6.0 59% North America 4.0 World scale & efficient 2.0 operations 0.0 World capacity approximates 71 million tonnes (DAP/MAP/TSP
Slide 14: Phosphate business and vertical integration
Mosaic’s other core business is phosphates. This 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. Our rock reserves provide us wit
Slide 15: Key Drivers for DAP Pricing
Key Drivers for DAP Pricing DAP Prices $ tonne Quarter Averages of Weekly Published Spot DAP fob Tampa 1,200 Source: Fertecon 1,000 Near-Term Drivers: Pipeline inventory 800 China exports India demand Brazil slowdown 600 Raw materials Buyer sentiment 400 200 Q1 07 Q2 Q3 Q4 Q1 08 Q2 Q3 Q4 Q1 09 8
Slide 16: DAP price trends and outlook
DAP prices have trailed off from historically high levels after sharp run-up earlier this year. These price movements were due to the combination of several demand-pull and cost-push factors. DAP selling prices have come under pressure of late due to higher pipeline inventory levels and the sharp de
Slide 17: Attractive Phosphate Market Margins
Attractive Phosphate Market Margins DAP Market Margin $ ton Quarter Averages Calculated from Weekly Published Spot Prices for a Central Florida Plant 800 700 Source: Green Markets, Fertecon, Mosaic 600 500 400 300 200 100 0 Q1 07 Q2 Q3 Q4 Q1 08 Q2 Q3 Q4 Q1 09 9
Slide 18: Raw material costs and market margin
It is importantto 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 gas
Slide 19: Capitalizing on Our Global Reach
Capitalizing on Our Global Reach Offshore assets aligned with global demand Canada 4 Mines United States 7 Mines China 4 Phosphate Plants 2 Warehouse & Blender 2 Production/Warehouse Thailand India 1 Warehouse & 1 Warehouse Blender Argentina 1 Warehouse & Blender 1 Production/Warehouse Brazil 7 Ware
Slide 20: 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 committed staff with the operational expertise that know how to serve customers and
Slide 21: Strategic Focus
Strategic Focus Focus on Potash and Phosphate Grow Potash Strengthen Phosphate Expand Offshore distribution Exit Nitrogen business Maintain a strong balance sheet Deliver value for shareholders 11
Slide 22: 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. We plan to grow our potash business through our previously announced expansions. As noted, this is an excellent business and we h
Slide 23: Cash Allocation Priorities
Cash Allocation Priorities Continued cash flow generation Strong balance sheet Capital expenditures Shareholder distribution policy 12
Slide 24: Cash flow and shareholder distributions
Cash flow has been very strong, allowing us to fund our capital expenditures and investment needs even as we begin returning cash to shareholders with dividends. We will consider additional shareholder distributions as we build excess cash. Clearly, liquidity is king right now, and our strong focus
Slide 25: Market Outlook
Market Outlook
Slide 26: Growing Global Affluence + Fuel
Growing Global Affluence + Fuel USA: China: Ethanol growth Middle class to 15 billion growth from 130 gallons million to by 2015 690 million by 2025 The 2008 mandate for ethanol is 9 billion gallons India: Middle class growth from 50 million in 2008 to 580 million by 2025 Source: McKinsey 14
Slide 27: Demand drivers: population and middle class growth
Now let me shift to the outlook for our business. 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 m
Slide 28: Growing Grain & Oilseed Use
Growing Grain & Oilseed Use Mil Tonnes World Grain and Oilseed Use 2,600 Source: USDA and Mosaic 2,400 2,200 2,000 1,800 1,600 1,400 1,200 1,000 70 75 80 85 90 95 00 05 Actual Actual for US Ethanol Forecast Forecast for U.S. Ethanol 15
Slide 29: Biofuels and middle class drive grain demand
Combine the boost from biofuels with the growth in the global middle class and you get growing and sustainable global demand for grain and oilseeds. According to the USDA estimates, global grain and oilseed demand is increasing 2.5 percent per year – twice the historical rate. In fact there have onl
Slide 30: 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 31: Crop production and stocks scenarios
Farmers have responded to grain and oil seed demand by growing bin-busting crops during the last two years. Yet, this has barely moved the needle on the gauge measuring overall grain and oilseed stocks. You can see from the cross hatched bar that inventories are projected to increase this year but s
Slide 32: Accelerating Nutrient Demand
Accelerating Nutrient Demand Mil Tonnes World Nutrient Use 200 Source: IFA May 2008 190 180 170 160 150 140 130 120 00 01 02 03 04 05 06 07 08 09 10 11 12 17
Slide 33: Crop nutrient demand outlook
All of these factors point to increasing demand for crop nutrients. Prospects continue to look strong for crop nutrients given the need to plant more area and increase crop yields. Here are the latest statistics published by the InternationalFertilizer Association in May 2008. While the projections
Slide 34: Crop Prices at Respectable Levels
Crop Prices at Respectable Levels Crop Prices $ bushel Quarter Averages of the Daily Closing of Nearby Options 15.0 Source: CBOT and KCBOT 13.0 Corn Soybean Wheat 11.0 9.0 7.0 5.0 3.0 1.0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 05 06 07 08 09 18
Slide 35: Agricultural commodity price outlook
Our analysis indicates that the agricultural commodity markets will have to price in this need for more area and higher yields in 2009. Futures prices for 2009 -- while down from the peaks earlier this summer and hit hard these past couple weeks-- still remain at respectable levels with new crop soy
Slide 36: Crop Nutrients Remain Essential
Crop Nutrients Remain Essential Continuing grain & oilseed demand growth Low stock to use ratios Maximum yields required Attractive farmer economics 19
Slide 37: Crop nutrients and crop yields
While market and economic factors make crop nutrients a great investment, the low grain and oil seed stocks make crop nutrients essential. Markets are telling farmers around the world to increase crop production to meet accelerating demand growth. Crop nutrients are part of the yield solution. Agron
Slide 38: Fundamentals are Positive
Fundamentals are Positive Unprecedented global demand for food, feed and fuel Crop nutrient outlook remains positive Mosaic well positioned to meet demand 20
Slide 39: Closing remarks and key points
To sum up, it’s a great time to be in our business. We serve an ever more importantrole to help meet the world’s growing demand for food and fuel. In closing, I want to emphasize four key points. First, agricultural fundamentals remain positive due to strong global demand for food, fuel and fiber. S