Terra Industries Inc. reported net income attributable to common shareholders of $45.9 million ($.46 per diluted share) for the third quarter ending Sept. 30, 2009, down 72 percent from the year-ago $164.9 million ($1.64 per share). Sales dropped to $347 million from the year-ago $790.2 million.
The company said sales price declines contributed 84 percent to the revenue decline and that sales volume reductions decreased revenues by 16 percent. The company was also impacted by maintenance turnarounds at Verdigris during the quarter, as well as a curtailment at Donaldsonville.
“Terra’s third quarter sales volumes and selling prices reflect the effect of the economic downturn on agricultural and industrial nitrogen demand,” said Terra President and CEO Michael Bennett. “Countering this somewhat, our natural gas per-unit costs for the quarter were relatively moderate.
“We were particularly disappointed that UAN prices remained unusually low relative to ammonia and urea prices over the quarter. Historically, UAN has commanded a premium, and we believe the current relative price is a short term aberration. Volume driven competition in the third quarter drove domestic UAN prices to levels that enticed reluctant customers to take limited positions. At these prices, few imports were received at the gulf. During July and August 2009, UAN imports were 59 percent lower than the comparable period in the prior year. As harvest concludes and growers make plans for the upcoming season, we expect customers to continue their stocking of supplies and we expect prices to improve to levels that will permit the imports necessary to ensure adequate supplies for the 2010 crop year.”
Terra said its average UAN price was $142/st for the third quarter, versus the year-ago $349/st. Volumes were down at 928,000 st from 1.05 million st. Ammonia prices were $245/st on volumes of 413,000 st, versus the year-ago $598/st and 392,000 st. Ammonium nitrate prices were $171/st on volumes of 241,000 st, versus the year-ago $341/st and 251,000 st. Urea prices were $298/st on volumes of 63,000 st, versus the year-ago $520/st and 67,000 st.
The average natural gas price was only $3.70/mmBtu, versus the year-ago $9.94/mmBtu.
“We remain positive about nitrogen industry fundamentals,” said Bennett. “Assuming typical weather and field conditions, fall ammonia applications should return to normal levels, which would be an improvement over last year. Depending on when dealer customers begin stocking inventories for the spring season, UAN demand should also strengthen. We believe this should occur late in the 2009 fourth quarter and the 2010 first quarter if U.S. growers are to achieve the strong level of planted corn acres that USDA is currently projecting,” said Bennett.
Nine-month net income was $156.3 million ($1.57 per share) on sales of $1.22 billion, versus the year-ago $467.2 million ($4.54 per share) and $2.21 billion, respectively.