Mosaic swung to a $272.8M Q2 loss ($0.86/share) as sulfur costs up 150% overwhelmed higher phosphate prices; potash held steady at $195M operating earnings while phosphates and Brazil slipped to losses.
Revenue
$2.8B
-6.0% YoY
Net income
-$273M
-166.4% YoY
Diluted EPS
$-0.86
-166.7% YoY
Operating margin
-1.3%
Headline: prices went up, but sulfur costs went up much faster
Mosaic swung to a net loss of $272.8 million ($0.86 per diluted share) in the second quarter of 2026, compared with net income of $410.7 million ($1.29) a year earlier. Net sales fell 6% to $2.82 billion.
The main operating problem was raw materials. Fertilizer selling prices rose, but not by enough to cover the cost of making the product. Mosaic's North American phosphate plants paid an average of $522 per long ton for sulfur, up 150% from $209, and $621 per tonne for ammonia, up 40%. Sulfur is turned into sulfuric acid, which is used to dissolve phosphate rock, so a phosphate producer cannot run without it. In the 10-Q, management says the Middle East conflict and attacks on Russian and Ukrainian industrial sites "restricted exports of fertilizers and raw materials (namely sulfur and ammonia)". Mosaic adds that price increases "were more than offset by elevated input costs, particularly sulfur and ammonia."
Much of the GAAP loss comes from items outside day-to-day operations. The earnings release lists $351 million of pre-tax "notable items", mainly:
a $162 million mark-to-market loss (a paper loss from the share price falling) on Mosaic's stake in Ma'aden, the Saudi mining company
$69 million of non-cash write-offs for a phosphate project Mosaic decided not to go ahead with
foreign-currency losses
Without these items, adjusted EPS was $0.13, against $0.51 a year ago. Adjusted EBITDA (earnings before interest, tax, depreciation and amortization, excluding notable items) fell to $407 million from $566 million. The underlying business still earned money, but much less than a year ago.
Key metrics
Metric
Q2 2026
Q2 2025
YoY Change
Net sales
$2,824.1M
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Segment results: potash held up, phosphates and Brazil did not
Mosaic has three businesses:
Potash: mined in Canada. It needs no sulfur or ammonia.
Phosphates: made in Florida and Louisiana from mined phosphate rock, sulfur and ammonia.
Mosaic Fertilizantes: Brazil. It both produces fertilizer and distributes fertilizer that it buys from other producers.
This quarter, the cost increases landed almost entirely on the two segments that use sulfur and ammonia.
Segment
Net sales Q2 2026
Net sales Q2 2025
Gross margin Q2 2026
Gross margin Q2 2025
Operating earnings Q2 2026
Operating earnings Q2 2025
Phosphates
$1,246.3M
$1,173.0M
$(4.5)M
$103.0M
$(104)M
$(8)M
Potash
$650.3M
$710.5M
$207.3M
$209.4M
$195M
$194M
Mosaic Fertilizantes
$1,033.8M
$1,174.9M
$6.2M
$161.7M
$(41)M
$109M
Phosphates: sales up, gross margin gone
Phosphate sales rose 6%. Higher prices added about $120 million, and lower volumes took away about $90 million. The DAP price (diammonium phosphate, the benchmark phosphate fertilizer), measured at the plant gate, rose 16% to $773 per tonne.
Even so, the segment's gross margin went from $103.0 million to a $4.5 million loss. Gross margin is revenue minus the direct cost of making and shipping the product. The 10-Q breaks the change down:
about $290 million from higher raw material costs, mainly sulfur, ammonia and phosphate rock
about $20 million from the higher per-tonne cost of producing lower volumes
about $165 million back from higher selling prices
about $20 million back from lower idle and turnaround costs
about $15 million back from smaller land-reclamation adjustments
In other words, higher prices recovered only a little over half of the cost increase.
Other details from the segment:
Volumes: finished-product volumes fell 9% to 1.41 million tonnes. Mosaic blames "affordability challenges weakening global demand". Farmers were buying less at these prices.
Rock costs: phosphate rock production in North America fell to 2.1 million tonnes from 2.7 million as mining moved into new areas. Blended rock cost rose to $90 per tonne from $74.
Operating rate: the processed-phosphate operating rate was 58%, down from 61%.
Project write-off: the $69 million write-off is why the operating loss ($104 million) is so much bigger than the gross margin loss.
Potash: steady, and more profitable per tonne
Potash is the one segment that looks healthy. Operating earnings were $195 million, about the same as a year ago. Segment adjusted EBITDA was unchanged at $278 million.
Sales fell 8% because volumes fell 14% to 2.02 million tonnes. Two things drove the lower volumes:
a planned maintenance shutdown (a "turnaround") at the Esterhazy mine in Saskatchewan
the sale of the Carlsbad, New Mexico mine, which closed on April 30
Profit per tonne improved. Potash gross margin was 32% of sales, up from 29%. Gross margin per tonne rose to $103 from $89. The MOP (muriate of potash, the standard potash product) mine-gate price was $275, up 5%.
The 10-Q attributes about $45 million of lost gross margin to lower volumes. Most of that was recovered through:
higher prices (about $10 million)
lower turnaround costs (about $10 million)
lower plant operating costs and prior-year costs that did not recur (about $20 million)
Canadian resource taxes rose to $70.4 million from $61.7 million.
Mosaic Fertilizantes (Brazil): volumes fell by almost a third
Brazil had the sharpest decline in volumes. Total tonnes fell 32% to 1.52 million, and fertilizer produced in Brazil and sold through Mosaic's own distribution network fell 41%. Mosaic gives three reasons:
less production because raw materials were scarce
"limited customer credit availability in Brazil": Brazilian farmers usually buy fertilizer on credit, and less credit was available
deliberate production cuts
The average selling price rose 23% to $585 per tonne, but that did not protect profit. Gross margin fell from $161.7 million to $6.2 million, about 1% of sales. Per the 10-Q:
about $110 million of higher costs for products bought for resale
about $100 million of higher raw material costs, mainly sulfur
about $60 million from lower volumes
about $30 million of idle and unabsorbed fixed costs, meaning plant overheads that still have to be paid while output is low
about $26 million of accelerated depreciation, faster write-down of equipment at the idled Patrocínio mine
about $170 million back from higher prices
Production in Brazil fell 52%. The phosphate operating rate dropped to 47% from 84% after the Araxá and Fospar plants were idled in Q1.
Portfolio changes: Araxá, Patrocínio and Carlsbad
This quarter is partly a result of decisions made in Q1:
Brazil (Q1): Mosaic decided to sell the Araxá mining and chemical complex in Brazil and idle mining at Patrocínio. Together these cost about $442 million in Q1, plus about $40 million more in Q2 (accelerated depreciation and care-and-maintenance costs).
Carlsbad (Q2): the potash mine sale brought in only about $2 million in cash plus a $10 million deferred payment. It led to a further $6.2 million impairment (a write-down of the asset's book value) on top of $185 million recorded in Q4 2025.
For the first half of 2026, Mosaic reports a net loss of $530.4 million ($1.67 per share), against net income of $648.8 million ($2.04) in the first half of 2025.
Cash flow and balance sheet
Operating cash flow: $167 million in Q2, down from $610 million a year ago. The release blames lower adjusted EBITDA and customer prepayments in Brazil.
Free cash flow: after $320 million of capital expenditure, free cash flow (operating cash flow minus capital spending) was negative $153 million, against positive $305 million a year ago.
Refinancing: Mosaic set up a $1 billion term loan to refinance short-term commercial paper.
Capital spending: the 2026 capex target was cut to $1.20 billion from $1.25 billion.
Dividend: Mosaic paid its regular $0.22 per-share dividend.
Net interest expense rose 18% to $62.8 million.
Takeaway: Higher fertilizer prices did not help Mosaic, because the sulfur and ammonia it needs to make phosphate fertilizer rose much faster than the fertilizer itself. In phosphates, price increases worth about $165 million covered only part of about $290 million in higher raw material costs. The next sulfur contract makes this worse: Q3 was settled at $705 per long ton, 35% above Q2's $522 average cost, and Mosaic says it will mostly show up in Q4 results. Potash is currently carrying the company's earnings.
Outlook
Management's Q3 2026 guidance from the earnings release:
Phosphate volumes: 1.1 to 1.4 million tonnes, down from 1.41 million in Q2. Additional production cuts started in early July. The Faustina plant has been fully idled and Bartow is running at 40% of its target rate.
DAP price: $820 to $840 per tonne, up from $773 in Q2.
Potash volumes: 2.0 to 2.2 million tonnes, with MOP at $270 to $290 per tonne. Full-year potash production is still expected at about 9 million tonnes, weighted toward the second half.
Mosaic Fertilizantes: Q3 adjusted EBITDA is expected to be below Q2's $60 million, as commodity fertilizer production in Brazil "is in the process of being idled".
Full year: SG&A of $510 to $530 million, net interest expense of $220 to $240 million, and capex of $1.2 billion.
Our read: Q3 will probably show a sharp gap between segments. Potash should earn roughly what it did in Q2, maybe more, as Esterhazy runs at full rates again and unit costs fall. Phosphate prices are rising to about $830, but the $705 sulfur contract means sulfur costs could rise faster than prices again in Q4. Volumes will also be lower, and idled plants still carry fixed costs. That makes a near-term recovery in phosphate margins unlikely unless sulfur prices fall.
Mosaic's view is that "the current raw material environment is temporary". It is keeping idled plants ready to restart instead of closing them for good, which is a bet that sulfur supply returns to normal. The company is also generating negative free cash flow while its interest costs rise. The things to watch are:
the Q4 sulfur contract price
whether the Araxá sale closes
whether the working-capital release in Brazil that management is counting on shows up in second-half cash flow