The Mosaic Company Reports Strong Q3 2025 Earnings Recovery Driven by Pricing Strength, Cost Savings and Improved Operating Leverage

Executive Summary

The Mosaic Company delivered a strong turnaround performance for the third quarter and nine months ended September 30, 2025, reflecting improved fertilizer pricing, disciplined cost management, and operational stability across its phosphate and potash businesses. Net sales for Q3 2025 rose to $3.45 billion, up 23% YoY, while net earnings attributable to Mosaic surged to $411 million, compared with $122 million in the prior-year quarter. Earnings per share increased materially to $1.29, underscoring a sharp rebound in profitability.

For the nine-month period, Mosaic generated net earnings of $1.06 billion, a significant improvement from near break-even levels in 9M 2024, supported by stronger margins, foreign exchange gains, and higher other income. Operating earnings for 9M 2025 increased to $922.7 million, up 77% YoY, reflecting improved operating leverage despite working capital pressure and elevated inventory levels.

Mosaic’s balance sheet strengthened meaningfully, with total assets rising to $24.7 billion and equity increasing to $12.9 billion, supported by retained earnings growth. While operating cash flow moderated due to higher working capital requirements, the company continues to invest in asset reliability, cost savings, and long-term capacity optimization, positioning it for sustained earnings normalization into 2026.

Financial Highlights – Statement of Earnings ($’million)

$’million       Q3 2025       Q3 2024       YoY %          9M 2025       9M 2024          YoY %

Net Sales     3,452.1         2,810.9         +23%  9,078.7         8,306.9          +9%

Gross Margin         552.3  416.8  +33%  1,559.3         1,210.0         +29%

Operating Earnings         339.8  115.4  +194%          922.7  521.6  +77%

Earnings Before Tax         599.3  174.2  +244%          1,476.4         125.0          1081%

Net Earnings (Mosaic)     411.4  122.2  +237%          1,060.2         5.9          17870%

Diluted EPS ($)       1.29    0.38    +239%          3.33    0.02    16550%

Revenue and Margin Performance

Mosaic’s Q3 and 9M 2025 performance reflects a favorable pricing environment across fertilizer markets and disciplined execution.

Key Drivers:

• Improved pricing across phosphate and potash, lifting gross margin by 33% YoY in Q3.
• Phosphate production volumes reached approximately 1.8 million tons in the trailing three months, supported by improved asset reliability.
• Potash cash production cost declined to $71/ton, down from $75 in Q2, reinforcing margin expansion.
• Other income of $306 million in Q3, largely reflecting favorable FX movements and investment-related gains.

Gross margin expanded to 16.0% in Q3 2025, compared with 14.8% in Q3 2024, while operating earnings nearly tripled due to both pricing uplift and lower operating expenses.

Profitability and Cost Discipline

Mosaic continues to execute a multi-year cost optimization program:

• $150 million in cost savings already achieved, with a revised target of $250 million by end-2026.
• Selling, general and administrative expenses declined YoY, reflecting tighter cost control.
• Asset health investments are translating into improved reliability and production consistency, particularly in phosphate operations.

Despite these gains, operating cash flow in Q3 was $229 million, constrained by a working capital build of over $400 million, driven by higher inventory levels and fertilizer prices.

Balance Sheet Overview ($’million)

$’million       Sept 2025     Dec 2024     % Δ

Total Assets  24,667.5       22,924.0       +8%

Total Equity  12,937.0       11,614.7       +11%

Retained Earnings 14,845.4       13,926.1       +7%

Long-term Debt    3,372.0         3,332.3         +1%

Cash & Equivalents         153.3  272.8  -44%

Interpretation:

• Asset growth driven by higher inventories, equity investments, and capital expenditure.
• Equity expansion reflects strong earnings recovery.
• Liquidity declined modestly due to working capital absorption, but capital structure remains sound.

Cash Flow Analysis (9M 2025)

• Operating Cash Flow: $880.9 million (down YoY due to inventory build).
• Capital Expenditure: $1.01 billion, reflecting continued investment in asset reliability and long-term efficiency.
• Dividends Paid: $210.5 million, signaling continued shareholder returns despite near-term cash flow pressure.
• Mosaic deferred extraordinary dividends and buybacks to 2026 to preserve balance sheet flexibility.

Strategic Insights

• Cost Transformation: Execution on cost savings remains a key earnings lever into 2026.
• Brazil Resilience: Mosaic Fertilizantes continues to perform strongly operationally, despite credit tightening in Brazil.
• Portfolio Optimization: Divestment of non-core assets (Taquari potash and idle phosphate mines) improves capital efficiency.
• Operational Reliability: Investments in asset health underpin stable production and margin sustainability.

Strengths

• Leading global position in phosphate and potash fertilizers.
• Sharp earnings recovery supported by pricing and cost discipline.
• Improved operating leverage and asset reliability.
• Strong equity base and manageable leverage profile.

Weaknesses

• Working capital intensity during periods of rising prices.
• Cash flow volatility linked to inventory cycles.
• Exposure to input cost inflation (sulfur, ammonia, logistics).

Opportunities

• Structural growth in global food demand and fertilizer application rates.
• Margin expansion from cost savings program.
• Deeper penetration in Brazil and other emerging agricultural markets.
• Product differentiation through specialty fertilizers.

Threats

• Volatility in global fertilizer prices.
• Credit constraints for farmers, particularly in Brazil.
• Regulatory and environmental compliance costs.
• Geopolitical and trade policy risks affecting commodity flows.

Outlook

Mosaic enters FY2026 with improving earnings momentum, supported by:

• Continued execution of cost savings initiatives.
• Stable production outlook across phosphate and potash.
• Normalization of working capital as inventories unwind.

While near-term cash conversion remains pressured, the earnings trajectory and balance sheet strength support a constructive medium-term outlook, with shareholder returns expected to resume more aggressively as cash flows normalize.

Conclusion

“The Mosaic Company delivered a decisive earnings rebound in Q3 2025, driven by higher fertilizer prices, disciplined cost execution, and improved operational reliability. While working capital weighed on cash flow, the underlying earnings power has materially strengthened. With cost savings accelerating and asset performance improving, Mosaic is well-positioned to deliver more stable and attractive returns through the next cycle.”

Analyst: Qudus Adebara