This excerpt taken from the IPHS 8-K filed Feb 20, 2008.
2008: Innophos Goals and Market Outlook
Market prices of phosphate rock and sulfur, two primary raw materials used in the production of specialty phosphates, have increased substantially over the last several quarters.
Historically, we have successfully recovered raw material, energy, and other cost increases through price increases. During the fourth quarter 2007, we implemented price increases in all our product lines, most of which became effective January 1, 2008. We have also implemented additional price increases through February. Our January and February price increases, together, are expected to fully recover the currently estimated increases in raw material costs. While there may be timing differences between raw material cost increases and responsive actions, management expects price increases will be achieved at or ahead of realized cost increases. While we cannot guarantee that these measures will succeed, marketplace acceptance rates for these increases has to date been high.
If current raw material market price levels for phosphate rock and sulfur are sustained throughout 2008 into early 2009, we currently estimate that our annual raw material costs will increase by approximately 30% of 2007 annual sales by early 2009, as compared to our cost structure at year-end 2007.
Randy Gress commented, "Innophos benefits from a flexible production infrastructure that will allow us to adjust to customer demand shifts in the current environment. It does not change our overall mission to deliver quality products and lead in specialty phosphate production and customer service. Our infrastructure and staff are equipped to respond to these conditions. In summary, through price actions and operating improvements, we expect to again expand operating margins in 2008, in addition to what we accomplished in 2007."