CF Industries Holdings Inc. reported net earnings attributable to common shareholders of $48.2 million ($.67 per diluted share) on net sales of $917.1 million, up from the year-ago $38.5 million ($.78 per diluted share) on sales of $430.1 million. The results included a $25.7 million non-cash mark-to-market loss on natural gas derivatives, $22.8 million in business combination costs, and $800,000 for Peruvian development costs.
“Nitrogen volumes in the third quarter benefited from an increase in winter wheat plantings in reaction to weather-related supply shortfalls in Russia and other eastern European countries,” said Stephen Wilson, CF chairman and CEO. “Forward demand was and continues to be very strong as customers prepare for a long fall application window and higher planted acreage for corn in the spring.”
CF said it was able to sell into a rising nitrogen market in the third quarter, with factors initially favoring urea and then later UAN as favorable conditions in Europe reduced UAN imports into the U.S.
CF said in order to optimize its business mix and margins, it has opted not to renew some large industrial ammonia contracts in the quarter. It said its large network of ammonia storage ensures product availability for the most opportune uses and selling seasons, especially in the brief fall and spring season for agricultural direct application.
While CF natural gas costs were higher in the third quarter ($4.37/mmBtu) than year-ago levels ($3.29/mmBtu), CF said that price declined during the quarter as gas production started to climb.
CF used strong cash flow during the quarter to reduce long-term debt by $350 million.
Third-quarter nitrogen gross margins were $141.3 million on sales of $735.1 million, up from the year-ago $101.9 million on sales of $276.1 million. Tons sold moved up to 3 million st from the year-ago 1.24 million st, with much of the increase due to the acquisition of Terra Industries Inc. UAN saw the biggest increase in tonnage, to 1.43 million st at an average price of $188/st, up from the year-ago 570,000 st and $155/st.
Third-quarter phosphate gross margins were $28.5 million on sales of $182 million, up from the year-ago $22.1 million on sales of $154 million. Tons sold were down to 451,000 st from the year-ago 497,000 st; however, the year-ago tonnage included 58,000 st of potash, sales of which have been discontinued. DAP volumes were 329,000 st at an average price of $403/st, down slightly from the year-ago 332,000 st and $281/st. MAP volumes were up at 122,000 st ($404/st) from 107,000 st ($283/st).
Nine-month net income attributable to shareholders was $214 million ($2.35 per share) on sales of $2.73 billion, down from the year-ago $391.2 million ($6.38 per share) on sales of $2.1 billion.
Nine-month nitrogen gross margins were $606.1 million on sales of $2.18 billion, down from the year-ago $674.5 million on sales of $1.49 billion. Tons sold moved up to 8.11 million st from the year-ago 4.38 million st. UAN volumes were 3.4 million st at $205/st, up from the year-ago 1.6 million st and $255/st.
Nine-month phosphate gross margins were $89.5 million on sales of $542.5 million, up from the year-ago $38.8 million on sales of $614.4 million. Tons sold were 1.39 million st, down from the year-ago 1.7 million st, with 164,000 st of the year-ago being potash. DAP volumes were down at 1.06 million st and $387/st, versus the year-ago 1.25 million st and $338/st. MAP tons were up at 332,000 st and $399/st versus the year-ago 288,000 st and $357/st.