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Why Mosaic’s Sales Could Climb in 1Q18

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May. 4 2018, Published 7:29 a.m. ET

Mosaic’s sales

Mosaic’s (MOS) sales primarily come from three segments: Phosphates, Potash, and International Distribution. The International Distribution segment sales come from potash and phosphate sales in countries such as Brazil, India, Paraguay, and China. Let’s look at sales estimates for the upcoming quarter and beyond.

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Sales estimates

For 1Q18, Mosaic is estimated to post $1.8 billion in sales, which would represent a 12% increase from $1.6 in 1Q17. The expectations are similar for the remaining three quarters. In all, analysts estimate Mosaic’s sales for the next four quarters to grow to $8.6 billion, representing 17% growth from $7.4 billion in the last four quarters.

Sales drivers

Realized prices and sales volume are two key sales drivers for fertilizer companies. Of the two, realized prices have a more pronounced impact on the operating results of fertilizer producers (XLB) like Nutrien (NTR), Intrepid Potash (IPI), and Israel Chemicals (ICL).

With potash and phosphate fertilizers forming the core of Mosaic’s business, the above expectations reflect growth in prices in the coming four quarters. Our recent series How Fertilizer Prices Moved in the Week Ending April 27 also highlighted that prices for potash and phosphate fertilizers have been consistently higher compared to a year ago.

But how does the sales growth stack up for gross margin expectations? We’ll discuss this next.

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