Kilgore, Texas—Martin Midstream Partners LP reported that its Sulfur Services unit, which includes sulfur and fertilizer, continued the momentum they had in the fourth quarter 2011 into the first quarter ending March 31, 2012. Martin said they had stronger-than-expected results with strong margin levels. Martin said the fertilizer production units are running at very high levels of utilization that coincides with strong customer demand for its products. Operating income for the Sulfur Services unit was up 56 percent, to $12.5 million on revenues of $74.5 million from the year-ago $8 million on revenues of $59.7 million. Fertilizer sales volumes were up at 93,900 lt from the year-ago 77,600 lt, while sulfur volumes were down at 308,200 lt from the year-ago 375,300 lt. While Sulfur Services exceeded expectations, the other three Martin units – Terminalling, Natural Gas Service, and Marine Transportation – were slightly below expectations. Still, company-wide, Martin reported increased net income at $10.5 million ($.40 per basic and diluted unit) on revenues of $338.3 million, compared to the year-ago $7.3 million ($.31 per unit) on revenues of $283 million.
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Innophos income inches up on increased sales
Cranbury, N.J.—Specialty phosphate maker Innophos Holdings Inc. reported first-quarter net income of $27.6 million ($1.22 per diluted share) on net sales of $228.2 million, compared to the year-ago $26 million ($1.15 per share) on sales of $197.6 million. Operating income was off slightly, to $38.1 million from $40.8 million. During the quarter, the company reached a settled with former parent Rhodia, including a claim of liability for excess water duty charges in Mexico. As a result, first-quarter net income included a $7.2 million after-tax benefit or $.32 per share. The year-ago quarter also included adjustments to water charges. Excluding these adjustments, first-quarter 2012 net income was $20 million compared to $24 million for the year-ago quarter, with the decline attributable exclusively to results from the GTSP and Other segment (primarily fertilizer co-product). The company noted that sales from this unit increased 64 percent on significantly higher volumes, but market prices were lower and operating income dropped to $4.6 million from $7 million. Innophos said its specialty phosphate products saw sales revenues up 10 percent and prices up 11 percent, though operating income was down slightly to $33.5 million from $33.8 million. Innophos expects market demand in this sector to remain stable to moderately improving, with market volume growth of 4-6 percent for 2012 driven by product innovation and geographic growth.
OCI gets green light for vote on demerger
Cairo—Orascom Construction Industries (OCI) said April 30 that it has received approval from the Egyptian Financial Supervisory Authority to call for an Extraordinary General Meeting (EGM) to approve the demerger of the company’s construction business from its fertilizer business. The EGM, in which shareholders will vote on the demerger, will be held May 17. If approved, OCI will split into two separate companies – OCI Fertilizers S.A.E. and Orascom Engineering & Construction S.A.E. Nassef Sawiris will serve as chairman and CEO of OCI Fertilizers, and Salman Butt and Renso Zwiers will serve as CFO and COO, respectively. Sawiris will serve as chairman of Orascom Engineering and Construction, and Osama Bishai and Sherif Tantawy will serve as CEO and CFO, respectively. OCI explained that since 2010, the fertilizer business has grown and has overtaken the construction business in terms of overall EBITDA and net income contribution. For the full year ending Dec. 31, 2011, 69.5 percent of consolidated EBITDA and 71.9 percent of consolidated net income was contributed by the fertilizer business, while 30.5 percent of EBITDA and 28.1 percent of net income was from the construction business. OCI noted that fertilizer and construction offer distinct value propositions to investors. On a pro forma basis, OCI Fertilizers had 2011 net income of $486.1 million on revenues of $2.38 billion, with EBITDA of $976.9 million. Orascom Engineering & Construction had net income of $205.9 million on revenues of $3.22 billion with EBITDA of $443.5 million.
New Maine facility boasts location, blender
Fort Fairfield, Maine—Cavendish Agri Services’ new $5.7 million fertilizer plant and mixing system, which recently held its grand opening, benefits both from its key location in the heart of potato country as well as having a new high-speed blender. The facility, which will serve growers in Maine and New Brunswick, is one of the largest of this type in New England and the first to be built in Maine in decades. The company said the new blending system will dramatically reduce the time required to fill a typical 16-ton farm truck from 35 to four minutes. Cavendish Agri Services President Robert Irving said the new facility enhances the company’s ability to service the increasingly complex nutrient needs of growers with a highly efficient, 300-ton per hour plant. He said customers can count on Cavendish Agri Services more than ever to meet their need for speedy, reliable, and precise fertilizer blends, even in periods of high demand. The company has approximately 14 locations in Maine and Atlantic Canada.
Fertilizer building fire causes evacuations
Hornick, Iowa—A fire that broke out in the fertilizer storage building at Western Iowa Co-op Tuesday, May 1, caused some residents in this small town to evacuate their homes because of smoke concerns. But officials say the fire was contained within an hour, residents were able to return to their homes and no one was injured. Fire authorities were concerned about elderly residents and others having breathing problems from the thick smoke and burning fertilizer and chemicals. The Woodbury County Sheriff’s Office was also worried about air quality and residents’ safety, and urged over 250 residents to evacuate the area. Co-op General Manager John Bender told Green Markets that the fire started in a fertilizer loader inside a 5,000-ton dry storage facility, and a neighbor reported the blaze to the authorities. “Fortunately it isn’t a manned facility, and there were no chemicals in the building. The real concern was 20 mph winds coming in from the south, blowing smoke all over town,” added Bender. “It will be a tough loss. However we will be able to get through. We were just lucky the building was mostly empty and no one was hurt.” He described the building, which normally stores phosphate-based fertilizer, as about 90 percent empty due to the start of the growing season. Concerned about people having breathing problems from the thick smoke and burning chemicals, authorities went door-to-door in order to evacuate some of the residents. Chief Deputy Greg Logan said the evacuation was voluntary. Hornick is located 30 miles southeast of Sioux City.
Rig tips over bridge, causes serious fish kill
Morton, Ill.—Investigators found the fish kill in the immediate vicinity almost total after a self-contained sprayer unit making the spring rounds with over 1,100 gallons of a nitrogen-herbicide mixture got hung up on a bridge and tipped over into a stream near here late last month. Illinois Environmental Protection Agency emergency responders spent long hours monitoring the situation and collecting samples to determine how far the chemical moved down stream and the effectiveness of remedial measures being taken. Residents were cautioned about using the water between the spill site and the Mackinaw River (approximately eight miles) as drinking water for animals, recreation, or any other purpose, and to avoid the area until the water is determined to be safe through testing. The advisory stated that while concentrations of the chemicals appear “milky” in the water, there are still dangers even after the water appears to be clear. Morton Fire Chief Joe Kelley calculated that 900 gallons of the mixture of 28 percent nitrogen and 13.3 percent of an herbicide containing Atrazine was emptied into the stream through an opening in the tank. “We worked with a hazmat team to dam up the creek both upstream and downstream and keep as much of the material contained as we could using a backhoe and dirt from the banks of the stream,” Kelley reported. The Illinois EPA has asked the state attorney general’s office to proceed with an enforcement action against Haycock Soil Service Inc., for the discharge of ag chemicals into Prairie Creek, causing a fish kill. Haycock operates an ag chemical facility in Delavan. The state EPA has requested that Haycock be directed to take steps to remove all agricultural chemical contaminants and undertake any measures necessary to prevent them from reaching the Mackinaw River.
Students kept inside during ammonia release
Hopewell, Va.—Two contractors with exposure symptoms were taken to the hospital for evaluation and approximately 50 employees briefly evacuated when a small amount of ammonia was released Thursday, April 26, at the Linde carbon dioxide facility here. At the same time, a shelter-in-place order was in effect for approximately 4,000 students for 30-45 minutes in the city’s high, middle, and three elementary schools. Hopewell Battalion Chief Donny Hunter described the ammonia release as amounting to a gallon or 15 pounds that became trapped when the contractors purged the lines. “The biggest thing we did was evacuate the building and monitor the area with ammonia detectors to make sure it didn’t go off-plant, and then we treated two people and transported them to the hospital,” Hunter explained. “We just moved the people from the one building outside to an open field across the street for about two hours. Everything was back to normal about noon.” Others in the industrial section, including several chemical plants, were not affected.
CVR board, Icahn continue to spar leading up to April 2 deadline
The CVR Energy Inc. board of directors and billionaire investor Carl Icahn, who is trying to take over CVR, continued to shoot letters to shareholders last week arguing their cases, leading up to the April 2 expiration of Icahn’s offer.
On March 28, the CVR board issued a letter again saying the Icahn offer of $30 per share with a contingency undervalues the company, and noting that Icahn is hoping to replace the current board with nominees who have little or no experience in the refinery or fertilizer business. The board said it is more qualified and has a plan for continued growth. The board went on to tout its own track record, saying CVR stock has gone up 41 percent since its IPO, versus a drop of 44 percent for its peers and a 7 percent drop for the S&P 500. For the last three years, those percentages were 436 percent, 67 percent, and 70 percent, respectively, and 30 percent, 14 percent, and 8 percent, respectively, for the past year
The board said that just prior to Icahn’s offer analysts’ price targets for CVR stock were $30-$35 per share, with Icahn’s offer at the bottom of this range. It also said that at least one Wall Street analyst (Macquarie Equities Research) saw the Icahn offer as an overhang on the stock and reason to downgrade it to neutral.
Icahn quickly responded. “The investment bankers that CVR hired with your money have put together fancy tables showing how great the current board and management have performed,” said Icahn. “However, no amount of smokescreen can obscure the following facts: CVR went public in an IPO in October 2007 at $19 per share. Under the stewardship of CEO Jack Lipinski, the stock fell to a low of $2.25 per share by October 2008. The day before we filed our Schedule 13D on Jan. 13, 2012, the stock was trading at $22.25, a gain of only $3.25 from the IPO price over 4 years ago. It is only after we announced our stake in the company subsequent tender offer did the stock produce substantial gains over its IPO price.
“The board also continues to tell shareholders that our offer of a minimum of $30 per share, with the possibility of further upside, undervalues the company,” continued Icahn. “However, it is unclear to me how Jack Lipinski, the board’s chairman, is able to say that with a straight face while at the same time he has been selling his own shares at prices as low as $25.50 per share!”
It appears that should Icahn take control of CVR, the company will shed all of its fertilizer business, not just additional shares as is planned by the current board. Icahn called the current plan to sell a portion of the shares in the fertilizer unit, CVR Partners LP, a “de facto poison pill.” “I ask fellow shareholders this simple question: do we really want to continue with ‘business as usual’ and risk having the company making another expensive and ill-advised acquisition like Wynnewood or would be rather have the company sell ALL of the fertilizer business and return ALL (not a mere portion) of the proceeds to shareholders? I believe the answer is obvious.”
Icahn believes CVR Energy is too small an operation to stand alone and would find a better home with a larger refiner, one that he hopes to sell to once he takes control.
On March 29, Icahn issued another letter saying CVR shareholders have been confused by the rhetoric disseminated by the CVR board regarding the offer, and he reiterated his position. If Icahn receives at least 36 percent of the outstanding shares by 5:00 p.m. New York City time on April 2, giving Icahn 51 percent, he is committed to having a proxy fight at the upcoming CVR annual meeting, presumably in May. Once it wins the proxy fight, it will replace the current CVR board and remove the poison pill. Once removed, Icahn will accept all tendered shares for payment and will be irrevocabl
ICL reports record fourth quarter
Israel Chemicals Ltd. (ICL) reported a record fourth quarter and sharply higher annual revenue for 2011, driven primarily by its ICL Fertilizers division. The company said net profits for the quarter rose by 50 percent, to $370 million versus $245 million in the same quarter in 2010. Revenues were up by 20 percent, to a record $1.71 billion versus $1.42 billion in the fourth quarter of the previous year.
For the full year, ICL reported a 48 percent rise in net profits, to $1.511 billion versus $1.024 billion in 2010. Revenues were up by 24 percent, to $7.067 billion versus 2010’s $5.692 billion.
ICL Fertilizers, the company’s largest division, accounted for 55 percent of total ICL revenue in 2011, up from 51.7 percent in 2010. The division reported a 31 percent increase in revenues, to $4.1 billion versus $3.1 billion in 2010. The operating profit was up by 45 percent, to $1.403 billion versus $965 million in 2010. Potash revenues totaled $2.506 billion versus $2.140 billion in 2010. Fertilizers and phosphate rock sales totaled $1.705 billion, versus $1.056 billion in 2010. Increased profits and revenues were largely the result of higher prices. Potash revenues for the year totaled $2.506 billion, versus $2.140 billion in 2010. Potash revenues in the fourth quarter were $1.182 billion versus $858 million.
Phosphate and fertilizer revenues for the year were $1.706 billion versus $1.056 billion in the previous year. However, the company noted a decline in revenues in the fourth quarter, to $108.6 million versus $221.3 million in the corresponding quarter in 2010. ICL attributed this to a decline in global demand for fertilizers. ICL Fertilizers operating profit in the fourth quarter totaled $364.6 million, versus $244.4 million in the corresponding quarter in 2010. For the year, the division’s operating profit totaled $1.403 billion versus $965 million in the previous year.
Potash sales accounted for 59 percent of revenue in 2011 versus 67 percent the year before, due largely to a strike at Dead Sea Works during the first quarter of 2011. Forty-one percent of revenues were from phosphate rock and fertilizer sales. However, potash continued to contribute most of the operating revenue at ICL Fertilizers, accounting for 84 percent in 2011, compared to 89 percent in 2010. The percentage of operating revenue from potash in the fourth quarter rose to 92 percent.
Production of potash was little changed at 4.261 million mt in 2011 versus 4.251 million mt the previous year. Total sales in 2011 amounted to 5.172 million mt, versus 5.558 million mt the previous year. Phosphate rock production amounted to 3.105 million mt in 2011 versus 3.135 million mt in 2010. Phosphate rock sales were 720 thousand mt to external customers versus 636 thousand mt in 2010.
Fertilizer production totaled 1.570 million mt in 2011, versus 1.688 million mt in the previous year. Fertilizer sales were 1.638 million mt versus 1.735 million mt in 2010. ICL Fertilizers saw little change in the geographic breakdown of sales, with China, India, Brazil, France, and Germany being the largest markets. Asia accounted for 38 percent of the division’s revenues, on par with the previous year.
The only changes were increased shipments to North America, which represented 8 percent of revenues in 2011, compared to only 3 percent in 2010. South America – primarily Brazil – accounted for 14 percent of revenues, down from 18 percent the previous year.
In related news, the company said it was expanding production at Sdom by 500,000 mt, with expected completion in 2014. This would bring its total capacity to 6.5 million mt. ICL also said that geological studies by its CPL subsidiary indicate more than 1 billion mt of polyhalite ore beneath the potash layer in the company’s mine in England. At the end of 2011 ICL Fertilizers started to conduct trial sal
OCI earnings off for quarter, up for year; Gavilon sale ôimminentö
Orascom Construction Industries (OCI) reported a 34.1 percent drop in net income from continuing operations for the fourth quarter ending Dec. 31, 2011, to US$122.6 million on revenues of $1.41 billion, versus the year-ago $186 million on sales of $1.32 billion. Much of the decline was due to one-time charges of $51.5 million, including a reclassification of OCI’s stake in Gavilon Group LLC and Notore Chemical Industries Ltd. as “assets held for sale,” which resulted in a $19.7 million drop in investment income compared to the year-ago quarter.
OCI told analysts that the sale of its 16.8 percent stake in Gavilon is imminent, and that there has been strong interest. In addition, it notes that Notore, a Nigerian company, is planning an initial public offering in which OCI expects to monetize its 13.5 percent stake in that company.
Other one-time charges included a $22.2 million debt restructuring charge as a result of early repayment of existing loans to facilitate demerger related refinancing, and a $12.8 million charge related to the Employee Share Option Plan (ESOP), usually expensed in a single quarter with a view to amortize such future expense over four quarters.
OCI said its fertilizer group operated at full capacity during the quarter with sales of approximately 1 million mt of nitrogen, totaling 4.2 million mt for the year. So far this year, OCI said it has seen a noticeable recovery in ammonia and urea prices, with good prospects for the rest of the year. The company also said there has been improved industrial ammonia demand. It said urea prices are up over 25 percent so far this year, and attributed this to tight supplies and a strong planting season.
Overall, OCI said its nitrogen fertilizer capacity is expected to increase 60 percent once all of its expansion plans are completed. It said the OCI Beaumont plant in Texas has been running steadily since December 2011, and is expected to produce 250,000 mt/y. The plant’s 750,000 mt of melamine is expected to come online in June 2012. OCI said it had $89 million in capital expenditures for the Beaumont startup during the fourth quarter, and investment costs associated with the purchase of the 50 percent of outstanding shares of the Beaumont facility.
In Algeria, Sorfert Algeria has entered final commissioning stages for Line I, which is expected to start production in April, with Line II to follow in the third quarter. Sorfert will add 1.2 million mt of urea and 800,000 mt of ammonia annually at full capacity.
In the Netherlands, OCI Nitrogen has completed the expansion for a 26 percent increase in CAN capacity, to 1.45 million mt. It also restarted a 30,000 mt melamine plant in Geleen during the fourth quarter, which has been idle since the business was acquired, increasing Geleen’s capacity to 250,000 mt/y.
In Egypt, Egyptian Fertilizer Co. expects to complete a 20 percent increase in urea production capacity to 1.55 million mt/y by mid-2012.
Fourth-quarter EBITDA was up 6.8 percent, to $340.8 million from the year-ago $319.2 million. The fertilizer unit contributed 72.7 percent to OCI EBITDA, and 72.6 percent of net income for the fourth quarter.
For the fiscal year ending Dec. 31, 2011, OCI reported a 13.9 percent increase in net income, to $676.9 million on revenues of $5.5 billion, compared to 2010’s $594.3 million on revenues of $4.89 billion. EBITDA was up 29.3 percent, to $1.41 billion from 2010’s $1.09 billion.
OCI reports that it expects to hold its annual general assembly meeting, as well as its extraordinary general meeting, in April. The latter pertains to the demerger of the company’s construction business from its fertilizer business.
As for the unrest in Egypt, OCI told analysts that the only post-revolution change that it has seen has been an increase in its tax rate, from 20 to 25 percent.