Mosaic (MOS) Q4 2025 earnings review
Potash Shines, But Massive Impairments and Margin Squeeze Plunge Mosaic into the Red
Despite a record production year for Potash, Mosaic’s Q4 collapsed into a $519M net loss. The damage was driven by $422M in pre-tax notable items—including write-downs of the Carlsbad mine and Mosaic Fertilizantes—alongside a massive $261M deferred tax asset reserve in Brazil. Underlying operations also stumbled: skyrocketing sulfur costs and plunging U.S. phosphate demand squeezed margins and bloated inventories, causing Q4 Operating Cash Flow to turn starkly negative (-$56M). While management projects a Q1 spring recovery, the sudden curtailment of 30% of Brazilian production capacity underscores deep near-term cost distress.
🐂 Bull Case
Potash Adjusted EBITDA grew 58% YoY to $336M in Q4. Esterhazy and Belle Plaine delivered record outputs, and the segment's MOP cash cost of production remains highly competitive, insulating it from the margin volatility seen in Phosphate.
With North American buyers deferring purchases due to affordability, inventories are staged for a massive spring planting season. China's continued export restrictions are keeping global phosphate supply tight, which should defend pricing once volume recovers.
🐻 Bear Case
Free Cash Flow for the year fell to negative $535M. The company aggressively built $428M in finished product inventories amid weak demand, tying up crucial liquidity just as Capex requirements are increasing to $1.5B in 2026.
Mosaic Fertilizantes booked a $110M goodwill impairment and a $261M deferred tax reserve. Gross margins plummeted to $10/tonne, and the company was forced to curtail SSP production—signaling a severe, fundamental deterioration in the region's profitability.
⚖️ Verdict: 🔴
Bearish. While the Potash business is performing admirably, the sudden evaporation of cash flow, the bloated inventory levels, and the severe impairments in Brazil suggest the company misjudged demand elasticity and raw material cost inflation.
Key Themes
Mosaic Fertilizantes Margin Collapse and Curtailments
Reversing sharply from prior quarters' bullishness, the Brazil segment's gross margin collapsed from $46/tonne in 24Q4 to just $10/tonne in 25Q4. Intensified competition, tightening credit, and skyrocketing sulfur prices forced management to curtail SSP production at Fospar and Araxa (representing 30% of Brazilian capacity). The simultaneous $110M goodwill write-down and $261M DTA reserve suggest management no longer believes in the near-term recovery of this asset.
Working Capital Bloat Destroys Free Cash Flow
Decelerating violently, Operating Cash Flow in Q4 was negative $56M (down from +$219M a year ago). Management blamed a massive inventory build: finished products increased by $428M, and raw materials (rock and sulfur) absorbed another $346M. The company produced at normal rates while demand plummeted, destroying full-year Free Cash Flow (-$535M) and creating a risk of future price concessions to clear the backlog.
Skyrocketing Sulfur Costs
Benchmark sulfur prices rose above $500 per tonne late in the fourth quarter. Management explicitly warned that each $10/tonne increase in sulfur costs reduces quarterly EBITDA by ~$10M. Because the full impact of these Q4 spot prices won't hit Cost of Goods Sold until 26Q2, phosphate margins face a guaranteed, telegraphed headwind for the next six months.
Potash Operating Outperformance
Accelerating into the end of the year, Potash was the sole stabilizing force. Adjusted EBITDA grew 58% YoY in Q4 to $336M. The segment navigated the temporary Esterhazy idling well, achieving full-year production of 8.8M tonnes and keeping MOP cash costs relatively flat ($75/tonne). Prices also improved sequentially to $264/tonne FOB.
Mosaic Biosciences Traction
The company's biologicals segment is scaling rapidly. By launching five new products, the segment more than doubled its net sales YoY to $68 million in 2025 and positively contributed to Q4 adjusted EBITDA. Management is targeting a further 100% top-line growth in 2026 via eight to ten new product launches.
Corporate Cost Savings Realized
Mosaic successfully achieved its $150M value capture target for 2025 (measured against 2023). Most notably, $100M of this was generated in the troubled Fertilizantes segment through lower blended rock costs and scrap reduction. The program is being expanded to target an additional $100M in savings for 2026.
Macro Backdrop: Supply Constrained, Crop Shifts
Stable. The macro picture remains highly constrained on the supply side, with Chinese phosphate export restrictions expected to remain through at least 1H26. Meanwhile, North American planting outlooks signal a shift toward corn acreage, which is nutrient-intensive and should support baseline demand once spring application begins.
Other KPIs
Decelerating sharply from 1.6 million tonnes a year ago, reflecting severe affordability challenges and buyer strikes in the U.S. market. The resulting inventory build sets up a critical pressure test for Q1 pricing.
Accelerating from $1.25B in 2024. Spending is directed at restoring phosphate asset health. This is guided to rise even further to ~$1.5B in 2026 due to gypstack and clay settling area requirements, which will put immense pressure on Free Cash Flow.
Guidance
Accelerating sequentially from 1.3 million tonnes in 25Q4. Implies a normalization of the deferred demand from the winter. Management expects DAP prices of $640-$670/tonne.
Stable sequentially compared to 2.1 million tonnes in 25Q4. Pricing is guided at $255-$275/tonne FOB, maintaining the strong margin profile achieved at the end of 2025.
Decelerating aggressively versus historical Q1s. The guide acknowledges the ongoing pain of higher sulfur costs, idle expenses from the SSP curtailment, and the highly competitive credit environment in Brazil.
Accelerating from $1.36 billion in 2025. This structural increase in capex (partially offset by a $58M drop in ARO spending) makes inventory liquidation in 1H26 critical to avoiding external financing needs.
Key Questions
Nature of the Brazilian Impairments
The $110M goodwill impairment and $261M deferred tax asset reserve in Mosaic Fertilizantes point to structural long-term downgrades. What specific long-term assumptions (e.g., market share, structural sulfur disadvantage) triggered this massive reassessment?
Sulfur Cost Thresholds
With sulfur costs pushing above $500/tonne and forcing SSP curtailments in Brazil, at what point does the cost profile force North American phosphate operations to reconsider their own production run-rates?
Inventory Liquidation Strategy
Finished product inventories surged by over $400 million due to Q4's buyer strike. How is management planning to clear this inventory in Q1 without conceding heavily on the guided $640-$670 DAP price?