TORONTO (miningweekly.com) – US fertiliser and phosphates company Mosaic on Tuesday reported a 79% slump in fourth-quarter earnings, as soft demand and weak prices hindered its performance.

However, a strong 2014 outlook and a $1-billion top-up to its $2-billion share buy-back programme announced in December, buoyed the NYSE-listed firm’s stock.

For the three months ended December 31, the Plymouth, Minnesota-based company reported net earnings of $129-million, or $0.30 a share, compared with $616-million, or $1.44 a share, a year earlier.

Mosaic's net sales in the fourth quarter of 2013 dipped 8% to $2.2-billion, down from $2.4-billion last year. Operating earnings during the quarter were $179-million, down from $463-million a year ago, as record phosphate and strong potash sales volumes were more than offset by lower realised prices.

"While our results for the fourth quarter reflect the low market prices for potash and phosphates, current market conditions are improving. Market dynamics are unfolding as we expected they would, with sales volumes increasing before prices; in fact, we shipped a record volume of phosphates during the quarter, and potash volumes increased significantly,” Mosaic president and CEO Jim Prokopanko said.

The unexpected July 2013 unravelling of the world's largest potash cartel, the Belarus Potash Company (BPC), had resulted in an extremely cautious market, and had resulted in soft prices, and weak demand as buyers waited to see how low prices would go.

The break-up of the BPC, a joint venture between Russia's Uralkali and Belarussian partner Belaruskali, left North America's Canpotex, comprising of PotashCorp, Agrium and Mosaic, as the dominant potash export venture.

Towards the end of 2013, however, sales volumes began to rise, and saw a meaningful price escalation in phosphates, which Prokopanko believed set the stage for improving potash prices later this year.

During the fourth quarter, Mosaic gained much leverage off its cartel membership and the company sold 1.9-million tonnes of potash in the period, touching the top end of its guidance range of 1.5-million to 1.9-million tonnes, at an average realised price of $303/t. That price fell within Mosaic's guidance range but was 30% less than in 2012.

Mosaic also sold a record 3.4-million tonnes of phosphate in the fourth quarter, greater than its guidance of 2.5-million to 2.9-million tonnes, at an average price of $381/t of diammonium phosphate. This was still within Mosaic’s guidance range, but fell 28% short of the previous year’s price.

"Mosaic is in an excellent position to thrive as the business cycle continues to improve, in large part because of the notable progress we made on our strategic priorities in 2013. We rebalanced and grew our business portfolio, began to structure a more efficient balance sheet by increasing leverage and returning capital to shareholders, and accelerated our work to assure Mosaic remains a low-cost producer,” Prokopanko said.

He added that the company was watching grain and oilseed prices, changes in Indian demand, and product inventory levels.

“At Mosaic, we've positioned the company to take advantage of the near-term cyclical trends and to capitalise on the inevitable secular trends, most notably the ever-increasing global demand for grain and oilseeds,” he said.

For the first quarter of 2014, the company expects phosphates sales to range from 2.3-million to 2.6-million tonnes, compared with 2.7-million tonnes last year. It expects to earn $390/t to $420/t of diammonium phosphate.

Potash sales volumes were expected to range between 2.3-million and 2.7-million tonnes in the first quarter, up from 2-million tonnes a year earlier. The company expected an average realised price of $245/t to $275/t of potash in the first quarter.

Mosaic’s NYSE-listed shares closed on Tuesday up $1.14 apiece at $47.96, having touched $48.35 a share in early morning trades.