Mosaic Company (the) · NYSE:MOS
Mosaic Company (the) — Bank of America Basic Industries Conference 2006
44 slides from Mosaic Company (the)'s conference presentation, May 4, 2006
Slide 1: The Mosaic Company Overview and Outlook
The Mosaic Company Overview and Outlook Exhibit 99.1 Fritz Corrigan President & CEO Bank of America Basic Industries Conference 2006
Slide 2: Welcome and introduction
May 4, 2006 Good Morning and thank you for inviting Mosaic to present at this conference. I am Fritz Corrigan, President and CEO of The Mosaic Company.
Slide 3: Safe Harbor Statement
Safe Harbor Statement May 4, 2006 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 stat
Slide 4: Forward-looking statements reminder
May 4, 2006 Before we start today, I want to remind you that there are forward-looking statements in this presentation. The remarks made today are based on information and understandings that we believe to be accurate as of today’s date. Actual results are likely to differ from those set forth in th
Slide 5: Business Overview
May 4, 2006 Business Overview Phosphates Potash Nitrogen / Offshore Financial Outlook
Slide 6: Overview of agenda and priorities
May 4, 2006 I’d like to start today with an overview of Mosaic and then discuss each of our business segments. I’ll also address Mosaic’s priorities for fiscal 2006 and give you an overview of our expectations for the remainder of the fiscal year. Please note that our fiscal year ends on May 31 st .
Slide 7: Mosaic vision: global leader in nourishing crops
Mosaic will be the global leader in nourishing crops, delivering distinctive value to world agriculture and to all we touch.
Slide 8: Mosaic background and integration
May 4, 2006 Mosaic is now 18 months old. We are the product of an October 2004 combination between the former Cargill Crop Nutrition and the former IMC Global Inc. We are still working hard to complete our integration, but remain very focused on reaching our vision: Mosaic will be the global leader
Slide 9: Mosaic's Sales and Operating Earnings
Mosaic’s Sales and Operating Earnings May 4, 2006 1213.3 1229.5 3122.0 68.8 0.0 500.0 1000.0 1500.0 2000.0 2500.0 3000.0 3500.0 Phosphate Potash Offshore Nitrogen Total Net Sales - $5.4 billion -51.7 -36.7 344.9 198.3 -100 Phosphate Potash Offshore Nitrogen Other Total Operating Earnings - $464.8 mi
Slide 10: Net sales and operating earnings, last twelve months
Now let me turn to Mosaic’s net sales and operating earnings for the last twelve months ending February 28, 2006. Mosaic’s net sales were $5.4 billion, over half of which were from the Phosphates business, about one-quarter from our Potash business, and most of the remaining quarter from our Offshor
Slide 11: Business Overview
Business Overview Phosphates Potash Nitrogen / Offshore Financial Outlook
Slide 12: Mosaic's Phosphates business
Now I will discuss Mosaic’s Phosphates business.
Slide 13: Mosaic's Phosphates Segment: Restructuring Announced May 2, 2006
Mosaic’s Phosphates Segment Phosphate Restructuring Announced May 2, 2006 Restructure to lower costs and operate efficiently Close 1 high cost mine and 2 high cost concentrates plants in Florida Operate remaining capacity at full capacity Focus on marketing products with high value Such as MAP, Micr
Slide 14: Phosphates restructuring and MAP promotion
Mosaic is the largest phosphate producer in the world. However, our Phosphates business has been producing unacceptable financial returns during a period of strong overall market conditions and attractive industry margins. Therefore, we announced a restructuring of Phosphates on May 2 nd which will
Slide 15: Phosphates Restructure Strategy
Phosphates Restructure Strategy Key: Operate a low-cost and globally competitive Phosphates business Indefinitely close Ft. Green Mine with capacity of 4.9 million tonnes per year Indefinitely close Green Bay Processing Plant with 1.3 million tonnes per year of DAP & MAP Indefinitely close South Pie
Slide 16: Closure of Fort Green, Green Bay and South Pierce
The Phosphates restructuring plan will result in the closure of our Fort Green mine, and our Green Bay and South Pierce phosphate production plants. The Fort Green mine has high costs due to the long distances between our mining operations and phosphate rock processing and shipping facilities at For
Slide 17: Phosphate Restructuring Strategy
Phosphate Restructuring Strategy
Slide 18: Florida and Louisiana phosphate operations map and closure charges
This map shows our Florida and Louisiana phosphate operations with circles around the three operations we plan to close indefinitely. We expect the closure of these operations will result in an after-tax earnings charge in the range of $300 to $400 million during our fiscal fourth quarter. Most of t
Slide 19: DAP Prices near record highs
DAP Prices near record highs DAP Prices have been on the rise for the last three years and after a modest dip this winter are back near $265 per tonne. DAP Prices US$ MT fob Tampa Vessel Source: Fertecon
Slide 20: Recent phosphate price trends
Now let’s look at recent phosphate prices. DAP prices have been on the rise for the last three years and reached $265 per tonne FOB Tampa last summer. Prices declined modestly this winter, once shipments to India and Pakistan ended. India continues to be the largest wild card for the outlook in Phos
Slide 21: DAP Market Margins Pressured by Raw Materials
DAP Market Margins Pressured by Raw Materials The DAP Market Margin has recently started to recover due to falling ammonia prices and rising DAP prices. DAP Market Margin Calculated from Published Spot Prices for a Central Florida Plant $ ST Source: Fertecon, Green Markets, Mosaic
Slide 22: DAP market margin discussion
We manage our business based on margins. This chart shows the DAP market margin, or DAP margin minus sulfur and ammonia costs and before rock and conversion costs. Similar to the price trend, the DAP market margin also increased over the last year and was near a 20-year high in mid 2005. The DAP mar
Slide 23: Florida Land Holdings
Florida Land Holdings Over 300,000 people move to Florida each year Mosaic’s preliminary estimate of Florida land holdings total about 260,000 acres or approximately 400 square miles Develop a strategy to maximize value of Florida land assets Over 300,000 people move to Florida each year
Slide 24: Florida land footprint and value strategy
Our Phosphate business covers lots of central Florida. This chart shows our Florida footprint. We are one of the largest landowners in Florida with holdings totaling roughly square miles. We are in the process of developing a strategy to maximize the value of our Florida land assets. In the past, we
Slide 25: Business Overview
Business Overview Phosphates Potash Nitrogen / Offshore Financial Outlook
Slide 26: Mosaic's Potash business
Now I will turn to Mosaic’s Potash business.
Slide 27: Mosaic's Potash Segment: World Potash Demand Growth
Mosaic’s Potash Segment World Potash Demand Growth to Continue in Developing Countries Great fundamentals Canpotex - China contract negotiations continue Superior earnings with high cash generation Excellent platform for growth Low cost and intelligent operator One of the largest manufacturers in th
Slide 28: Potash fundamentals and Canpotex China negotiations
The Potash business has great fundamentals. But today we face normal seasonal demand swings in this business compounded by some unusual circumstances, namely the protracted contract negotiations between Canpotex and the Chinese. As a result, exports are slower than last year. In response, Mosaic has
Slide 29: Potash Price Stabilizes
Potash Price Stabilizes Cornbelt-Saskatchewan Potash Prices US$ ST Granular Grade Cornbelt Saskatchewan Source: Green Markets
Slide 30: Potash price and demand drivers
Potash prices have about doubled over the last three years due to very strong demand and the industry’s tight supply/demand balance. This followed a long period of relatively stable prices. Demand growth was initially strong in Latin America, mainly Brazil, but the last two years the growth has been
Slide 31: Business Overview
Business Overview Phosphates Potash Nitrogen / Offshore Financial Outlook
Slide 32: Nitrogen and Offshore segments
Now let me turn to Mosaic’s Nitrogen and Offshore segments.
Slide 33: Mosaic's Nitrogen Segment
Mosaic’s Nitrogen Segment Equity stake of 50% in Saskferco Products Inc., a world scale facility Energy-efficient plant with 1.2 million tonnes nitrogen capacity Continued to run profitably even with high-priced natural gas Mosaic is agency marketer for Saskferco production Saskferco’s equity earnin
Slide 34: Nitrogen segment and Saskferco
Our Nitrogen segment is our smallest and consists mainly of our equity investment in Saskferco Products Inc. Saskferco is a great performer and yields good cash flow. We market all of Saskferco’s production through an agency relationship plus we are also a distributor of other nitrogen products in N
Slide 35: Mosaic's Offshore Segment
Mosaic’s Offshore Segment Offshore currently distributes about 1 million tonnes of Mosaic’s production Emphasis on distribution of Mosaic’s production Manages seasonality of global demand Mainly Brazil and other large growth markets Challenging short-term environment, but long-term platform growth R
Slide 36: Offshore segment differentiation and footprint
Our Offshore business segment differentiates Mosaic from our North American competitors. We have a large global production and distribution footprint in key growth markets, particularly in Latin America and Asia. It includes approximately one million tonnes of storage capacity at two dozen facilitie
Slide 37: Business Overview
Business Overview Phosphates Potash Nitrogen / Offshore Financial Outlook
Slide 38: Mosaic's financial outlook
Finally, let me address Mosaic’s financial outlook.
Slide 39: Fiscal 2006 Financial Outlook
Fiscal 2006 Financial Outlook Market Update – Good Spring is underway – Strong DAP sales to China and India – Canpotex and Sinochem potash negotiations Sales rebounding in fourth quarter Phosphate fertilizer and feed sales volume of 10.2 to 10.5 million tonnes Potash sales volume of 7.1 to 7.4 milli
Slide 40: Fourth quarter and sales volume outlook
We continue to expect a strong fourth quarter, which is seasonally Mosaic’s best quarter, and the supply and demand fundamentals over the medium term remain attractive. Based on our most recent information, we are projecting phosphate fertilizer and feed sales volumes of 10.5 to 10.9 million tonnes
Slide 41: Mosaic Finance Priorities
Mosaic Finance Priorities Focus on Execution and Cash Flow Generation Restructure phosphate capacity to lower costs Grow our successful potash business Generate cash to pay down debt / lower interest expense Investment grade goal New ERP / SOX / financial controls Be a market leader, react swiftly a
Slide 42: Conclusion and priorities
In conclusion, let me note that Mosaic has an experienced management team that is driven to deliver superior returns during the industry’s cyclical swings. Our immediate priorities are to generate cash to pay down debt, with a goal towards achieving an investment grade rating as soon as we reasonabl
Slide 43: Mosaic Overview and contact information
Mosaic Overview Management: Fritz Corrigan, President & CEO Jim Thompson, Executive Vice President Larry Stranghoener, Executive Vice President & CFO Website: www.Mosaicco.com Headquarters: 3033 Campus Drive, Suite E490, Plymouth, MN 55441 Trading Symbol: NYSE: MOS Investor Relations: Doug Hoadley,
Slide 44: Thank you, questions
Thank you for your time. I will now take questions.
Mosaic — Bank of America Basic Industries Conference 2006 on 6ix