CF Industries Holdings Inc., in releasing record earnings for the fourth quarter and year ending Dec. 31, 2011, confirmed that it has curtailed phosphate production in the first quarter. CF said it did so by advancing the timing of scheduled plant turnarounds. It said plans for the turnarounds were finalized in December in recognition of the then-prevailing market imbalance.
CF told analysts the curtailment was roughly in line with those announced by other U.S. producers on a percentage basis. CF did not return calls to further quantify the amount, but this would roughly equate to 66,000 st based on The Mosaic Co.’s earlier announced curtailment of 250,000 mt.
CF reported net earnings attributable to common stockholders of $438.9 million ($6.66 per diluted share) on sales of $1.72 billion for the fourth quarter ending Dec. 31, 2011, compared to the year-ago $200.3 million ($2.78 per share) on sales of $1.24 billion. EBITDA was $870.6 million, compared to the year-ago $499.5 million.
CF said that it was able to enter the fourth quarter with a large order book reflecting attractive forward prices contracted earlier in the year. As a result, these allowed it to bridge the extended lull in demand that many sellers experienced during the quarter – at least for nitrogen.
Fourth-quarter nitrogen tonnage was almost level with year-ago levels – 3.34 million st versus the year-ago 3.35 million st. UAN was the saving grace, with tonnage up at 1.57 million st versus the year-ago 1.45 million st. Other major nitrogens saw a fall-off in tonnage during the fourth quarter.
The company said the fall direct application season for ammonia benefited from mild weather and a long application window. Volumes were 874,000 st with an average price of $633/st, versus the year-ago 917,000 st and $452/st. The company said the volume fall-off was due to industrial ammonia, with direct application on par with year-ago levels. Positive ammonia movement even transitioned over into January – particularly in Kansas, Missouri, Iowa, and Nebraska.
Phosphate sales volumes did see a lull in North America, where tonnage moved down to 240,000 st from 393,000 st. Export tons, however, were up, at 199,000 st from 84,000 st. Total tons were 439,000 st, down from 477,000 st.
Fourth-quarter nitrogen gross margins were $786 million on sales of $1.46 billion, up from the year-ago $420.6 million and $1 billion, respectively.
Fourth-quarter phosphate gross margins were $79.2 million on sales of $255.3 million, up from the year-ago $63.3 million on sales of $235 million.
For the year, CF reported net income of $1.54 billion ($21.98 per share) on sales of $6.1 billion, compared to the prior year $349.2 million ($5.34 per share) on sales of $3.96 billion. Pre-tax results did include $77.3 million of non-cash mark-to-market net losses on natural gas derivatives, a $34.8 million impairment charge due to the permanent shutdown and removal of the methanol plant at Woodward, Okla., $34.5 million of gains on asset dispositions, $24.3 million in business combination costs, and $1.2 million in Peru project development costs.
“We enjoyed a position of competitive strength because of the combination of high global prices for commodities, declining natural gas costs in North America, and our advantageous business configuration,” said Stephen Wilson, CF chairman and CEO. “Our achievement of $3 billion of EBITDA in 2011 is a testament to the company’s powerful business model and great execution.” 2010 EBITDA was $1.1 billion.
2011 saw record sales volume at 14.9 million st, including a record 13 million st of nitrogen products.
Full-year nitrogen gross margins were $2.56 billion on sales of $5 billion, up from 2010’s $1 billion on sales of $3.19 billion. Full-year phosphate gross margins were $332.4 mi