Here’s how India can affect each of these companies:
– India made up 32% of Canpotex’s total sales in 2009. The percentage plummeted to 5% last year. India’s contribution to PhosChem’s total sales volumes in 2012 also halved, to 28%, from 56% two years ago.
– Potash Corp./Saskatchewan (USA) (NYSE:POT) contributes 54% to Canpotex’s potash requirement. As a result of lower demand from key markets like India, PotashCorp’s potash sales slipped 18%, year over year, in 2012. The company’s phosphate sales also fell 8%, year over year, since PotashCorp derives more than 10% of its phosphate sales from PhosChem.
– Mosaic Co (NYSE:MOS) supplies 37% of Canpotex’s potash requirement. But phosphate is a bigger concern for the company, since it gets more than 70% of its sales from phosphate. India accounted for 14% of Mosaic’s total sales last year. International phosphate sales volumes for the company fell 9% last year. Though Mosaic’s total revenue from phosphate improved year over year, it was backed entirely by higher selling prices. With phosphate prices down by double-digit percentages this year, Mosaic Co (NYSE:MOS) has a reason to worry.
– Agrium Inc. (USA) (NYSE:AGU)’s investors are probably better off, because Agrium isn’t as exposed to the Indian market, or even to potash and phosphate nutrients, as the other two companies. The two nutrients made up only 9% of Agrium’s total sales last year, and 29% of the company’s total potash sales came from Canpotex last year. As for phosphate, Agrium primarily sells in the U.S. and Canadian markets.
Clearly, of the three companies, Potash Corp./Saskatchewan (USA) (NYSE:POT) and Mosaic Co (NYSE:MOS) are likely to be hit the hardest if India’s fertilizer imports decline. Agrium deals primarily in nitrogen, and nitrogen-centric companies depend more on the domestic market for sales. That’s also the reason why CF Industries Holdings, Inc. (NYSE:CF) didn’t find itself on my list of companies that need to worry if things in India get ugly. Phosphate made up 17% of CF’s revenue last year; the rest came from nitrogen. Also, only 6.5% of CF’s sales last year came from markets outside the U.S. and Canada.
Now that you know how closely these companies’ fortunes, except CF’s, are tied to the Indian market, you should pay special attention to what their outlook is about India, and how it could financially affect them, when they release their respective quarterly earnings reports over the next few weeks. Until India wakes up, these fertilizer companies could have a bumpy ride ahead.
The article India Could Control These Companies’ Destiny originally appeared on Fool.com and is written by Neha Chamaria.
Fool contributor Neha Chamaria has no position in any stocks mentioned. The Motley Fool owns shares of CF Industries Holdings, Inc. (NYSE:CF).
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