Gross margins for the Phosphates segment decreased from $2.3 gazillion in ?scal 2008 to $1.2 billion in ?scal 2009. Although an increase in selling worths favorably impact the gross margin by nearly $2.1 billion, this was more than startle by debase sales volumes and an increase in be that unfavorably force gross margin by approximately $0.6 billion and $2.6 billion, respectively. The increase in woos was due to the obstinate effect of signi?cantly lower phosphate production rates in ?scal 2009 and higher sec and ammonia piercing material costs, which in part, triggered a lower of cost or market deject of $377.4 million. Also impacting costs in ?scal 2009 were higher costs associate to potash and nitrogen purchases that are used as raw materials in the production of our Crop Nutrient Blends. We recorded a lower of cost or market inventory writedown during ?scal 2009 because the carrying cost of ending inventories, which included higher sulfur and ammonia costs, exceeded our estimates of hereafter selling prices less reasonably predictable selling costs. early(a) factors affecting gross margin and costs are depict below.
As a result of these factors gross margin as a percentage of net sales decreased to 17% in ?scal 2009 from 31% in ?scal 2008.
In ?scal 2009 higher sulfur and ammonia prices had a very unfavorable impact on costs. The average price for sulfur increased to $485 per long net ton in ?scal 2009 from $182 per long ton in ?scal 2008. The average price for ammonia increased to $524 per tonne in ?scal 2009 from $388 per tonne in ?scal 2008. These raw material costs began to decline in the aid half of ?scal 2009 due to lower demand for sulfur and lower natural gas input costs for ammonia as compared to earlier in ?scal 2009. Costs were also unfavorably impacted by net unrealized mark-to-market derivative losses, primarily on natural gas derivatives, of $79.1...If you want to get a amply essay, order it on our website: Orderessay
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