Mosaic Company (the) · NYSE:MOS
Mosaic Company (the) — Goldman Sachs Fourteenth Annual Agricultural Biotech Forum (February 2010)
45 slides from Mosaic Company (the)'s conference presentation, Feb 10, 2010
Slide 1: Goldman Sachs Fourteenth Annual Agricultural Biotech Forum
Goldman Sachs Fourteenth Annual Agricultural Biotech Forum Larry Stranghoener, Executive Vice President and Chief Financial Officer February 10, 2010 Exhibit 99.1
Slide 2: Good morning, everyone
Good morning, everyone. I’m delighted to have the opportunity to speak with you today about Mosaic, the outstanding long-term outlook for the crop nutrient industry, and our strong market position in both Potash and Phosphates. We’d like to thank Bob Koort and Joe Fischer for their support and cover
Slide 3: Safe Harbor Statement
Safe Harbor Statement Slide 2 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
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, 2010. Actual results are likely to differ from those set forth in the forward-lo
Slide 5: Strategic Focus
Strategic Focus Slide 3 Deliver value for shareholders Focus on Potash and Phosphate • Grow Potash • Strengthen Phosphate Maintain a strong balance sheet
Slide 6: At Mosaic, our focus
At Mosaic, our focus is on shareholder value creation, driven by the unquestionable long-term demand for our products. As a global leader in nutrients, Mosaic will benefit from the expanding worldwide need for food, feed and fuel. At the core of our strategy is a plan to solidify our resource base a
Slide 7: Leading Global Potash Producer
Leading Global Potash Producer World capacity approximates 74 million tonnes (all potash products) • Potash Fertilizer Capacity Slide 4 Mosaic MOP production • 14% Global • 39% North America • Five mines Competitive industry position Mil tonnes Source: Fertecon / Mosaic PotashCorp Mosaic Belaruskali
Slide 8: Potash segment commentary
Let’s first talk about our Potash segment. Mosaic is one of the world’s top producers of potash with an estimated 14% of global market share. Potash is produced in only 12 countries in the world, and agricultural giants such as China, India and Brazil depend on imports.
Slide 9: Rebounding Potash Demand
Rebounding Potash Demand Slide 5 World MOP Demand 09F Mil Tonnes Source: Mosaic 10F Low & High Range
Slide 10: Potash demand rebound commentary
Following the well documented drop in potash demand last year, we believe potash demand will rebound in calendar 2010. The nutritional value of potash is critical to optimize crop yields and increase food production and we believe the nutrient has been under-applied historically. We project the pota
Slide 11: Growth Opportunities - Our Potash Expansions
Growth Opportunities - Our Potash Expansions Slide 6 Existing Capacity Tolling Agreement 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Estimated Mosaic Potash Capacity Belle Plaine expansions Esterhazy expansions Colonsay expansions Note: The projected annual capacity includes approxim
Slide 12: Mosaic has the capacity to meet demand
Mosaic has the capacity to meet the increasing demands from the agricultural market. We currently own enough mineral reserves to run our mines for over 100 years. In addition, our ongoing expansions are expected to increase annual capacity by over five million tonnes by 2020, ensuring that we will m
Slide 13: Expansions Improve Mosaic's Cost Structure
Expansions Improve Mosaic’s Cost Structure First Quintile Weighted Average Second Quintile Weighted Average Third Quintile Weighted Average Fourth Quintile Weighted Average Fifth Quintile Weighted Average Slide 7 *Excludes Canadian resource taxes and royalties for all Canadian potash producers Sourc
Slide 14: Potash cost curve commentary
The global potash industry has a relatively flat cost curve. This chart shows estimated cost per tonne for all major potash producers. Mosaic’s potash cost structure is competitive and should improve as our expansions come on line. The expected increase in sales and production volumes will leverage
Slide 15: World's Largest Integrated Phosphate Producer
World’s Largest Integrated Phosphate Producer World capacity approximates 76 million tonnes (DAP/MAP/TSP) • Phosphate Fertilizer Capacity Slide 8 World’s largest capacity of finished phosphate fertilizer Mosaic phosphate production share 14% Globally 59% U.S. World scale & efficient operations Mil t
Slide 16: Phosphate segment commentary
Now, let’s turn to our Phosphate segment. As a large, vertically integrated producer, our Phosphate business possesses its own attractive set of attributes. We have substantial company-owned rock reserves, granulation capacity, and a worldwide supply chain and distribution network. We have the large
Slide 17: Phosphate Demand Recovery
Phosphate Demand Recovery Slide 9 World Processed Phosphate Demand 09F Mil Tonnes Source: Mosaic DAP, MAP and TSP 10F Low & High Range
Slide 18: Phosphate demand and price commentary
Demand and price momentum in phosphates had been strong until demand came to an abrupt halt last year. Raw material costs reset, lowering selling prices and causing buyers to back away from the market. This is a story most of you know well. Now, the phosphates market is recovering nicely. This began
Slide 19: Industry Leading Cost Structure in Phosphate
Industry Leading Cost Structure in Phosphate First Quintile Weighted Average Second Quintile Weighted Average Third Quintile Weighted Average Fourth Quintile Weighted Average Fifth Quintile Weighted Average Slide 10 Industry Cost Curve - DAP fob Plant/Port 2009 Q2 Million Tonnes US$ Tonne Mosaic Ave
Slide 20: Phosphate cost curve commentary
Unlike the potash industry, the phosphate industry cost curve is steeper – and you can see that Mosaic is one of the world’s low cost producers. We are working on a number of operational fronts to maintain that position, as I will discuss further.
Slide 21: Phosphates Opportunities
Phosphates Opportunities Slide 11 Operational Cost Savings Maintenance Contract services Process chemicals Energy – heat recovery and conversion Phosphate Rock and Other Strategic Opportunities
Slide 22: Increasing investments to lower costs
We are increasing investments to further enhance efficiencies across our phosphates business, and in turn, lower costs. Already recognized as among the best operators in the business, we are reengineering our phosphates business across the enterprise, targeting maintenance, contract services, proces
Slide 23: Distribution Assets Aligned with Global Demand
Distribution Assets Aligned with Global Demand Slide 12
Slide 24: Distribution network commentary
Mosaic also has a distribution network without peer in our industry – allowing us to move our products where and when needed, efficiently and cost-effectively. Our industry leading North American distribution capabilities are bolstered by strong networks in prime growth regions such as Asia and Lati
Slide 25: Strong Financial Position
Strong Financial Position Cash and Cash Equivalent Less Debt ¹ Cash and Cash Equivalent Less Debt Reconciliation: See Appendix
Slide 26: Overall strategy and capital allocation
As we have discussed, our overall strategy is to capitalize on attractive long-term agriculture 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 deci
Slide 27: Financial Guidance
Financial Guidance 3rd Qtr FY 2010 FY 2010 Phosphate Sales Volume 2.2 - 2.6 million tonnes DAP Selling Price $310 - $350 per tonne Potash Sales Volume 1.7 - 2.0 million tonnes MOP Selling Price $340 - $360 per tonne Capital Spending $1.0 billion - $1.2 billion SG&A $350 - $370 million Effective Tax
Slide 28: Financial guidance commentary
Now I will share some financial guidance for fiscal 2010. We are reconfirming third quarter guidance we previously shared for Phosphates. We expect to be at the high end of the volume range and within the price range. As we have shared before, even though we expect the third quarter average selling
Slide 29: Business Outlook
Business Outlook
Slide 30: Outlook for agricultural markets
Now I will give a few thoughts on the outlook for the agricultural markets.
Slide 31: Growing Global Affluence + Fuel
Growing Global Affluence + Fuel Slide 16 World Arable Land per Person Hectares per 1,000 People Source: FAO and IHS Global Insight GDP Growth Three Largest Asian Countries by Population 3% 4% 5% 6% 7% 8% 9% 10% 11% 12% 13% 09F 10F 11F 12F Source: IHS Global Insight China India Indonesia
Slide 32: Long term agricultural fundamentals
Long term agricultural fundamentals continue to look positive. We believe several macro trends will continue to place increasing pressure on the global food supply. Increasing population is stretching the world’s arable land. On a per capita basis, arable land has been steadily declining. In additio
Slide 33: Growing Grain & Oilseed Use
Growing Grain & Oilseed Use Slide 17 World Grain and Oilseed Production and Use 2.0 2.1 2.2 2.3 2.4 2.5 2.6 2.7 2.8 L M H Bil Tonnes Production Use Source: USDA and Mosaic 2010/11 Scenario Assumptions Low Medium High Harvested Area Change -0.5% -0.5% -0.5% Yield Deviation from 11-Year Trend Largest
Slide 34: Grain and oilseed production and use commentary
Here we show the increase in grain and oilseed production and use over the past decade. As you can see, use has grown slowly, but consistently. History has proven that economic slowdowns don’t have a large negative impact on food consumption – people still need to eat. On the production side, we hav
Slide 35: More Cushion but Stocks Still Not at Secure Levels
More Cushion but Stocks Still Not at Secure Levels Slide 18 World Grain and Oilseed Stocks L M H Mil Tonnes Days of Use Stocks Days of Use Source: USDA and Mosaic 2010/11 Scenario Assumptions Low Medium High Harvested Area Change -0.5% -0.5% -0.5% Yield Deviation from 11-Year Trend Largest Negative
Slide 36: Global grain stocks commentary
Back-to-back bumper crops have built global grain and oilseed stocks and calmed agricultural markets. Supply has responded to higher prices and good weather. Our base forecast assumes a trend yield and a slight decrease in harvested area. We expect the stock to use ratio to remain at a relatively lo
Slide 37: Farm Economics
Farm Economics Slide 19 ISU application rate recommendations 2009 and 2010 crops sold at CBOT closing prices on January 27, 2010 less basis Fertilizer prices for 2003 - 2009 are from USDA. 2010 fertilizer prices are based on current spot wholesale prices Crop Nutrient Costs on Corn in Iowa Bushels o
Slide 38: Farmer economics commentary
Farmer economics remain relatively strong despite the recent downward trend in grain markets. The graph at the left shows farmer profitability. Grain prices remain at relatively high levels as compared to historical prices. At the same time, input prices have reset. This has allowed farmers to maint
Slide 39: Growth Expected to Resume
Growth Expected to Resume Slide 20 World Nutrient Use 08E 09F 10F Source: IFA November 2009 Mil Tonnes 2007/08 2008/09E 2009/10F 2010/11F Nitrogen 3.2% -1.5% 1.6% 2.6% Phosphate 0.1% -10.5% 3.0% 6.2% Potash 6.8% -19.8% -4.5% 13.5% Total 3.1% -6.7% 1.0% 4.9% Changes in World Fertilizer Consumption
Slide 40: Nutrient use rebound commentary
Despite the drop in nutrient use in 2008 and 2009, we expect use to rebound significantly. Over the next several years, the International Fertilizer Industry Association projects crop nutrient use to increase 12% over the peak 2007 period. Agronomic science points to the need for the replenishment o
Slide 41: Key Takeaways
Key Takeaways Slide 21 Focus on value creation Global leader with vertically integrated operations Potash growth projects at attractive capital costs Phosphate growth options in rock reserves and acquisitions Encouraging recent market trends
Slide 42: Four key points in closing
In closing, I would like to emphasize four key points about Mosaic. First, we have managed well through a challenging year while keeping a focus on creating long term value. Second, we are an established industry leader with vertically integrated operations, a strong balance sheet and a broad intern
Slide 43: Thank you!
Thank you!
Slide 44: Questions
I appreciate you listening to Mosaic’s story and our outlook for the future. Now I’d be happy to take questions.
Slide 45: Cash and Cash Equivalent Less Debt Reconciliation
Slide 23 $ in billions Period Ended Cash and Cash Equivalents Short-Term Debt Current Maturities Long-Term Debt Total Debt Net (Debt) Cash 8/31/2007 $ 0.6 $ 0.2 $ 0.5 $ 1.6 $ 2.2 $ (1.6) 11/30/2007 $ 0.6 $ 0.1 $ 0.2 $ 1.4 $ 1.7 $ (1.0) 2/29/2008 $ 1.1 $ 0.2 $ 0.0 $ 1.4 $ 1.7 $ (0.5) 5/31/2008 $ 2.0
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