Mosaic faces further phosphate pressure despite cheaper sulfur contract

The Mosaic Company (NYSE:MOS) has fallen into a US$72 million third-quarter net loss, with the fertiliser producer’s phosphate business absorbing the sharpest blow from costly sulfur, curtailed production and lower volumes. The result compares with US$411 million of net income a year earlier, while diluted loss per share was US$0.23 and revenue fell to US$3.1 billion from US$3.5 billion.

Phosphate losses deepen as sulfur costs climb

Mosaic’s operating loss reached US$97 million, compared with US$340 million of operating earnings in the same quarter of 2025. Adjusted EBITDA, a non-GAAP measure, dropped to US$324 million from US$806 million, while adjusted diluted loss per share was US$0.19 versus adjusted earnings of US$1.04 a year earlier. Mosaic said the decline primarily reflected lower sales volumes across its segments and higher raw material costs, partly offset by stronger phosphate prices. Phosphate operating earnings swung from a US$102 million profit to a US$194 million loss. The segment’s adjusted EBITDA fell to US$49 million from US$280 million, despite DAP selling prices rising to US$838 per tonne from US$714. Sulfur costs averaged US$715 per long ton, compared with US$272 a year earlier, while phosphate sales volumes fell to 1.4 million tonnes from 1.6 million tonnes after production curtailments linked to limited affordable sulfur availability. Idle, turnaround and unabsorbed fixed costs rose to US$77 million from US$42 million.

Potash remains the earnings anchor, but geology cuts output

Potash was the quarter’s main source of operating profit, generating US$189 million and adjusted EBITDA of US$284 million. That was still below the prior-year figures of US$229 million and US$329 million as sales volumes declined to 2.1 million tonnes. Production at Esterhazy was hit by abnormal geological conditions that reduced ore grades, prompting Mosaic to lower its full-year 2026 potash production expectation to 8.6 million tonnes. The company said the lower grades are temporary and continues to target more than 9 million tonnes annually over the longer term. Mosaic Fertilizantes also remained loss-making, reporting a US$21 million operating loss and US$41 million of adjusted EBITDA, against US$96 million and US$241 million respectively a year earlier. Sales volumes dropped to 1.9 million tonnes from 2.8 million tonnes, reflecting curtailed domestic production and limited customer credit availability. Mosaic said fourth-quarter adjusted EBITDA in the Brazilian segment is expected to fall below the third quarter because of the full-quarter effect of production curtailments and normal seasonality.

Cash flow improves while capital spending is reset

There was a more constructive signal in cash generation. Operating cash flow rose to US$284 million from US$229 million, helped primarily by lower finished-goods inventories, while free cash flow was roughly breakeven compared with negative US$135 million a year earlier. Mosaic expects another sequential improvement in fourth-quarter cash flow as working capital is released and cost-reduction measures take effect. The company now expects 2026 capital expenditure of US$1.2 billion and is targeting spending below US$1 billion in 2027. It has also refinanced and extended all long-term debt maturities through 2028, with its US$2.5 billion revolving credit facility fully available. That improves the maturity profile, although the balance sheet still carries the weight of a difficult operating year and the company paid its regular US$0.22-per-share dividend during the quarter.

Cheaper sulfur offers relief, but not immediately

Mosaic settled its fourth-quarter sulfur supply contract at US$615 per long ton, below the US$715 average cost recorded in the third quarter. The company expects the lower contract price to support fourth-quarter free cash flow, but said the associated earnings benefit will be felt primarily in the first quarter of 2027 because of its two-to-three-month inventory cycle. Fourth-quarter phosphate volumes are forecast at 1.3 million to 1.6 million tonnes, with DAP prices expected at US$820 to US$840 per tonne. The company also reported US$53 million of pre-tax notable items, including environmental reserve adjustments, facility closure and restructuring costs, partly offset by gains from the revaluation of its Ma’aden investment and foreign currency movements. Excluding those items does not erase the underlying pressure: adjusted EBITDA still fell by more than half year on year. The immediate test is whether sulfur relief can arrive before further curtailments and fixed-cost absorption losses drag on the phosphate and Brazilian businesses.