Compass Minerals saw sales growth in 2017 driven by growth in its plant nutrition sector as recently reported in its fourth quarter earnings release. The company had lower earnings this year in salt sales due to a mild winter but the addition of their South America plant nutrition program and continued growth in plant nutrition in North America, offset the decline.
In North America, Compass saw growth in both sulfate of potash and micronutrients. Sales volumes were up 11 percent in the fourth quarter of 2017 from the fourth quarter of 2016. This was done through attention to their sales teams and investments.
The company reports that it has shifted the focus of its commercial teams to the company’s broadened product portfolio. The commercial teams have also been re-oriented to more deeply engage with their distribution partners and end users.
Their investment in research and development was increased in 2017 and was primarily focused on opening a new research center in Kansas City metropolitan area. The first Brazil-developed product line was also introduced to North America.
Fran Malecha, president and CEO of Compass Minerals, says the company accomplished all of this while also reducing their selling, general and administrative expenses. He believes these careful investments will further the company’s success.
“With the resources we have in both North and South America, we are well positioned to drive additional product innovation to serve our customer needs,” says Malecha.
In South America, there was growth in direct-to-grower specialty nutrients. The sales volume in this channel grew 15 percent from the previous year and the demand for specialty nutrients remains strong in this area. This growth comes during a time of economic uncertainty for Brazil particularly in the oil and gas industry.
“Our focus on high value innovative plant nutrients and our strong direct to grower sales channel improved operating earnings and provided margin growth,” says Jamie Standen, CFO of Compass Minerals. “We are pleased with this performance given the weaker than expected Brazilian economics in 2017.”
The 2018 outlook for plant nutrition in both North and South America is positive. In North America, plant nutrition sales volume is predicted to rise from 320,000 to 350,000 tons while the operating earnings margin is expected to increase from 10 to 12 percent.
In South America, plant nutrition sales volume is expected to increase from 700,000 to 900,000 tons. South America’s operating earnings margin is expected to grow from 1 to 3 percent.
The company’s goals for 2018 include reducing capital spending and driving value from investments they made in 2017. One thing Compass Minerals plans to focus on is improving innovation to meet customer needs.
“This business tends to be more sensitive to ups and downs of farmer economics because it serves smaller growers who have fewer resources,” says Standen. “There is however, increasing interest from these customers to have access to our more innovative products, which will be something we pursue in 2018.”