Potash (POT) reported a disastrous second quarter, as the fertilizer company's profits plunged 38 percent. To add fuel to the fire, the company also projected earnings for the second half would fall below previous expectations.
Earnings for 2012 were downwardly revised from $3.20 to $3.60 to $2.80 to $3.20 a share. Analysts were looking for earnings estimates of $3.47 a share on the year.
For the next quarter Potash projected earnings to come in at a range of 70 cents a share to 90 cents a share. The Street was looking for 95 cents a share.
Even so, Potash noted that the drought, which has resulted in higher crop prices, should result in farmers increasing their use of fertilizer for 2013.
Income in the 2nd quarter dropped 60 cents a share to finish at $522 million, way down from the 96 cents a share or $840 million generated last year.
Part of the poor results were attributed to a $341 million impairment charge from an investment by Potash in Chinese fertilizer maker Sinofert Holdings Ltd.
The phosphate segment also dragged on the company, as margins were lower than expected because of weaker demand and prices.
On the other hand, the nitrogen business of the company was helped by low natural gas prices.
Potash raised its forecast for combined phosphate and nitrogen gross margin in 2012 to a range of $1.4 billion to $1.6 billion, an increase over the $1.3 billion to $1.5 billion originally projected.
Because of the announcement that the ECB would do everything to prop up the euro, shares of Potash closed up at $44.99, gaining $0.50, or 1.12 percent. In after hours trading over half of that was already given back.
Showing posts with label Fertilizer Companies. Show all posts
Showing posts with label Fertilizer Companies. Show all posts
Thursday, July 26, 2012
Wednesday, June 1, 2011
Citigroup (C) Likes (MOS) (POT) in Fertilizers
Fertilizer companies are getting a more bullish outlook from Citigroup (NYSE:C), as Potash Corp. (NYSE:POT) and Mosaic (NYSE:MOS) are considered to be desirable at this time because of attractive valuations and stronger fundamentals, according to Citigroup analyst P.J. Juvekar.
Particularly noted by Juvekar was the was declining fertilizer exports from China and sustainable pricing strength.
Juvekar wrote in a note to clients, “According to the USDA farm income is expected to increase 20% this year, which should incentivize farmers to fully fertilize this fall. High commodity prices and the relatively gradual pace of fertilizer price increases have reduced the share of revenue that growers need to spend on fertilizers. The USDA estimates that this share will decline to 10.3% this year, well below the recent peak of 12.1% in 2008. This suggests that farmers have the financial wherewithal to absorb current fertilizer prices and even potentially higher prices, should crop prices remain elevated.”
Short term there appears to be little concern over lower utilization rates because of wet and cooler weather, as well as lower acreage planted, for corn. Over the long term it's considered a positive for the sector.
He raised his ratings on both companies from a "Hold" to a "Buy." Price targets on Potash was boosted to $67, while Mosaic was increased to $85.
Particularly noted by Juvekar was the was declining fertilizer exports from China and sustainable pricing strength.
Juvekar wrote in a note to clients, “According to the USDA farm income is expected to increase 20% this year, which should incentivize farmers to fully fertilize this fall. High commodity prices and the relatively gradual pace of fertilizer price increases have reduced the share of revenue that growers need to spend on fertilizers. The USDA estimates that this share will decline to 10.3% this year, well below the recent peak of 12.1% in 2008. This suggests that farmers have the financial wherewithal to absorb current fertilizer prices and even potentially higher prices, should crop prices remain elevated.”
Short term there appears to be little concern over lower utilization rates because of wet and cooler weather, as well as lower acreage planted, for corn. Over the long term it's considered a positive for the sector.
He raised his ratings on both companies from a "Hold" to a "Buy." Price targets on Potash was boosted to $67, while Mosaic was increased to $85.
Monday, November 1, 2010
BHP (NYSE:BHP) Will Wait to Raise Bid for Potash (NYSE:POT)
Although there are many guesses as to how high BHP (NYSE:BHP) will raise its bid for Potash Corp. (NYSE:POT), one thing all agree on, is they are in no hurry to do it before they pass through regulatory hurdles, and in light of no competitor emerging to challenge them for the fertilizer giant.
UBS (NYSE:UBS) has offered one of the higher price scenarios, saying they may bid as high as $165 a share to gain the company. That would be surprising if they went that high, as BHP shareholders have reportedly said they don't want the bid to go any higher than 10 percent.
That is actually good news for BHP, as there has been pressure on them to expand through acquisition, but it's good to see shareholders not willing to grow at any expense.
Yet UBS analyst Olivia Ker wrote in a note, “BHP may be prepared to pay up to this higher limit given the strength in fertilizer prices as well as an approximate 30 percent re-rating of other names in the agricultural space since the bid was announced.”
That seems like a weak argument based on the fact a major reason for the 30 percent re-rating in the industry is from the bid of BHP for Potash. There is also of course the increased price of corn and soybeans, which most believe will leave farmers with more capital, which they could spend on more fertilizer.
Nothing can or will go forward until the decision by Canada in a couple of days whether they'll allow the deal to proceed.
UBS (NYSE:UBS) has offered one of the higher price scenarios, saying they may bid as high as $165 a share to gain the company. That would be surprising if they went that high, as BHP shareholders have reportedly said they don't want the bid to go any higher than 10 percent.
That is actually good news for BHP, as there has been pressure on them to expand through acquisition, but it's good to see shareholders not willing to grow at any expense.
Yet UBS analyst Olivia Ker wrote in a note, “BHP may be prepared to pay up to this higher limit given the strength in fertilizer prices as well as an approximate 30 percent re-rating of other names in the agricultural space since the bid was announced.”
That seems like a weak argument based on the fact a major reason for the 30 percent re-rating in the industry is from the bid of BHP for Potash. There is also of course the increased price of corn and soybeans, which most believe will leave farmers with more capital, which they could spend on more fertilizer.
Nothing can or will go forward until the decision by Canada in a couple of days whether they'll allow the deal to proceed.
Wednesday, October 20, 2010
Potash (NYSE:POT), Mosaic (NYSE:MOS), Agrium (NYSE:AGU) Sign 3-Year Deal with Sinofert via Canpotex
Potash (NYSE:POT), Mosaic (NYSE:MOS) and Agrium (NYSE:AGU) signed a 3-year deal with China-based fertilizer giant Sinofert Holdings, via Canpotex, the marketing and pricing arm of the three companies.
Terms of the deal are for a minimum of 3.15 million tons of potash to be delivered over a three-year period, with pricing to be negotiated at six-month intervals.
The deal begins on January 1, 2011 and extends through December 31, 2013.
With the probability of supply challenges in the years ahead, China and other Asian countries will be beneficial to fertilizer suppliers for some time to come, as demand will eventually outpace supply.
Potash Corp. supplies over 53 percent of the potash sold by Canpotex.
Terms of the deal are for a minimum of 3.15 million tons of potash to be delivered over a three-year period, with pricing to be negotiated at six-month intervals.
The deal begins on January 1, 2011 and extends through December 31, 2013.
With the probability of supply challenges in the years ahead, China and other Asian countries will be beneficial to fertilizer suppliers for some time to come, as demand will eventually outpace supply.
Potash Corp. supplies over 53 percent of the potash sold by Canpotex.
Friday, October 15, 2010
Agrium (NYSE:AGU) Downgraded by TD Newcrest on Valuation
A lot of companies have been getting the same treatment Agrium (NYSE:AGU) has been getting, as they were downgraded by TD Newcrest based on valuation from the recent runup in share price.
TD downgraded Agrium from "Action List Buy" to "Buy," saying it was "due mainly to stock price appreciation of 26% since our upgrade in mid-August."
This represents what TD evidently thinks will be a potential short-term pullback, as they raised their price target on the agricultural company from $95 to $105 a share.
Some things they see needing to happen support in nitrogen prices, as "domestic urea price has increased by 40% to about US$350/ton (fob NOLA) by the end of Q3/10, and continues to show reasonable strength so far into Q4/10." Additionally, "...the U.S. urea wholesale inventory as of the end of August is still - 14% lower than it was in the equivalent 2008 period..."
They also like the company if the price of corn continues to find support. "The corn price has rebounded over 75% since reaching an annual low in June 2010, while wheat, soybean, and rice price increased 59%, 24%, and 38%, respectively, over the same period."
Agrium closed Thursday at $86.33, down $0.48, or 0.55 percent.
TD downgraded Agrium from "Action List Buy" to "Buy," saying it was "due mainly to stock price appreciation of 26% since our upgrade in mid-August."
This represents what TD evidently thinks will be a potential short-term pullback, as they raised their price target on the agricultural company from $95 to $105 a share.
Some things they see needing to happen support in nitrogen prices, as "domestic urea price has increased by 40% to about US$350/ton (fob NOLA) by the end of Q3/10, and continues to show reasonable strength so far into Q4/10." Additionally, "...the U.S. urea wholesale inventory as of the end of August is still - 14% lower than it was in the equivalent 2008 period..."
They also like the company if the price of corn continues to find support. "The corn price has rebounded over 75% since reaching an annual low in June 2010, while wheat, soybean, and rice price increased 59%, 24%, and 38%, respectively, over the same period."
Agrium closed Thursday at $86.33, down $0.48, or 0.55 percent.
Wednesday, October 6, 2010
Mosaic's (NYSE:MOS) Earnings Lowered by Canaccord, "Buy" Maintained
Canaccord Genuity lowered its earnings estimate for Mosaic (NYSE:MOS) in the full year of 2011, but raised earning estimates for full year 2012.
Canaccord said, "We reiterate our recommendation on Mosaic following the company’s reported Q1/F11 results. After reviewing our model, we have lowered our expected F2011 earnings estimate, but that has been offset by a similar increase to our F2012 EPS estimate.
"Despite posting a quarterly profit that nearly tripled, as demand for phosphate and potash surged, Wall Street was still left disappointed. For its fiscal first quarter, Mosaic's net income came in at $297.7 million, or $0.67 per share, compared with $100.6 million, or $0.23 per share, in the year-ago period. The Street was expecting earnings of $0.70 per share. As for the top-line, Mosaic said revenues jumped 50% to $2.19 billion, compared to the Street's expectation for $1.97 billion. Looking ahead, Mosaic expects to sell 3.3-3.6 million tons of phosphate and 1.6-1.9 million tons of potash in its fiscal second quarter."
CEO Jim Prokopanko was very positive, saying, "Agricultural commodity markets have tightened, bolstering prices and farm economics worldwide. Farmers need to plant record areas and harvest ever increasing yields to meet the world's accelerating appetite for grains and oilseeds. That implies strong growth in global crop nutrient markets."
All of this is obvious, and the key is the timing of all this, which in the near term is anything but guaranteed, although in the long term the fertilizer industry looks good.
Mosaic closed Tuesday at $60.80, gaining $2.01, or 3.42 percent. Canaccord has a price target of $66 on the company.
Canaccord said, "We reiterate our recommendation on Mosaic following the company’s reported Q1/F11 results. After reviewing our model, we have lowered our expected F2011 earnings estimate, but that has been offset by a similar increase to our F2012 EPS estimate.
"Despite posting a quarterly profit that nearly tripled, as demand for phosphate and potash surged, Wall Street was still left disappointed. For its fiscal first quarter, Mosaic's net income came in at $297.7 million, or $0.67 per share, compared with $100.6 million, or $0.23 per share, in the year-ago period. The Street was expecting earnings of $0.70 per share. As for the top-line, Mosaic said revenues jumped 50% to $2.19 billion, compared to the Street's expectation for $1.97 billion. Looking ahead, Mosaic expects to sell 3.3-3.6 million tons of phosphate and 1.6-1.9 million tons of potash in its fiscal second quarter."
CEO Jim Prokopanko was very positive, saying, "Agricultural commodity markets have tightened, bolstering prices and farm economics worldwide. Farmers need to plant record areas and harvest ever increasing yields to meet the world's accelerating appetite for grains and oilseeds. That implies strong growth in global crop nutrient markets."
All of this is obvious, and the key is the timing of all this, which in the near term is anything but guaranteed, although in the long term the fertilizer industry looks good.
Mosaic closed Tuesday at $60.80, gaining $2.01, or 3.42 percent. Canaccord has a price target of $66 on the company.
Tuesday, October 5, 2010
Potash (NYSE:POT), Intrepid Potash (NYSE:IPI), Agrium (NYSE:AGU) Rated by Gleacher & Co
Gleacher & Co. took rating aim at some fertilizer companies, including Potash (NYSE:POT), Intrepid Potash (NYSE:IPI) and Agrium (NYSE:AGU).
All of the companies had their earnings per share raised by Gleacher, based on the assumption the companies have or will be able to increase prices in 2010 and 2011.
For Potash Corp., which Gleacher maintained a "Neutral" rating, they are expected to increase potash volume as well as have higher nitrogen and DAP prices.
Gleacher said, "We are raising our 2010 EPS to $5.44 from $5.15 and our 2011 EPS estimates to $7.30 from $6.90, primarily to reflect higher DAP and nitrogen prices, as well as higher potash volume. We maintain our Neutral rating and take-over fair value of $160 which represents 14.5X our 2011 EBITDA and 22X 2011E EPS. Risks to our price target include 1) failure of BHP and POT to come to an agreement regarding BHP's bid; 2) volatile crop prices that could dampen buyer sentiment; 3) failure of potash producers to raise prices."
The maintained their "Buy" on Agrium, also basing that on the probability of pricing power for the three major nutrients.
"We are raising our 2010 EPS by $0.02 to $5.11 and our 2011 EPS by $0.95 to $6.65 on higher nitrogen, phosphate and potash price assumptions," they said.
Concerning Intrepid Potash, they consider their valuation already high, so they downgraded them from "Buy" to "Neutral." That was even with the same reasoning they could also have pricing power for their fertilizer and higher volume too.
Gleacher noted, "We are raising our 2010 EPS by $0.08 to $0.54 and our 2011 EPS by $0.15 to $1.15 on higher potash volume and pricing assumptions, as well as higher langbeinite prices. However, at current valuations, we are no longer aggressive buyers of IPI and thus are downgrading our rating."
Intrepid also has limitations because of their regional parameters.
All of the companies had their earnings per share raised by Gleacher, based on the assumption the companies have or will be able to increase prices in 2010 and 2011.
For Potash Corp., which Gleacher maintained a "Neutral" rating, they are expected to increase potash volume as well as have higher nitrogen and DAP prices.
Gleacher said, "We are raising our 2010 EPS to $5.44 from $5.15 and our 2011 EPS estimates to $7.30 from $6.90, primarily to reflect higher DAP and nitrogen prices, as well as higher potash volume. We maintain our Neutral rating and take-over fair value of $160 which represents 14.5X our 2011 EBITDA and 22X 2011E EPS. Risks to our price target include 1) failure of BHP and POT to come to an agreement regarding BHP's bid; 2) volatile crop prices that could dampen buyer sentiment; 3) failure of potash producers to raise prices."
The maintained their "Buy" on Agrium, also basing that on the probability of pricing power for the three major nutrients.
"We are raising our 2010 EPS by $0.02 to $5.11 and our 2011 EPS by $0.95 to $6.65 on higher nitrogen, phosphate and potash price assumptions," they said.
Concerning Intrepid Potash, they consider their valuation already high, so they downgraded them from "Buy" to "Neutral." That was even with the same reasoning they could also have pricing power for their fertilizer and higher volume too.
Gleacher noted, "We are raising our 2010 EPS by $0.08 to $0.54 and our 2011 EPS by $0.15 to $1.15 on higher potash volume and pricing assumptions, as well as higher langbeinite prices. However, at current valuations, we are no longer aggressive buyers of IPI and thus are downgrading our rating."
Intrepid also has limitations because of their regional parameters.
Monday, October 4, 2010
Report on BHP (NYSE:BHP) Takeover of Potash (NYSE:POT) to be Released Today
A report will be released today dealing with several scenarios which could arise in a takeover of Potash (NYSE:POT), including the existing bid by BHP Billiton of $39 billion for the fertilizer company.
The three scenarios detailed in the report, according to Glen Hodgson, chief economist at the Conference Board of Canada, are the BHP bid, a takeover from a sovereign wealth fund or investment board, and a takeover from a country like China.
Although the report is expected to have some influence in the process, it'll still take weeks before the decision from the Canadian government is made on whether it will have a "net benefit" for Canada, which is the basic parameter surrounding any decision.
The Investment Canada Act requires any takeover of a Canadian company result in that type of benefit.
It is thought Potash is probably taking measures, like lawsuits, to buy themselves time while they wait for alternative bids from other entities.
The three scenarios detailed in the report, according to Glen Hodgson, chief economist at the Conference Board of Canada, are the BHP bid, a takeover from a sovereign wealth fund or investment board, and a takeover from a country like China.
Although the report is expected to have some influence in the process, it'll still take weeks before the decision from the Canadian government is made on whether it will have a "net benefit" for Canada, which is the basic parameter surrounding any decision.
The Investment Canada Act requires any takeover of a Canadian company result in that type of benefit.
It is thought Potash is probably taking measures, like lawsuits, to buy themselves time while they wait for alternative bids from other entities.
Monday, September 27, 2010
Gleacher Maintains "Buy" on Mosaic (NYSE:MOS), Increases EPS
Gleacher & Co. said it maintaining its "Buy" rating on Mosaic Company (NYSE:MOS), while increasing their earnings per share estimate, citing higher pricing power on growing demand for fertilizer.
"We expect MOS to report FYQ1 EPS of $0.72 (vs. prior $0.68), up 218% y/y but down 19% q/q in the seasonally slower Q1. As the year progresses, we expect the rebound in fertilizer demand to continue gaining traction and we have increased our FY2011E EPS to $3.95 from $3.60 and FY2012E to $4.55 from $3.95 on surging DAP prices and higher potash price assumption," said Gleacher.
"With supportive crop prices, tight inventories, and anticipated strong demand heading into the fall application season, the momentum has returned to the fertilizer industry. In addition, we believe the BHP (NYSE:BHP) bid for Potash (NYSE:POT) has unlocked the value of potash. We maintain our belief that investors can continue owning Mosaic heading into the fall."
Mosaic closed the week at $62.09, gaining $0.74, or 1.21 percent.
The price target on the fertilizer company was raised by Gleacher from $56 to $70.
"We expect MOS to report FYQ1 EPS of $0.72 (vs. prior $0.68), up 218% y/y but down 19% q/q in the seasonally slower Q1. As the year progresses, we expect the rebound in fertilizer demand to continue gaining traction and we have increased our FY2011E EPS to $3.95 from $3.60 and FY2012E to $4.55 from $3.95 on surging DAP prices and higher potash price assumption," said Gleacher.
"With supportive crop prices, tight inventories, and anticipated strong demand heading into the fall application season, the momentum has returned to the fertilizer industry. In addition, we believe the BHP (NYSE:BHP) bid for Potash (NYSE:POT) has unlocked the value of potash. We maintain our belief that investors can continue owning Mosaic heading into the fall."
Mosaic closed the week at $62.09, gaining $0.74, or 1.21 percent.
The price target on the fertilizer company was raised by Gleacher from $56 to $70.
Friday, September 24, 2010
Mosaic (NYSE:MOS), Agrium (NYSE:AGU), Intrepid (NYSE:IPI) Now Covered by Susquehanna
Susquehanna took aim at the fertilizer industry, initiating coverage on Mosaic Co. (NYSE:MOS), Agrium (NYSE:AGU), and Intrepid Potash (NYSE:IPI).
On Mosaic, they were started off with a "Positive" rating, with a price target of $76 on them.
Susquehanna noted that Mosaic is the largest producer of phosphate in the world, and second in the world for potash. They believe the potash segment of the company is underestimated by investors.
For Agrium, coverage also launched with a "Positive" rating, with a 12-month price target of $96 on them.
Susquehanna especially likes the diversity of the company, and considers them one of the better ways to get exposure to increasing healthy agricultural fundamentals.
They said, Agrium the "most diversified way to gain exposure to rapidly improving agricultural fundamentals."
Along with fertilizer, Agrium is also a top U.S. distributor of seeds and chemicals for crop protection.
Intrepid Potash has coverage initiated with a "Neutral," mostly on concerns over their ability to compete because of the regional focus of the business, which is a strength and weakness.
The strength of being a regional company is the ability to deliver potash a lower cost to local markets. But their weakness is the potential strategies of their larger competitors to go head to head in pricing if they choose.
They have a price target on the company of $26.
Susquehanna expects Intrepid Potash to increase by 94 percent its 2011 potash segment EBITDA, with estimates they'll rise as high as $164 million.
On Mosaic, they were started off with a "Positive" rating, with a price target of $76 on them.
Susquehanna noted that Mosaic is the largest producer of phosphate in the world, and second in the world for potash. They believe the potash segment of the company is underestimated by investors.
For Agrium, coverage also launched with a "Positive" rating, with a 12-month price target of $96 on them.
Susquehanna especially likes the diversity of the company, and considers them one of the better ways to get exposure to increasing healthy agricultural fundamentals.
They said, Agrium the "most diversified way to gain exposure to rapidly improving agricultural fundamentals."
Along with fertilizer, Agrium is also a top U.S. distributor of seeds and chemicals for crop protection.
Intrepid Potash has coverage initiated with a "Neutral," mostly on concerns over their ability to compete because of the regional focus of the business, which is a strength and weakness.
The strength of being a regional company is the ability to deliver potash a lower cost to local markets. But their weakness is the potential strategies of their larger competitors to go head to head in pricing if they choose.
They have a price target on the company of $26.
Susquehanna expects Intrepid Potash to increase by 94 percent its 2011 potash segment EBITDA, with estimates they'll rise as high as $164 million.
CF Industries (NYSE:CF) Gets Mixed Coverage
CF Industries (NYSE:CF) has received a lot of coverage from companies lately, with two looking positive at the fertilizer company, and one looking negative, with most investors seeming to believe the negative report rather than the two positive ones.
The damage was done by Dahlman Rose, which downgraded CF in the middle of Thursday's trading session, dropping their rating from "Buy" to "Hold." The stock plunged afterwards.
Soleil on the other hand upgraded CF from "Hold" to "Buy," while raising their price target from $105 to $116.
They said CF "embeds a paired trade: long corn and short natural gas."
Earnings per share for full year 2011 was raised from $8.10 to $9.44 by Soleil.
Susquehanna initiated coverage on CF with a "Positive," citing the strength of their nitrogen business.
The company said they consider CF the "purest" nitrogen play in the North American market.
With nitrogen profits expected to explode by Susquehanna, they believe nitrogen EBITDA could could grow as much as 77 percent in 2010, with 2011 adding another 28 percent.
"CF provides the best leverage to surging corn prices, and our
expectations for a 4 million increase in 2011 corn acreage," said Susquehanna.
They have a price target of $129 on CF.
CF closed at $98.68 Thursday, plummeting $2.75, or 2.71 percent.
The damage was done by Dahlman Rose, which downgraded CF in the middle of Thursday's trading session, dropping their rating from "Buy" to "Hold." The stock plunged afterwards.
Soleil on the other hand upgraded CF from "Hold" to "Buy," while raising their price target from $105 to $116.
They said CF "embeds a paired trade: long corn and short natural gas."
Earnings per share for full year 2011 was raised from $8.10 to $9.44 by Soleil.
Susquehanna initiated coverage on CF with a "Positive," citing the strength of their nitrogen business.
The company said they consider CF the "purest" nitrogen play in the North American market.
With nitrogen profits expected to explode by Susquehanna, they believe nitrogen EBITDA could could grow as much as 77 percent in 2010, with 2011 adding another 28 percent.
"CF provides the best leverage to surging corn prices, and our
expectations for a 4 million increase in 2011 corn acreage," said Susquehanna.
They have a price target of $129 on CF.
CF closed at $98.68 Thursday, plummeting $2.75, or 2.71 percent.
Thursday, September 9, 2010
China Agritech (Nasdaq:CAGC) Crushed on Downgrade, Auditing Concerns
The downgrade of China Agritech (Nasdaq:CAGC) by Chardan Capital punished the Chinese fertilizer company more than a downgrade normally would, mostly based on analysts' concerns over the past and present auditing of the company.
Consequently, China Agritech closed at $13.29, plummeting $2.59, or 16.3 percent.
In a note to clients, analyst Tim Tiberio said, "In light of increased scrutiny over the relationships between Chinese companies and their auditors, we believe China Agritech's auditor history could place the shares under pressure going forward."
Not long after the downgrade the company came out with a statement it still expects to meet its 2010 guidance, which did nothing to forestall the damage from the auditor issue.
Agritech was downgraded from "Neutral" to "Sell."
Consequently, China Agritech closed at $13.29, plummeting $2.59, or 16.3 percent.
In a note to clients, analyst Tim Tiberio said, "In light of increased scrutiny over the relationships between Chinese companies and their auditors, we believe China Agritech's auditor history could place the shares under pressure going forward."
Not long after the downgrade the company came out with a statement it still expects to meet its 2010 guidance, which did nothing to forestall the damage from the auditor issue.
Agritech was downgraded from "Neutral" to "Sell."
Tuesday, September 7, 2010
Vale (NYSE:VALE) Joins BHP (NYSE:BHP) in Diversifying into Fertilizers
Although Vale (NYSE:VALE) and BHP Billiton (NYSE:BHP) aren't new to fertilizers, it is the growing focus for growth they're looking to the sector for, expanding far beyond their metals' base.
Vale has laid down the gauntlet, saying over the long term they're going to become the largest producer of fertilizer in the world.
At this time their goal for the next seven years for potash is to increase production to 10.7 million tons a year, and triple their annual phosphate production to 19.2 million. Now the company produces from 6 to 7 million metric tons of phosphate on a yearly basis.
If they achieve those combined goals, at that time they would be the largest producer of fertilizers in the world.
In potash they would still be behind Mosaic (NYSE:MOS) and BHP Billiton, assuming BHP lands the potash deal. Of course if they do, BHP has already said they're going to ramp up production, which makes the assertion of being the largest supplier of fertilizer in the world by 2017, making it a much larger challenge for Vale.
The bottom line is metal companies are diversifying even more, and the large ones are positioning themselves in a way which could make them much less cyclical when combining all their products.
Vale has laid down the gauntlet, saying over the long term they're going to become the largest producer of fertilizer in the world.
At this time their goal for the next seven years for potash is to increase production to 10.7 million tons a year, and triple their annual phosphate production to 19.2 million. Now the company produces from 6 to 7 million metric tons of phosphate on a yearly basis.
If they achieve those combined goals, at that time they would be the largest producer of fertilizers in the world.
In potash they would still be behind Mosaic (NYSE:MOS) and BHP Billiton, assuming BHP lands the potash deal. Of course if they do, BHP has already said they're going to ramp up production, which makes the assertion of being the largest supplier of fertilizer in the world by 2017, making it a much larger challenge for Vale.
The bottom line is metal companies are diversifying even more, and the large ones are positioning themselves in a way which could make them much less cyclical when combining all their products.
Wednesday, September 1, 2010
BHP (NYSE:BHP) Says Potash (NYSE:POT) Assets Not for Sale
BHP Billiton (NYSE:BHP) said the rumors floating around that there are plan in place to sell off some of the assets of Potash aren't true, if they are successful with the bid for the fertilizer giant.
That is hard to believe though, as the cost to acquire Potash will probably have to be increased, and that would weigh on BHP, even though they claim they would have no need to sell off assets to shore up their balance sheet after the purchase.
A spokesman for BHP said, "Our financing is not dependent on asset sales and we do not require divestments to maintain balance sheet strength."
BHP CEO Marius Kloppers continues his mantra that the approximate $130-a-share offer is the only one made, and he is committed to remaining disciplined when it comes to the price to acquire Potash. No matter. If he wants it bad enough, we'll see the price increase even though he's attempting to downplay the possibility with a poker face.
While the company and Kloppers may not have any plans to divest of assets of Potash in place, there is sure to be some movement in that direction concerning non-core assets, even if the purpose isn't to strengthen the balance sheet. Some of them may not make sense for the company.
But there is a strong possibility the majority of the assets would remain under the BHP umbrella, as they are hungry for raw materials, and the world will continue to be once we move out of the recession, which is probably still several years away at best.
Long term this is a super deal for BHP if they can swing it, and adds to a strong, diversified portfolio of assets which will generate solid revenue and earnings for many years.
That is hard to believe though, as the cost to acquire Potash will probably have to be increased, and that would weigh on BHP, even though they claim they would have no need to sell off assets to shore up their balance sheet after the purchase.
A spokesman for BHP said, "Our financing is not dependent on asset sales and we do not require divestments to maintain balance sheet strength."
BHP CEO Marius Kloppers continues his mantra that the approximate $130-a-share offer is the only one made, and he is committed to remaining disciplined when it comes to the price to acquire Potash. No matter. If he wants it bad enough, we'll see the price increase even though he's attempting to downplay the possibility with a poker face.
While the company and Kloppers may not have any plans to divest of assets of Potash in place, there is sure to be some movement in that direction concerning non-core assets, even if the purpose isn't to strengthen the balance sheet. Some of them may not make sense for the company.
But there is a strong possibility the majority of the assets would remain under the BHP umbrella, as they are hungry for raw materials, and the world will continue to be once we move out of the recession, which is probably still several years away at best.
Long term this is a super deal for BHP if they can swing it, and adds to a strong, diversified portfolio of assets which will generate solid revenue and earnings for many years.
Friday, August 20, 2010
Rumors of Potash (NYSE:POT) Bidding War Going Viral
Ever since the $130-a-share offer for Potash Corp. of Saskatchewan Inc. (NYSE:POT) by BHP Billiton (NYSE:BHP), rumors have skyrocketed concerning an inevitable bidding war that is about to emerge.
Major mining company competitors of BHP like Rio Tinto (NYSE:RTP) and Vale (NYSE:VALE) have been mentioned as possible suitors, although the likelihood of a state-owned business would probably be the biggest competitor to BHP.
China is one of the more obvious choices there, as they consume about 30 percent of the fertilizer in the world, and owning Potash would be a huge win for them.
Russia has also been mentioned as a possible suitor, although they would probably have trouble competing against China, or some of the giant mining companies.
One dark-horse in the possible bidding war could be India, who has a strong need for fertilizer as well, and may have the resources to compete with a Chinese bid.
If this bidding war does ensue, it will be bad news for investors who want to invest in Potash, as it is probably already overvalued from the BHP bid.
But for Potash shareholders, it's a golden opportunity to really make some big profits if the bidding war becomes a reality.
Investors will also have to be careful of the other fertilizer companies, which have moved up in price as an overall sector, and are without a doubt overvalued. The assumption is if Potash of Saskatchewan is a target, eventually the others will be too once a winner emerges and takes ownership of Potash.
Stocks like Agrium (NYSE: AGU), Intrepid Potash (NYSE:IPI) and CF Industries (NYSE:CF) did shoot up on the offer for Potash, but they're starting to come back to earth again, although they're sure to shoot up again if other bids for Potash come about.
Major mining company competitors of BHP like Rio Tinto (NYSE:RTP) and Vale (NYSE:VALE) have been mentioned as possible suitors, although the likelihood of a state-owned business would probably be the biggest competitor to BHP.
China is one of the more obvious choices there, as they consume about 30 percent of the fertilizer in the world, and owning Potash would be a huge win for them.
Russia has also been mentioned as a possible suitor, although they would probably have trouble competing against China, or some of the giant mining companies.
One dark-horse in the possible bidding war could be India, who has a strong need for fertilizer as well, and may have the resources to compete with a Chinese bid.
If this bidding war does ensue, it will be bad news for investors who want to invest in Potash, as it is probably already overvalued from the BHP bid.
But for Potash shareholders, it's a golden opportunity to really make some big profits if the bidding war becomes a reality.
Investors will also have to be careful of the other fertilizer companies, which have moved up in price as an overall sector, and are without a doubt overvalued. The assumption is if Potash of Saskatchewan is a target, eventually the others will be too once a winner emerges and takes ownership of Potash.
Stocks like Agrium (NYSE: AGU), Intrepid Potash (NYSE:IPI) and CF Industries (NYSE:CF) did shoot up on the offer for Potash, but they're starting to come back to earth again, although they're sure to shoot up again if other bids for Potash come about.
Monday, August 16, 2010
Potash (NYSE:POT) President Bullish on Company's Future
Potash (NYSE:POT) president Garth Moore gave his reasons for the bullish attitude he has for the company going forward, after recent quarterly results imply a possible global rebound for the potash market.
While few watching the fertilizer company and industry are in doubt of the inevitable growth in demand of the products, there is still a question of when that will come about, although the if isn't really there any longer.
Moore was asked in an interview what he sees driving the demand for potash, and ultimately his bullishness for the company and industry.
Three things were identified by Moore: Higher grain prices, low inventory held by farmers, and growing world population.
Higher grain prices are driven by perceived supply problems so far this year, but that has created better margins for farmers, which allows them to spend more on fertilizer. That could change quickly, but for now that's the reality.
That leads into low inventory, which, along with increased margins, could generate stronger demand from farmers.
Most important to Moore is the demographics involved, which inevitably will lead to increased demand, and that is the growing global population.
It's different this time around because, even though there has always been growing global populations, there hasn't been the disposable income to make a difference in reference to demand, as many had to continue living at sustenance levels.
Now the middle classes in emerging markets have the income to pay for more protein-based foods, and that will come from meat, which the grains must feed, and which fertilizers must help grow.
Moore is right in that these will drive fertilizer prices up, but the ongoing recessionary pressure around the world could still hold prices and demand down until there's a real recovery.
That could take several years, depending on how much damage central banks like the Federal Reserve, and governments as well, do with their quantitative easing policies.
Sooner or later there can be no doubt fertilizer prices will rise, and with it the share price of fertilizer companies which have positioned themselves to take advantage of it.
Potash is among those that have, and investors with patience will eventually be rewarded.
While few watching the fertilizer company and industry are in doubt of the inevitable growth in demand of the products, there is still a question of when that will come about, although the if isn't really there any longer.
Moore was asked in an interview what he sees driving the demand for potash, and ultimately his bullishness for the company and industry.
Three things were identified by Moore: Higher grain prices, low inventory held by farmers, and growing world population.
Higher grain prices are driven by perceived supply problems so far this year, but that has created better margins for farmers, which allows them to spend more on fertilizer. That could change quickly, but for now that's the reality.
That leads into low inventory, which, along with increased margins, could generate stronger demand from farmers.
Most important to Moore is the demographics involved, which inevitably will lead to increased demand, and that is the growing global population.
It's different this time around because, even though there has always been growing global populations, there hasn't been the disposable income to make a difference in reference to demand, as many had to continue living at sustenance levels.
Now the middle classes in emerging markets have the income to pay for more protein-based foods, and that will come from meat, which the grains must feed, and which fertilizers must help grow.
Moore is right in that these will drive fertilizer prices up, but the ongoing recessionary pressure around the world could still hold prices and demand down until there's a real recovery.
That could take several years, depending on how much damage central banks like the Federal Reserve, and governments as well, do with their quantitative easing policies.
Sooner or later there can be no doubt fertilizer prices will rise, and with it the share price of fertilizer companies which have positioned themselves to take advantage of it.
Potash is among those that have, and investors with patience will eventually be rewarded.
Saturday, July 24, 2010
Mosaic (NYSE:MOS) Doubles Potash Sales, Declares Dividend
In their quarterly report, Mosaic (NYSE:MOS) said they generated a profit of $396.1 million, or $0.89 a share. That was on sales of $696.5 million in potash sales, double last year's total.
Last year, earnings came in at $146.9 million, or 33 cents a share in the same quarter. Revenue in the quarter rose to $1.86 billion, an increase of 17 percent.
Phosphate sales remained level with last year, reaching $1.2 billion.
The downside is their highly productive mine in South Fort Meade, Florida, which a U.S district judge allowed a dubious claim by the Sierra Club that it could harm water, result in a restraining order against them. That particular mine generates about 33 percent of all phosphate production from the company on an annual basis.
Mosaic executives said while they doubt the Sierra Club will be able to prove and/or convince the judge there is a legitimate threat to the water quality, they are putting together a contingency plan in the unlikely case they are ruled against. They added they would immediately seek appeal if that is the case.
Even so, Mosaic likes what they see going forward, and the Board of Directors declared a quarterly dividend of $0.05 a share Friday. Shareholders of record as of the close of business on August 6, 2010 will qualify for the dividend, which will be paid on August 19, 2010.
Last year, earnings came in at $146.9 million, or 33 cents a share in the same quarter. Revenue in the quarter rose to $1.86 billion, an increase of 17 percent.
Phosphate sales remained level with last year, reaching $1.2 billion.
The downside is their highly productive mine in South Fort Meade, Florida, which a U.S district judge allowed a dubious claim by the Sierra Club that it could harm water, result in a restraining order against them. That particular mine generates about 33 percent of all phosphate production from the company on an annual basis.
Mosaic executives said while they doubt the Sierra Club will be able to prove and/or convince the judge there is a legitimate threat to the water quality, they are putting together a contingency plan in the unlikely case they are ruled against. They added they would immediately seek appeal if that is the case.
Even so, Mosaic likes what they see going forward, and the Board of Directors declared a quarterly dividend of $0.05 a share Friday. Shareholders of record as of the close of business on August 6, 2010 will qualify for the dividend, which will be paid on August 19, 2010.
Friday, July 16, 2010
JPMorgan (NYSE:JPM) Upgrades Mosaic (MOS), Raises Price Target
Mosaic was upgraded by JP Morgan (NYSE:JPM), with the company raising them from "Neutral" to "Overweight."
The fertilizer producer, and overall sector, should perform strongly in the near term, probably the reasoning behind the upgrade. Long-term, there are a lot more challenges for Mosaic and others, and there isn't anything that can be seen which will change that.
Unfortunately Mosaic focuses on concentrated potash and phosphate, which will remain under pricing pressure after this season. Nitrogen should be a more profitable fertilizer, and that isn't the specialty of Mosaic.
Even so, the price target was raised by JP Morgan for Mosaic from $45 to $52.
The fertilizer producer, and overall sector, should perform strongly in the near term, probably the reasoning behind the upgrade. Long-term, there are a lot more challenges for Mosaic and others, and there isn't anything that can be seen which will change that.
Unfortunately Mosaic focuses on concentrated potash and phosphate, which will remain under pricing pressure after this season. Nitrogen should be a more profitable fertilizer, and that isn't the specialty of Mosaic.
Even so, the price target was raised by JP Morgan for Mosaic from $45 to $52.
Thursday, July 8, 2010
Potash (NYSE:POT), Mosaic (NYSE:MOS), Agrium (NYSE:AGU), CF Industries (NYSE:CF) and Intrepid Potash (NYSE:IPI) Move Up with Fertilizer Sector
Potash Corp of Saskatchewan (NYSE:POT), The Mosaic Company (NYSE:MOS), Agrium (NYSE:AGU), CF Industries (NYSE:CF) and Intrepid Potash (NYSE:IPI) continue to move up with the fertilizer sector.
Others participating in the benefits of the move today have been China's Yongye (NYSE:YONG) and Converted Organics (NASDAQ:COIN).
There really isn't any news that is pushing the stocks up other than the broader market and possibly some bargain hunting.
Since March the fertilizer sector has been punished, and just over the last five days has there been a rebound.
All the stocks mentioned above are up in today's trading. For the majors listed in the first paragraph, they have all been moving up over the last five trading days.
Others participating in the benefits of the move today have been China's Yongye (NYSE:YONG) and Converted Organics (NASDAQ:COIN).
There really isn't any news that is pushing the stocks up other than the broader market and possibly some bargain hunting.
Since March the fertilizer sector has been punished, and just over the last five days has there been a rebound.
All the stocks mentioned above are up in today's trading. For the majors listed in the first paragraph, they have all been moving up over the last five trading days.
Friday, June 25, 2010
Goldman (NYSE:GS) Continues "Neutral" Rating on Potash (NYSE:POT)
This week Goldman Sachs (NYSE:GS) reiterated their "Neutral" rating on Potash (NYSE:POT), while also setting a price target of $131 a share.
Potash, which is the largest producer of potash fertilizer, has lagged the overall market, as they are down close to ten percent on the year, while the broader market has dropped five percent.
The weak economy continues to hinder the stock, as ongoing uncertainty and conflicting data, which could be interpreted more than one way, generated a sense of chaos and inability to project accurately as to where the economy is really going, and how much demand for products like the potash fertilizer the company produces will grow.
If the company does reach the projected $131 target, it's not going to be in 2010, as in the short term there's not a lot to be positive about in the current economic climate.
Potash was at $95.37 as of 3:39 PM EDT on Friday, a gain of $0.17 or 0.18 percent.
Potash, which is the largest producer of potash fertilizer, has lagged the overall market, as they are down close to ten percent on the year, while the broader market has dropped five percent.
The weak economy continues to hinder the stock, as ongoing uncertainty and conflicting data, which could be interpreted more than one way, generated a sense of chaos and inability to project accurately as to where the economy is really going, and how much demand for products like the potash fertilizer the company produces will grow.
If the company does reach the projected $131 target, it's not going to be in 2010, as in the short term there's not a lot to be positive about in the current economic climate.
Potash was at $95.37 as of 3:39 PM EDT on Friday, a gain of $0.17 or 0.18 percent.
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