Terra reports 1Q net income of $30 M

Terra Industries Inc. reported net income of $30 million ($.30 per diluted share) on revenues of $419.7 million for the first quarter ending March 31, 2009, versus the year-ago $101.4 million ($.97 per share) and $574.7 million, respectively.

Terra said the drop in revenues was due primarily to lower ammonia selling prices and UAN and ammonium nitrate sales volumes. Ammonia prices decreased 27 percent, while UAN and AN prices remained substantially the same. Terra said the decrease in ammonia prices was due primarily to soft global industrial demand related to the economic downturn. UAN and AN volumes decreased by 32 and 30 percent, respectively, as customers continued to work off higher-priced inventory. Terra’s ammonia sales volumes increased by 5 percent. Declines in industrial ammonia sales volumes were more than offset by a healthy start to the 2009 pre-plant ammonia application season, as growers sought to make up for ammonia not applied in the fall. Terra also reported strong sales by Terra Environmental Technologies (TET).

First-quarter operating costs reflect the curtailment of ammonia production at the Donaldsonville and Woodward plants for much of the quarter. In addition, the Yazoo City plant performed a turnaround in February that is reflected in operating costs. The cost of these activities was an estimated $12.3 million pretax.

Terra expects the Woodward UAN expansion to be up next year and to have cost $105-$110 million. During the remainder of 2009, Terra expects turnarounds at Woodward and one-half of Verdigris, as well as the Courtright, Ont., urea plant.

Terra’s GrowHow UK joint venture curtailed ammonia production at its Billingham and Ince locations for much of the first quarter. Sales volumes were down by approximately 60 percent in the first quarter of 2009 due to lower demand.

Earnings from the Trinidad jv were $3.3 million.

“Terra’s first quarter results were consistent with the overall environment, which was characterized by slow demand for nitrogen products globally and a late start in many U.S. areas to the spring application season,” said Terra President and CEO Michael Bennett. “Natural gas prices have come down considerably, and although this decrease isn’t fully reflected in Terra’s first quarter results due to timing issues, if sustained it should benefit Terra in coming months.”

Citing USDA projections of 85 million acres of corn, Terra expects stronger earnings in the second quarter. It said UAN may again be a premium-value product as growers have faced wet weather conditions early in the season. However, Bennet told analysts he expects activity to be hand-to-mouth or truckload-to-truckload during the second quarter, adding that UAN may be 1 million short of demand this year. Looking forward, Terra said the fundamental drivers for the business remain positive.