U.S. fertilizer company Mosaic Co. said on Tuesday it will eliminate more than 500 jobs in the next year as it reported a larger-than-expected 43% drop in quarterly profit, reports Rod Nickel of Reuters.com.
The fertilizer sector has been under pressure since last summer’s breakup of one of the world’s biggest potash traders, Belarusian Potash Co, led to a steep drop in prices. Transportation problems in North America also dogged the industry during the frigid winter.
CEO Jim Prokopanko said the Plymouth, MN-based company will shed 550 to 560 jobs across the company, using layoffs, attrition, early retirement and eliminating contractors. It said in October it aimed to cut $500 million in costs during the next five years, bolstering its status as a low-cost phosphate producer and reducing its relatively high cost of producing potash.
“We feel we can reduce the spending because we have a sounder enterprise overall” than previously, Prokopanko said in an interview. “We’ve allowed ourselves to grow when times were good. Now we think we can be just as productive with fewer people.”
Prokopanko said more than half of the jobs to be eliminated are not directly involved in production, but would not say how the cuts break down between the phosphate and potash segments.
The company will shed another 200 jobs from previously announced asset sales in South America and the U.S.
Mosaic’s job cuts follow rival PotashCorp’s move in December to slash its workforce by 18%, or more than 1,000 jobs.
Mosaic’s shares fell 2.3% to $48.54 on the New York Stock Exchange.
Prokopanko said the potash market looked oversupplied for the next three years as demand grows only modestly just as producers have expanded capacity.
“It could be, just (based on) purely supply and demand, some tough sledding,” he said on an earlier conference call.
Prokopanko said the company will not halt expansion of the Esterhazy, Saskatchewan mine, but would not comment directly when asked if Mosaic may close or sell other potash mines.
“We look at our portfolio of assets frequently and we’re always asking ourselves that question, that’s all I’ll say. We’re looking to maximize production to our lowest cost facilities and balance the supply with the actual market demand,” he told Reuters.