CF Industries Inc. reported net earnings of $7.3 million ($.13 per share) on sales of $378 million for the third quarter ending Sept. 30, versus the year-ago loss of $91.4 million ($1.66 per share) on sales of $359.4 million. The year-ago loss was primarily the result of unusual items related to the company’s IPO.
Nine-month earnings were $25.3 million on sales of $1.443 billion, versus the year-ago loss of $26.2 million and sales of $1.445 billion.
Third-quarter nitrogen gross margins were $9.6 million on net sales of $260.5 million, versus the year-ago $45 million and $258.3 million, respectively. Increased urea and UAN volumes helped offset reduced average selling prices. Total nitrogen volumes were up 17 percent, to 1.378 million st from 1.176 million st.
Third-quarter phosphate gross margins were up 47 percent to $16.2 million on sales of $117.5 million, versus the year-ago $11 million and $101.1 million, respectively.
Citing the good prospects for corn, CF is optimistic about 2007. For the fourth quarter, CF CEO Stephen Wilson said fundamentals appear strong and cited strong international nitrogen prices, which have discouraged exports to the U.S. However, he did note hesitancy by wholesalers and retailers to build inventory in a market that has experienced fertilizer price volatility.
CF also announced two new capital projects totaling $21 million. It plans to upgrade two of its four ammonia plants at Donaldsonville, La., to enhance natural gas efficiency. One will be complete in 2007, the other in 2008. In addition, CF plans a 15-month project to increase DAP capacity by 80,000 st at its Plant City, Fla., complex. The project will also make it easier to switch from DAP to MAP.
CF also reported that it has received an extension of its Florida mine’s local development reauthorization from the Hardee County Board of Commissioners, extending the termination date from December 2011 to December 2029. This will allow it to mine the currently permitted phosphate rock reserves and then reclaim affected land. The extension will permit CF to mine an additional 11 years of reserves at current operating rates beyond the original 2001 termination date.
Wilson also announced that CF has established growth and diversification as its strategic priority. “Our initiatives to address these priorities generally will be natural extensions of our core competencies and may include organic initiatives, merger and acquisition activity, joint ventures, and other strategic actions,” said Wilson. “In this global industry, we must increase our size and diversify our sources of cash flow in order to become less dependent on the relationship between nitrogen fertilizer prices and North American natural gas costs.”