Mosaic Co (MOS.N) reported a better-than-expected quarterly profit as it kept a tight leash on costs, and the company slashed its annual dividend as it expected only a "gradual" improvement from a prolonged slump in the fertilizer market.

The company's shares were down 6.6 per cent at US$29.90 in light premarket trading on Tuesday.

The world's largest producer of finished phosphate products said it would cut its annual dividend by 45.4 per cent to 60 cents per share, effective with the next declaration.

A capacity glut and soft crop prices have pushed potash and phosphate prices to multi-year lows.

"While we are confident the market bottom is behind us, the pace of improvement is expected to be gradual," Chief Executive Officer Joc O'Rourke said in a statement.

Potash MOP (muriate of potash) cash production costs dropped 28 per cent in the fourth quarter from a year earlier, while phosphate conversion costs fell 15 per cent.

Net earnings attributable to Mosaic fell to US$12 million, or 3 cents per share, in the three months ended Dec. 31, from US$155 million, or 44 cents per share, a year earlier

On a per share basis, the company recorded a charge of 23 cents, compared with 16 cents a year earlier.

Excluding items, the company earned 26 cents per share, according to Thomson Reuters I/B/E/S, handily beating estimates of 13 cents.

Plymouth, Minnesota-based Mosaic's net sales fell to US$1.86 billion, but was slightly above analysts' average estimate of US$1.80 billion.

Mosaic recently bought Vale SA's fertilizer business for US$2.5 billion, the latest in the global fertilizer market as companies seek ways to beat the slump in prices.

The deal, which makes the Brazilian iron ore miner the biggest shareholder in the U.S. company, is expected to close in late-2017.