Mosaic Company (the) · NYSE:MOS
Mosaic Company (the) — Investor Day (January 2009)
109 slides from Mosaic Company (the)'s investor day presentation, Jan 12, 2009
Slide 1: Mosaic's 2009 Institutional Investor & Analyst Meeting
Mosaic’s 2009 Institutional Investor & Analyst Meeting Tuesday, January 13, 2009 Exhibit 99.1
Slide 2: Safe Harbor
Safe Harbor Christine Battist, Director Investor Relations
Slide 3: Safe Harbor Statement
Safe Harbor Statement This presentation contains forwar d -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 curre
Slide 4: Welcome and Introductions
Welcome and Introductions Jim Prokopanko, President and CEO
Slide 5: Agenda
Agenda Break 9:35 – 9:55 Jim Prokopanko Concluding Comments 11:10 – 11:15 Leadership Team Management Q&A 10:35 – 11:10 Larry Stranghoener Financial Progress & Prospects 10:20 – 10:35 Joc O’Rourke Norm Beug Steve Pinney Operational Excellence & Growth 9:55 – 10:20 Rick McLellan Building Markets, Reac
Slide 6: Growth Opportunities and Priorities
Growth Opportunities and Priorities Jim Prokopanko, President and Chief Executive Officer
Slide 7: Market Outlook
Market Outlook Dr. Mike Rahm, Vice President - Market Analysis and Strategic Planning
Slide 8: Topics and Take Aways
Topics and Take Aways Current Situation • Crop nutrient markets recalibrate • Inventory valuation risk along the entire supply chain Near-Term Outlook • Another record crop is required in 2009 • Improving demand prospects: deferral or destruction • Significant declines in production worldwide • Pote
Slide 9: Current Situation
Current Situation Buyers step out of the market • Build up of distribution pipeline stocks last fertilizer year • A late North American harvest • Global financial crisis and reduced credit availability in some regions • Expectations of lower crop nutrient prices Large drops in energy and raw materia
Slide 10: Buyers Step Out of the Phosphate Market
Buyers Step Out of the Phosphate Market YTD (Jul-Nov) DAP/MAP domestic shipments were down 46% from the high levels a year ago. YTD (Jul-Nov) DAP/MAP exports were down 10% from a year ago due to the sharp decline in October and November. U.S. DAP and MAP Domestic Disapperance 0.0 0.1 0.2 0.3 0.4 0.5
Slide 11: Buyers Step Out of the Potash Market
Buyers Step Out of the Potash Market YTD (Jul-Nov) domestic shipments were down 21% from a year ago. YTD (Jul-Nov) exports were down 9% from a year ago. North America MOP Domestic Disapperance 0.0 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 0.9 1.0 Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Mil Tons K O MI
Slide 12: Expectations of Lower Crop Nutrient Prices
Expectations of Lower Crop Nutrient Prices Ammonia Prices c&f Tampa 1000 $ MT Source: Fertecon Sulphur Prices c&f India $ MT Source: Fertecon The rise and fall of phosphate raw materials costs
Slide 13: U.S. Phosphate Producer Inventories
U.S. Phosphate Producer Inventories DAP/MAP inventories held by U.S. producers at on and off-site warehouses 2008/09 2007/08 U.S. DAP and MAP Producer Stocks 0.0 0.5 1.0 1.5 2.0 Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Mil Tons MIN MAX Range (2002/03-2006/07) 2007/08 3-Yr Average Source: TFI
Slide 14: U.S. Phosphate Production Decreases
U.S. Phosphate Production Decreases YTD (Jul-Nov) U.S. phosphoric acid production was down 14% from a year earlier. Based on announced reductions, we estimate the U.S. industry operated at less than 40% of capacity during December. U.S. Acid Production and Operating Rates 1,000 Jul Aug Sep Oct Nov D
Slide 15: North American Potash Producer Inventories
North American Potash Producer Inventories MOP inventories held by NA producers at on and off-site warehouses 2007/08 2008/09 North America MOP Producer Stocks 0.0 0.3 0.6 0.9 1.2 1.5 1.8 2.1 2.4 Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Mil Tons K O MIN MAX Range (2002/03-2006/07) 2007/08 3-Y
Slide 16: Crop Nutrient Markets Recalibrate
Crop Nutrient Markets Recalibrate Potash Prices Blend Grade fob U.S. Midwest Warehouse 1000 $ ST Source: Green Markets Prilled Urea Prices fob Yuzhnyy $ MT Source: Fertilizer Week America DAP Prices fob Tampa Vessel 1000 1100 1200 1300 $ MT Source: Fertecon The entire supply chain captured large inv
Slide 17: Near-Term Outlook
Near-Term Outlook Nutrient demand prospects begin to improve • Another record crop is required in 2009 • A rally in agricultural commodities prices • Lower crop input costs • Better farm economics • Demand deferral vs. destruction Reduction in production worldwide Adjustments to get product moving t
Slide 18: Another Bumper Crop is Required in 2009
Another Bumper Crop is Required in 2009 World Grain and Oilseed Stocks 08/09E L M H Mil Tonnes 10% 13% 16% 19% 22% 25% 28% 31% 34% Percent Stocks Percent of Use Source: USDA and Mosaic (for 09/10 estimates)
Slide 19: Record Harvested Area and Average Yield
Record Harvested Area and Average Yield World Grain and Oilseed Area and Yields 08/09E Mil Ha 2.50 2.56 2.63 2.69 2.75 2.81 2.88 2.94 3.00 MT Ha Harvested Area Yield Trend Source: USDA
Slide 20: A Santa Claus Rally
A Santa Claus Rally (Dec 5 trough to Jan 9 change) +28% or $2.27 bu +29% or $1.03 bu +29% or $1.53 bu 2009 New Crop Prices Daily Close of New Crop Options Jan 2, 2008 to Jan 9, 2009 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan $ BU Dec 09 Corn Nov 09 Soybeans Jul 09 Wheat Source: CBOT and KCB
Slide 21: Farm Economics Improving
Farm Economics Improving RAVC - Return after Variable Cost RAVC for a U.S. Midwest High Yield Farm Operation $0 $100 $200 $300 $400 $500 $600 $700 2003 2004 2005 2006 2007 2008 2009 Source: Iowa State University and Mosaic $ Acre Soybeans Corn Following Soybeans Corn Following Corn
Slide 22: U.S. Phosphate Demand and Shipment Outlook
U.S. Phosphate Demand and Shipment Outlook U.S. Phosphate Use and DAP/MAP Shipments 2.75 3.00 3.25 3.50 3.75 4.00 4.25 4.50 4.75 5.00 5.25 08E Mil Tons P O 5.75 6.00 6.25 6.50 6.75 7.00 7.25 7.50 7.75 8.00 8.25 Mil Tons DAP/MAP Phosphate Use DAP/MAP Shipments Estimated DAP/MAP Use Source: AAPFCO, TF
Slide 23: Case 1: Large Shipments Required
Case 1: Large Shipments Required U.S. DAP and MAP Domestic Shipments 0.0 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 0.9 1.0 Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Mil Tons MIN MAX Range (2003/04-2007/08) 2008/09 Act/Fcst 3-Yr Average Source: TFI and Mosaic Case 1: 26% Drop in U.S. DAP/MAP Shipments in
Slide 24: Case 2: Below Average Shipments
Case 2: Below Average Shipments U.S. DAP and MAP Domestic Shipments 0.0 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 0.9 1.0 Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Mil Tons MIN MAX Range (2003/04-2007/08) 2008/09 Act/Fcst 3-Yr Average Source: TFI and Mosaic Case 2: 40% Drop in U.S. DAP/MAP Shipments in
Slide 25: NA Potash Demand and Shipment Outlook
NA Potash Demand and Shipment Outlook North America Potash Use and Shipments 3.5 4.0 4.5 5.0 5.5 6.0 6.5 7.0 7.5 08E Mil Tons K 2 O Ag Use Total Shipments Estimated Use Source: IPNI and Mosaic Fertilizer Year Ending June 30
Slide 26: Case 1: Large Shipments Required
Case 1: Large Shipments Required North America MOP Domestic Shipments 0.0 0.2 0.4 0.6 0.8 1.0 1.2 1.4 1.6 Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Mil Tons KCL MIN MAX Range (2003/04-2007/08) 2008/09 Act/Fcst 3-Yr Average Source: IPNI and Mosaic Case 1: 11% Drop in MOP Shipments in 2008/09
Slide 27: Case 2: Average Shipments Still Required
Case 2: Average Shipments Still Required North America MOP Domestic Shipments 0.0 0.2 0.4 0.6 0.8 1.0 1.2 1.4 1.6 Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Mil Tons KCL MIN MAX Range (2003/04-2007/08) 2008/09 Act/Fcst 3-Yr Average Source: IPNI and Mosaic Case 2: 20% Drop in MOP Shipments in 20
Slide 28: Near-Term Phosphate Import Demand Outlook
Near-Term Phosphate Import Demand Outlook World Less China Phosphate Import Demand 08E Mil Tonnes DAP/MAP/TSP W Europe Asia Less China Oceania L America Other Source: Fertecon, IFA and Mosaic
Slide 29: Near-Term Potash Demand Outlook
Near-Term Potash Demand Outlook World MOP Import Demand 08E Mil Tonnes KCL Asia Latin America West Europe US Other Source: Fertecon and Mosaic
Slide 30: Indian Demand Remains Strong
Indian Demand Remains Strong Indian subsidies insulate domestic farmers from higher crop nutrient costs India MOP Import Demand 0.0 1.0 2.0 3.0 4.0 5.0 6.0 7.0 08E Mil Tonnes KCL Source: Fertecon and Mosaic India Processed Phosphate Import Demand 0.0 1.0 2.0 3.0 4.0 5.0 6.0 7.0 08E Mil Tonnes DAP MA
Slide 31: Brazilian Demand Remains an Issue
Brazilian Demand Remains an Issue Brazil Monthly Fertilizer Shipments 0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Mil Tonnes 2007 2008 Source: ANDA Brazil Fertilizer Shipments 08E Mil Tonnes Source: ANDA and Mosaic
Slide 32: China Remains the Wild Card
China Remains the Wild Card Chinese export taxes and procurement strategies cause uncertainty China DAP and MAP Export Supply 0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 4.0 4.5 08E Mil Tonnes DAP MAP Source: Fertecon, IFA, China Customs and Mosaic China MOP Import Demand 08E Mil Tonnes KCL Source: Fertecon and
Slide 33: Reduction in Production Worldwide
Reduction in Production Worldwide Phosphate: DAP/MAP/TSP/MES Potash: MOP The year is drawing to a close with more than half of the worl d ’s DAP/MA P export capacity shut down and producers in the US and North Africa contemplating extending the closures into the first quarter. ICIS The Market Decemb
Slide 34: Long-Term Outlook
Long-Term Outlook Solid long-term nutrient demand outlook • Strong traditional demand drivers • Biofuels: a viable component of comprehensive energy policy Demand growth requires significant supply increases • Limited capacity additions during the next few years • Relatively high prices required to
Slide 35: Strong Traditional Demand Drivers
Strong Traditional Demand Drivers … World Grain and Oilseed Use 1,000 1,250 1,500 1,750 2,000 2,250 2,500 2,750 3,000 3,250 Source: USDA and Mosaic Mil Tonnes Actual Actual for US Ethanol Forecast Forecast for U.S. Ethanol
Slide 36: Driven by Population and Income Growth
… Driven by Population and Income Growth y = 17.913Ln(x) - 91.411 R 2 = 0.6745 Meat Consumption vs GDP (per capita in 2002) 5000 10000 15000 20000 25000 30000 35000 40000 Income per Capita (1997 US$) Source: FAO, Global Insight
Slide 37: Driven by Population and Income Growth
… Driven by Population and Income Growth Change in per capita broiler consumption 1997-2007 UAE 44.4 Brazil 16.1 Mexico 10.9 Russia 8.3 Australia 7.9 USA 7.4 Argentina 7.2 S Korea 3.7 EU27 3.1 Vietnam 2.9 China 2.7 Japan 1.6 India 1.4 Indonesia 0.9 Philippines 0.9 Thailand 0.6 Malaysia 6.9 kg per ca
Slide 38: Biofuels – a Viable Component of Energy Policy
Biofuels – a Viable Component of Energy Policy Long-term viability • Bullish oil fundamentals o Strong demand outlook (same as food story) o Uncertainties about new supplies • Continued or faster agricultural productivity gains from biotechnology U.S. Energy Independence and Security Act of 2007 • B
Slide 39: U.S. Ethanol – Significant Part of Gas Supply
U.S. Ethanol – Significant Part of Gas Supply U.S. Ethanol Production Source: EIA and Mosaic Bil Gal 0% 2% 4% 6% 8% 10% 12% 14% 16% Percent Actual Forecast Percent of Gasoline Use
Slide 40: Solid Long-Term Phosphate Demand Prospects
Solid Long-Term Phosphate Demand Prospects 2.5% CAGR 1.5% CAGR 2.0% CAGR World Phosphate Demand Forecast Mil Tonnes P O Actual Low Growth Medium Growth High Growth IFA Fertecon Source: IFA , Fertecon and Mosaic
Slide 41: Significant Additional Supply Required for Phosphate Demand
Significant Additional Supply Required to Meet Projected Phosphate Demand Rock Required to Meet Phosphate Demand Growth 2007-20 Actual 2007-20 Growth Scenario Million Tonnes 97-07 97-02 02-07 Low Medium High Crop Nutrient Demand Growth (P O ) 6.6 0.7 5.9 8.4 11.5 14.9 Crop Nutrient Demand Growth (CA
Slide 42: Solid Long-Term Potash Demand Prospects
Solid Long-Term Potash Demand Prospects 3.0% CAGR 2.0% CAGR 2.5% CAGR World Potash Demand Forecast Mil Tonnes K 2 O Actual Low Growth Medium Growth High Growth IFA Fertecon Source: IFA, Fertecon and Mosaic
Slide 43: Significant Additional Supply Required for Potash Demand
Significant Additional Supply Required to Meet Projected Potash Demand MOP Required to Meet Potash Demand Growth 2007-20 Actual 2007-20 Growth Scenario Million Tonnes 97-07 97-02 02-07 Low Medium High Crop Nutrient Demand Growth (K O) 6.4 0.9 5.5 8.5 10.9 13.5 Crop Nutrient Demand Growth (CAGR) 2.5%
Slide 44: Take Aways
Take Aways Current Situation • Crop nutrient markets recalibrate • Inventory valuation risk along the entire supply chain Near-Term Outlook • Another record crop is required in 2009 • Improving demand prospects: deferral or destruction • Significant declines in production worldwide • Potential shipp
Slide 45: Building Markets, Reaching Customers
Building Markets, Reaching Customers Rick McLellan, Senior Vice President - Commercial
Slide 46: Global Value Chain
Global Value Chain Granulation Plant Plant Storage Storage Wholesale Retailer Transport Ocean Port Transport Blend & Bag Grower • Warehouses to help balance production with shipments • Mainly at production sites in NA, Argentina, and Brazil • Warehouses close to consumers • “Buffer” stock and produc
Slide 47: Worldwide Sales Volumes
Worldwide Sales Volumes Total Volume Sold Approximately 27 Million Metric Tonnes
Slide 48: Four Primary Distribution Channels
Four Primary Distribution Channels CANPOTEX Canpotex PhosChem Mosaic North America Mosaic Offshore Distribution
Slide 49: North American Ag Sales
North American Ag Sales Ag- Retailers 55% Distributors 45% Distributors Aggregate products and sell to retailers Retailers Blend product and sell to farmers
Slide 50: North American Sales and Marketing
North American Sales and Marketing Feed • Focus on national account distributors and production integrators • Diversification from commodity products • Steady demand • Domestic and international sales teams Industrial • Profitable niche for mainly potash products • Diversification from commodity pro
Slide 51: North American Ag 'Share Value'
North American Ag ‘Share Value’ Collaborative business planning with key customers Jointly develop an annual purchase plan with incentives for execution Develop an agreed monthly/quarterly shipment program Execute and when needed adapt shipment plans Pay for performance Promise Plan Deliver
Slide 52: North American Warehouse Infrastructure
North American Warehouse Infrastructure
Slide 53: Offshore Distribution Facilities
@ Fertilizer Plant @ Port Operation ® Warehouse & Blender ® Sales Office San Antonio Concepcion Bays Quebracho
Slide 54: Asian and Australian Regions
Asian and Australian Regions
Slide 55: Farmer Education Events in China
Farmer Education Events in China
Slide 56: Key Focus Areas
Key Focus Areas Mosaic aligned sales process ‘Share Value’ success Offshore growth opportunities
Slide 57: Break
Mosaic’s 2009 Institutional Investor & Analyst Meeting Break - The meeting will resume momentarily
Slide 58: Operational Excellence and Growth
Operational Excellence and Growth Joc O’Rourke, Executive Vice President of Operations
Slide 59: Our Potash Opportunity
Our Potash Opportunity Norm Beug, Senior Vice President – Potash Operations
Slide 60: Leading Global Potash Producer
Leading Global Potash Producer World capacity approximates 73 million tonnes (all potash products) • Potash Fertilizer Capacity Mosaic potash production • 14% Global • 38% U.S. • Five mines Low-cost & competitive industry position PotashCorp Mosaic Belaruskali Kali & Salz Silvinit Uralkali Million t
Slide 61: Leading Global Potash Producer
Leading Global Potash Producer World capacity approximates 73 million tonnes (all potash products) • Potash Fertilizer Capacity Mosaic potash production • 14% Global • 38% U.S. • Five mines Low-cost & competitive industry position PotashCorp Mosaic Belaruskali Kali & Salz Silvinit Uralkali Million t
Slide 62: Mosaic's Competitive Advantages - Potash
Mosaic’s Competitive Advantages - Potash Excellent potash reserves Low cost capacity expansions Geographically located to serve North America & member of Canpotex Cost competitive Established continuous improvement process
Slide 63: Potash - Production Locations
Potash - Production Locations Belle Plaine Esterhazy K1 Esterhazy K2 Carlsbad Hersey Colonsay K-Mag Red Muriate of Potash Mosaic Facilities ® Solution Solution Hersey Esterhazy K1 & K2 Belle Plaine Shaft Carlsbad Shaft Colonsay Shaft White Muriate of Potash
Slide 64: Growth Opportunities - Potash
Growth Opportunities - Potash Estimated Annual Potash Capacity by Year Estimated Potash Capacity Expansion by Mine Location Estimated Annual Capacity Increase (tonnes in millions) Estimated Completion Esterhazy, SK 0.9 2012 0.9 2020 1.8 Belle Plaine, SK 0.1 2010 0.4 2012 1.5 2014-2017 2.0 Colonsay,
Slide 65: Operational Excellence - Potash
Operational Excellence - Potash Improving operations • Process centered organization • Benefits include increased productivity, reduced capital expenditures and cost Maintenance Center of Excellence • Mosaic wide • Improving predictive & preventive maintenance
Slide 66: Overview of Canpotex
Overview of Canpotex • Operational since 1972 • Markets Saskatchewan potash outside the United States and Canada • Owned by Saskatchewan potash producers • Operates as a stand alone company with its own transportation & logistics assets and 67 employees CANPOTEX Source: Fertecon Canpotex Supply Mosa
Slide 67: Esterhazy Brine Inflow Management
Esterhazy Brine Inflow Management Managed brine inflow since 1985 Approach • Pumping & injection infrastructure • Extensive 3D seismic coverage • Access to old workings • Grout and backfill R&D • Rock mechanics modeling K1 Largest underground potash mine in the world ! 4,700 km of tunnels Esterhazy
Slide 68: Mosaic's Competitive Advantages - Potash
Mosaic’s Competitive Advantages - Potash Excellent potash reserves Low-cost capacity expansions Geographically located to serve North America & member of Canpotex Cost competitive Established continuous improvement process
Slide 69: Operational Excellence - Phosphates
Operational Excellence - Phosphates Steve Pinney Senior Vice President, Phosphate Operations and Supply Chain
Slide 70: World's Largest Integrated Phosphate Producer
World’s Largest Integrated Phosphate Producer World capacity approximates 71 million tonnes (DAP/MAP/TSP) • Phosphate Fertilizer Capacity World’s largest capacity of finished phosphate fertilizer Mosaic phosphate production market share 15% Globally 59% North America World scale & efficient operatio
Slide 71: Mosaic Phosphate Facilities
Mosaic Phosphate Facilities Strategically located in the U.S. Gulf rock mines in Florida • 4 phosphate plants * Proposed Mines
Slide 72: Phosphate Offshore Destinations
Phosphate Offshore Destinations
Slide 73: Slide 73
Slide 74: Slide 74
Slide 75: PhosChem
PhosChem Reach 53% Mosaic’s Exports (fiscal 2008) PhosChem, a phosphate producer export association, administers Mosaic export sales to third party customers Operational since 1975 Sells concentrated phosphates outside the United States and Canada Organized under the provisions of the Webb Pomerene
Slide 76: Phosphates – Operational Cost Savings
Phosphates – Operational Cost Savings Energy – capture and convert
Slide 77: Phosphates – Operational Cost Savings
Phosphates – Operational Cost Savings Energy – capture and convert Maintenance spend reduction
Slide 78: Phosphates – Operational Cost Savings
Phosphates – Operational Cost Savings Energy – capture and convert Maintenance spend reduction Logistics and transportation network
Slide 79: New Product Development - MicroEssentials
New Product Development - MicroEssentials Innovative specialty product Sales growth opportunity Higher margin Patented production process
Slide 80: Value Opportunities - Phosphates
Value Opportunities - Phosphates Supply Chain Reducing Costs Excellent Assets Positive long-term outlook Leveraged asset base Supply chain and logistics Cost reduction opportunities
Slide 81: Financial Progress and Prospects
Financial Progress and Prospects Larry Stranghoener, Executive Vice President and Chief Financial Officer
Slide 82: Fiscal 2008 - A Pivotal Year
Fiscal 2008 - A Pivotal Year An Industry Leader Emerges – Prepared for Long-Term Growth… As Well as the Near-Term Downturn Capitalized on improved long-term fundamentals Delivered outstanding financial results Generated strong cash flow & reduced debt investment grade Developed and rolled out Mosaic
Slide 83: Value Creation – Cash Flow Drivers
Value Creation – Cash Flow Drivers Supported By Strong Governance & Controls 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 84: Value Driver: Potash Revenue
Value Driver: Potash Revenue Potash Sales Volume - 2.0 4.0 6.0 8.0 FY2006 FY2007 FY2008 MOP Price $0 $100 $200 $300 $400 $500 $600 FY2006 FY2007 FY2008 Q1 FY09 Q2 FY09 Annual Quarterly
Slide 85: Value Driver: Phosphates Revenue
Value Driver: Phosphates Revenue Phosphate Sales Volume - 2.0 4.0 6.0 8.0 10.0 FY2006 FY2007 FY2008 DAP Price $0 $200 $400 $600 $800 $1,000 $1,200 FY2006 FY2007 FY2008 Q1 FY09 Q2 FY09 Annual Quarterly
Slide 86: Value Driver: Securing & Enhancing Revenue Sources
Value Driver: Securing & Enhancing Revenue Sources Business Development Initiatives Potash expansions Phosphate reserve opportunities Monitoring & evaluation of strategic opportunities Developing and deploying new products and processes Florida land development
Slide 87: Value Driver: Business Mix
Value Driver: Business Mix (sales tonnes) Potash 49% Phosphates 51% Potash 60% Phosphates 40% Present Future
Slide 88: Value Driver: Operating Margin
Value Driver: Operating Margin Potash Gross Margin $0 $100 $200 $300 $400 $500 $600 $700 $800 $900 FY2006 FY2007 FY2008 0% 5% 10% 15% 20% 25% 30% 35% 40% 45% Phosphate Gross Margin $0 $250 $500 $750 $1,000 $1,250 $1,500 $1,750 $2,000 $2,250 FY2006 FY2007 FY2008 0% 5% 10% 15% 20% 25% 30% 35% 40% 45%
Slide 89: Operating Margin - Potash Operating Cost Structure
Value Driver: Operating Margin - Potash Operating Cost Structure % of Total Costs Key Drivers Cost Element Sales/Margin 40% Mining Taxes Supply chain/logistics Energy consumption De-bottlenecking Water management 40% Mining & Plant Processing Costs Infrastructure/Governance Distribution Strategy 10%
Slide 90: Operating Margin - Phosphate Operating Cost Structure
Value Driver: Operating Margin - Phosphate Operating Cost Structure % of Total Costs Key Drivers Cost Element 5% 40% 55% Infrastructure/Governance Distribution Strategy Management & Support Costs Supply Chain/Logistics Energy Consumption De-bottlenecking Mining & Plant Processing Costs Market Forces
Slide 91: Working Capital Trends
Working Capital Trends 1,000 1,200 1,400 1,600 May '05 May '06 May '07 May '08 Aug '08 Nov '08 0% 2% 4% 6% 8% 10% 12% Accounts Receivable % of trailing 12 month sales
Slide 92: Working Capital Trends
Working Capital Trends 1,000 1,200 1,400 1,600 May '05 May '06 May '07 May '08 Aug '08 Nov '08 0% 2% 4% 6% 8% 10% 12% Accounts Receivable % of trailing 12 month sales 1,000 1,200 1,400 May '05 May '06 May '07 May '08 Aug '08 Nov '08 0% 2% 4% 6% 8% 10% 12% Accounts Payable % of trailing 12 month sale
Slide 93: Working Capital Trends
Working Capital Trends 1,000 1,200 1,400 1,600 May '05 May '06 May '07 May '08 Aug '08 Nov '08 0% 2% 4% 6% 8% 10% 12% Accounts Receivable % of trailing 12 month sales 1,000 1,200 1,400 May '05 May '06 May '07 May '08 Aug '08 Nov '08 0% 2% 4% 6% 8% 10% 12% Accounts Payable % of trailing 12 month sale
Slide 94: Cash Flow from Operations
Cash Flow from Operations Cash Provided by Operating Activities $0 $200 $400 $600 $800 $1,000 $1,200
Slide 95: Cash & Debt: Last Four-Year Trend
Cash & Debt: Last Four-Year Trend $0 $500 $1,000 $1,500 $2,000 $2,500 $3,000 Cash & Cash Equivalents Debt
Slide 96: Net Cash Position Industry Leading Position
Net Cash Position Industry Leading Position $0.8 ($2.4) ($2.5) $1.4* ($3.0) ($2.0) ($1.0) $0.0 $1.0 $2.0 MOS CF POT AGU Net Cash Position = Cash & Cash Equivalents less Total Debt Note: MOS at Nov '08; POT, AGU, CF at Sep '08 *Cash & Cash Equivalents of $2.8B less total debt of $1.4B
Slide 97: Value Driver: Capital Investments
Value Driver: Capital Investments Increased Investment In Opportunity Projects… - 1,000 FY06 FY07 FY08 FY09 Opportunity Sustaining
Slide 98: Return on Invested Capital
Return on Invested Capital 2.3% 8.0% 30.2% 36.5% 0.0% 10.0% 20.0% 30.0% 40.0% 50.0% FY06 FY07 FY08 12 Mos Nov08
Slide 99: Cash Allocation Priorities
Cash Allocation Priorities Invest to maintain/grow existing business • Growing proportion of growth/opportunity projects • Disciplined capital allocation process Build liquidity buffer • To protect against cyclical downturn • To allow pursuit of strategic opportunities Shareholder Distributions • Mo
Slide 100: Key Financial Messages
Key Financial Messages Great progress – strong balance sheet Long-term fundamentals are excellent, despite near-term challenges Leading phosphate and potash producer in the world. Business mix is shifting in favor of potash Great strides in phosphate business
Slide 101: Management Questions & Answers
Management Questions & Answers
Slide 102: Concluding Comments
Concluding Comments Jim Prokopanko, President and CEO
Slide 103: Thank you
Mosaic’s 2009 Institutional Investor & Analyst Meeting Thank you
Slide 104: Investor Relations Contacts
Investor Relations Contacts Christine Battist – Director Investor Relations 763.577.2828 (phone) 763.577.2986 (fax) Carmen Kilde – Investor Relations Associate 763.577.2745 (phone) Email: investor@mosaicco.com
Slide 105: Biographies
Biographies James T. Prokopanko, President and Chief Executive Officer Jim became our President and Chief Executive Officer in January 2007. Mr. Prokopanko joined Mosaic as our Executive Vice President and Chief Operating Officer in July 2006. Previously, he was a Corporate Vice President of Cargill
Slide 106: Biographies
Biographies Steven L. Pinney, Senior Vice President, Phosphate Operations and Supply Chain Steve previously was a senior vice president of Cargill, Incorporated, and leader of Cargill's Phosphate Production Business Unit. He also served as president of Cargill Fertilizer, Inc. After joining Cargill
Slide 107: Net Cash: Non-GAAP Financial Measure Reconciliation
Net Cash: Non-GAAP Financial Measure Reconciliation The Mosaic Company (In millions) November 30 Net Cash Reconciliation 2008 Cash and cash equivalents 2,811.6 $ Less: Short-term debt 110.5 Current maturities of long-term debt 30.2 Long-term debt, less current maturities 1,272.3 Long-term debt-due t
Slide 108: ROIC: Non-GAAP Financial Measure Reconciliation
ROIC: 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 als
Slide 109: ROIC: Non-GAAP Financial Measure Reconciliation
ROIC: Non-GAAP Financial Measure Reconciliation We have presented above ROIC, which is a non-GAAP financial measure. Generally, non-GAAP financial measures are supplemental numerical measures of a company's performance, financial position or cash flows that either exclude or include amounts that are