Morningstar | Compass Minerals Announces Tentative Agreement With Union at Goderich Mine; Maintaining Our $83 FVE
Compass Minerals announced July 14 that it has reached a tentative agreement with Unifor Local 16-0, the labor union that represents workers at the company's Goderich salt mine. The agreement will end the current labor strike, which began April 27. During the strike, Compass Minerals used replacement workers to meet production targets. As a result, we do not think the strike will significantly affect our 2018 total salt volume forecast of 12.4 million tons. Although we anticipate a slightly higher cost of production in 2018 related to the replacement workers, this is offset by the time value of money effects since our last update. As such, we maintain our $83 fair value estimate for wide-moat Compass Minerals.The end of the strike should be the last of the near-term operational hiccups at the low-cost Goderich salt mine that have plagued Compass over the past year. Going forward, the company should be able to focus on the implementation of its cost-saving program. We continue to expect that unit production costs in the salt segment will decline over the next couple of years and boost profits.
Compass is scheduled to report second-quarter results Aug. 6. During the subsequent conference call, the company is likely to provide its first commentary on the early results of the deicing salt bid season, which typically begins in April and runs through September. As we noted in April, deicing salt prices typically rise following a harsher-than-normal winter. We continue to expect that higher deicing salt prices and a return to more normal volumes will provide a much-needed boost to Compass' profits.
For more information, see our April report, "Fleeting Headwinds Provide Attractive Entry Point for Compass."
Compass Minerals International is a holding company. Through its wholly owned subsidiaries, the company is a provider of minerals, including salt, secondary nutrients and micronutrients, and specialty chemicals. The company has three reportable segments: Salt, which produces, markets and sells salt and magnesium chloride and sodium chloride; Plant Nutrition North America, which includes sales of sulfate of potash specialty fertilizer and specialty plant nutrients; and Plant Nutrition South America, which manufactures, distributes and markets an array of specialty plant nutrients and supplements developed and formulated from primary and secondary nutrients, specialty plant nutrients and biostimulants.
Morningstar, Inc. is a leading provider of independent investment research in North America, Europe, Australia, and Asia. The company offer an extensive line of products and services for individual investors, financial advisors, asset managers, and retirement plan providers and sponsors.
Morningstar provides data on approximately 530,000 investment offerings, including stocks, mutual funds, and similar vehicles, along with real-time global market data on more than 18 million equities, indexes, futures, options, commodities, and precious metals, in addition to foreign exchange and Treasury markets. Morningstar also offers investment management services through its investment advisory subsidiaries and had approximately $185 billion in assets under advisement and management as of June 30, 2016.
We have operations in 27 countries.
Unfortunately, this report is not available for the investor type or country you selected.
Browse all ResearchPool reportsReport is subscription only.
Thank you, your report is ready.
Thank you, your report is ready.