Mosaic punctured ideas of potash groups as safe havens amid the fresh wave of market crisis by unveiling earnings well below Wall Street expectations, sapped by higher raw material costs.

The fertilizer group, in a preliminary update to investors following the release on Thursday of an offer of up to 20.7m shares, reported earnings of $526m for the June-to-August quarter.

The figure was 77% higher than a year before, reflecting rises of more than 80% in earnings from both phosphate and potash. Sales rose 40% to $2.22bn.

However, at $1.17 per share, the earnings fell short of analysts' expectations of a $1.29-a-share result.

Mosaic's costs of both ammonia, up 41% year on year, and sulphur, up 53%, both key raw materials for manufacturing phosphate fertilizers, both rose faster than the price at which the group sold the nutrient itself.

The price of diammonium phosphate, a key form in which the nutrient is marketed, rose 34% to $576 a tonne.

'Outlook strong'

The shortfall unsettled investors who have been presented upbeat pictures of the fertilizer sector by major players, who have stressed the uplift the industry is enjoying from farmers' quest to boost yields and cash in on crop prices which, even after tumbles this week, remain at historically elevated levels.

Uralkali, the Russian nutrients giant, on Thursday said the potash industry, "retains its strong fundamentals" as farmers "buy actively mineral fertilizers".

Last week, leaders of groups such as Agrium and PotashCorp at a Credit Suisse conference were termed by the bank "overwhelmingly positive" over prospects, seeing "no change in order patterns or dealer or farmer sentiment".

Mosaic itself on Friday said "the fundamental outlook for the industry remains strong as a result of low global stocks of grain and oilseeds, attractive agricultural commodity prices and record farm net income".

Market reaction

Nonetheless, Mosaic shares in the group stood 4.1% lower at $57.67 in New York, outpacing a 0.8% drop in the Dow Jones Industrial Average.

The fall also weighed on shares in North American peers, with Agrium down 1.6% at Can$73.56 in Toronto, and PotashCorp 1.9% lower at Can$47.25.

In New York, Intrepid Potash shares fell 1.1% to $28.04.