CF Industries Holdings Inc., Deerfield, Ill., reported fourth-quarter net earnings attributable to common stockholders of $49 million ($0.21 per diluted share) on net sales of $1.13 billion, down from the year-ago $465 million ($1.98 per share) and $1.1 billion. Volumes were also down, at 4.72 million st from 5.28 million st. However, adjusted EBITDA was up, at $341 million from $260 million.
Full-year net earnings were also down at $290 million ($1.24 per share) on sales of $4.43 billion, compared to 2017’s $358 million ($1.53 per share) and $4.13 billion, respectively. Volumes were 19.3 million st, down from 19.9 million st. Adjusted EBITDA was up 45 percent, to $1.4 billion from $969 million.
CF noted that 2018 net earnings results were not directly comparable to 2017 results due to the impact of the U.S. Tax Cut and Jobs Act of 2017.
Fourth-quarter sales of $1.13 billion missed the analyst average estimate of $1.23 billion according to Bloomberg, which saw an analyst range of $1.09-$1.41 billion.
“We delivered strong results in 2018, as higher global nitrogen prices and lower natural gas costs drove a 45 percent increase in adjusted EBITDA compared to 2017,” said Tony Will, CF president and CEO. “With strong nitrogen demand anticipated in North America during the first half of 2019, our in-region production and extensive transportation and distribution network position us well to build on our 2018 performance. Longer-term, our outlook remains positive: we are positioned at the low end of the global cost curve due to our access to low-cost North American natural gas, we continue to operate exceptionally well, and we expect the global nitrogen supply and demand balance to continue to tighten.”
CF is anticipating U.S. corn acreage to grow some 4 million acres in 2019 to 93 million acres, with wheat acres going up 1 million acres.
Will also noted that new global nitrogen capacity is growing more slowly than demand. “So our story is more than just about a great opportunity in the first-half of 2019,” added Will. “We are very well positioned for the next 4-5 years.”
CF said total fourth-quarter and annual sales volumes were down, as lower ammonia and ammonium nitrate volumes were partially offset by higher urea volumes. Ammonia volumes were off some 40 percent in the fourth quarter due to a wet fall season. The company also had a higher level of turnarounds in 2018 than in 2017.
The company expects the poor fall ammonia season to be made up in the first-half with applications of ammonia and upgraded products.
Fourth-quarter and full-year average selling prices were higher year-over-year for all segments, as higher energy costs in Asia and Europe, along with continued enforcement of environmental regulations in China, resulted in lower production in those regions, tightening the global supply and demand balance.
CF said Chinese urea exports shrunk to 2.4 million mt in 2018, and it expects similar volumes in 2019 due to firm energy prices and regulations. The company expects lower-priced Iranian urea will remain under pressure due to U.S. sanctions.
Asked by analysts about the forthcoming closure of the Magellan ammonia pipeline (GM Feb. 1, p. 1), CF Senior Vice President Bert Frost said the company was “disappointed, but not surprised,” noting that the pipeline had had operational issues for several years. He said CF ships about 4-5 percent of its ammonia volumes on the pipeline. To compensate for the loss, he said CF has various options, including increasing its inland storage space, as well as truck and barge options. The company also noted that its Donaldsonville, La., plant is on the NuStar ammonia pipeline.
| Production (000 st) | 4Q-18 | 4Q-17 | 2018 | 2017 |
| Ammonia | 2,381 | 2,642 | 9,805 | 10,295 |
| Gran Urea | 1,162 | 1,122 | 4,837 | 4,451 |
| UAN 32 | 1,946 | 1,892 | 6,903 | 6,914 |
| AN | 376 | 555 | 1,731 | 2,127 |
| Ammonia | 4Q-18 | 4Q-17 | 2018 | 2017 |
| Net Sales $/M | 250 | 344 | 1,028 | 1,209 |
| Gross Margin $/M | 24 | 44 | 161 | 139 |
| Sales Vol. (000 st) | 720 | 1,207 | 3,135 | 4,105 |
| Avg Realized Price ($/st) | 347 | 285 | 328 | 295 |
| Gross Margin ($/st) | 33 | 36 | 51 | 34 |
| Gran Urea | 4Q-18 | 4Q-17 | 2018 | 2017 |
| Net Sales $/M | 345 | 246 | 1,322 | 971 |
| Gross Margin $/M | 138 | 58 | 433 | 116 |
| Sales Vol. (000 st) | 1,119 | 1,008 | 4,898 | 4,357 |
| Avg Realized Price ($/st) | 308 | 244 | 270 | 223 |
| Gross Margin ($/st) | 123 | 58 | 88 | 27 |
| UAN | 4Q-18 | 4Q-17 | 2018 | 2017 |
| Net Sales $/M | 342 | 288 | 1,234 | 1,134 |
| Gross Margin $/M | 66 | 16 | 227 | 81 |
| Sales Vol. (000 st) | 1,933 | 1,920 | 7,042 | 7,093 |
| Avg Realized Price ($/st) | 177 | 150 | 175 | 160 |
| Gross Margin ($/st) | 34 | 8 | 32 | 11 |
| AN | 4Q-18 | 4Q-17 | 2018 | 2017 |
| Net Sales $/M | 97 | 125 | 460 | 497 |
| Gross Margin $/M | 3 | 10 | 46 | 51 |
| Sales Vol. (000 st) | 416 | 576 | 2,002 | 2,353 |
| Avg Realized Price ($/st) | 233 | 217 | 230 | 211 |
| Gross Margin ($/st) | 7 | 17 | 23 | 22 |
| Other | 4Q-18 | 4Q-17 | 2018 | 2017 |
| Net Sales $/M | 98 | 96 | 385 | 319 |
| Gross Margin $/M | 11 | 15 | 50 | 47 |
| Sales Vol. (000 st) | 535 | 573 | 2,252 | 2,044 |
| Avg Realized Price ($/st) | 183 | 168 | 171 | 156 |
| Gross Margin ($/st) | 21 | 26 | 22 | 23 |