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How Fertilizer Producers’ Phosphate Margins Stacked Up in 4Q17

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Phosphate gross margins

In the earlier part of this series, we discussed how phosphate prices performed in 4Q17. The overall trend for phosphate prices was broadly positive, but let’s see how this translated into margins for the three major players (NANR) discussed below.

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Margins in 4Q17

The overall direction for phosphate segment margins for the three companies in the above chart was broadly mixed in 4Q17. For example, the Mosaic Company’s (MOS) phosphate segment margins expanded to 13% in 4Q17 from 9% a year ago in 4Q16. According to Mosaic, the margin expansion was due to higher realized prices, which we discussed earlier, and lower input costs such as phosphate rock costs.

However, Agrium (AGU) (NTR) saw flat margins compared to 6% in the corresponding quarter a year ago. Agrium’s gross margins took a hit as a result of a higher input cost of phosphate rock and sulfur. In addition, the company had lower volumes due to production outages.

PotashCorp (POT) had an even worse performance with its phosphate segment’s margins delivering a deficit of 1% compared to a profit margin of 3% in the corresponding quarter a year ago. According to PotashCorp, lower margins resulted from $306 million non-cash impairment charges during the quarter. Israel Chemicals (ICL) doesn’t provide a breakdown of phosphate margins.

In the next part of this series, we’ll discuss the potash segment’s performance.

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