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Why Mosaic’s 2Q15 Top Line Improved

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Mosaic’s top line

Mosaic Co. (MOS) announced a realignment of its business model on March 2015. This included reporting revenue from sales and distribution in Brazil, India, China, and Paraguay under its international distribution segment. Previously, phosphate revenues from these key countries were reported under the phosphate segment.

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Overview

  • Overall, Mosaic’s revenue grew 2% to $2.5 billion from $2.4 billion in the corresponding quarter a year ago in 2014.
  • The phosphate segment, which contributed 56% toward Mosaic’s revenue, grew 4% to $1.39 billion from $1.33 billion in the corresponding quarter a year ago in 2014.
  • The potash segment, which contributed 29% toward the company’s revenue, declined 4% to $730 million compared to $762 million in the corresponding quarter in 2014.
  • Revenue from international distribution increased 18% to $637 million from $542 million over the same period. Most of the increase in this revenue came from the recently acquired Archer Daniels Midland’s (ADM) fertilizer distribution business in Brazil and Paraguay.

In the next few parts of this series, we will look at key drivers that impacted the revenue of the phosphate and potash segments.

The chemical fertilizer industry is capital intensive, with a few players in the market. Potash Corp.’s (POT) revenue declined 8.5%, Agrium’s (AGU) revenue declined 4.7%, and Intrepid Potash’s (IPI) revenue declined 33.6% over the same period.

This industry is affected by industry-wide fundamentals such as crop prices, global supply, demand, and prices of fertilizers. The VanEck Vectors Agribusiness ETF (MOO) is also impacted by these movements. MOO holds about 14% of AGU, IPI, and MOS as a percentage of its total portfolio.

Next, we will look at fertilizer prices and how they impact Mosaic.

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