CF Industries Holdings Inc. reported fourth-quarter net income attributable to common shareholders of $274 million on net sales of $1.57 billion, down 68% from the year-ago $860 million and $2.61 billion, respectively. Adjusted EBITDA was $592 million versus the year-ago $1.3 billion. Tons sold were 4.91 million st, up from 4.46 million st.
CF missed the Bloomberg Consensus by 7.4% on net income and 4.48% on adjusted EBITDA, but surpassed the estimates on revenues by 4.87%.
“CF Industries’ 2023 results demonstrate the strength of our business and our team,” said Tony Will, CF President and CEO. “We ran our plants well, added the Waggaman ammonia production facility to our network, and advanced our clean energy strategy.”
Will said CF believes the global energy cost structure presents attractive margin opportunities for the company’s North American-based production network in the near-term, with the global nitrogen supply-demand balance tightening considerably in the medium-term.
“As a result, we expect to continue to drive strong cash generation, underpinning our ability to create significant shareholder value from disciplined investments in growth opportunities and returning substantial capital to shareholders,” he said.
Full-year net income was $1.53 billion on sales of $6.63 billion, down from the year-ago $3.35 billion and $11.2 billion, respectively. Adjusted EBITDA was $2.76 billion, down from $5.88 billion. Tons sold were 19.1 million st versus 2022’s 18.3 million st.
CF projects US corn acreage at 91 million acres in 2024 and believes North American farmer profitability will improve compared to 2023 as lower crop prices are offset by lower input costs. CF suggested that the current warm weather in the Midwest could mean an early spring, which would pull demand forward and result in early river openings for barges.
CF said North American nitrogen inventories remain below average following what was probably its second-best fall ammonia application season in ten years. “A strong fall application season indicates a commitment to nitrogen-consuming crops on these acres and robust demand for additional urea and UAN applications through the first half of 2024,” said Bert Frost, CF Vice President, Sales, Market Development and Supply Chain.
CF confirmed that it lost some 150,000 st/y of ammonia production in January due to cold weather shutdowns, and believes other producers lost tonnage as well. The company added that nitrogen imports are below their three-year average.
Demand remains good from other major buyers, CF said. Brazil is now the top urea importer, surpassing India, with Brazil expected to take 7-8 million mt in 2024 and India 6-7 million mt.
Will added that the construction of new nitrogen production capacity is not sufficient to keep pace with the historical nitrogen demand growth rate of roughly 1.5% per year in traditional applications. He said emerging low carbon ammonia should further tighten the already strained global supply-demand balance.
CF said about 40% of European ammonia and 25% of urea were curtailed as of early January due to high natural gas prices, keeping European nitrogen imports elevated at a time when low gas costs make US producers very competitive.
In the meantime, other producing countries are not at full speed on exports. China urea exports are projected to be 4 million mt, with the country keeping much of its production to satisfy local demand. Also on the production side, CF cited downtime in Malaysia and export restrictions in Indonesia.
CF noted that ammonia exports from Russia remain lower due to the war and the closure of the ammonia pipeline to the port of Odessa, but Russia’s exports of other nitrogen products are at pre-war levels.
| Production (000 st) | 4Q-23 | 4Q-22 | YTD-23 | YTD-22 |
| Ammonia | 2,525 | 2,441 | 9,496 | 9,807 |
| Gran Urea | 1,130 | 1,143 | 4,544 | 4,561 |
| UAN 32 | 1,840 | 1,827 | 6,852 | 6,706 |
| AN | 416 | 355 | 1,520 | 1,517 |
| Ammonia | 4Q-23 | 4Q-22 | YTD-23 | YTD-22 |
| Net Sales ($/M) | 495 | 804 | 1,679 | 3,090 |
| Gross Margin ($/M) | 154 | 388 | 541 | 1,599 |
| Sales Volumes (000 st) | 1,077 | 895 | 3,546 | 3,300 |
| Avg Selling Price ($/st) | 460 | 898 | 473 | 936 |
| Gas Costs ($/mmBtu) | 3.01 | 6.88 | 3.67 | 7.18 |
| Gran Urea | 4Q-23 | 4Q-22 | YTD-23 | YTD-22 |
| Net Sales ($/M) | 392 | 605 | 1,823 | 2,892 |
| Gross Margin ($/M) | 157 | 301 | 813 | 1,564 |
| Sales Volumes (000 st) | 1,038 | 1,033 | 4,570 | 4,572 |
| Avg Selling Price ($/st) | 378 | 586 | 399 | 633 |
| UAN | 4Q-23 | 4Q-22 | YTD-23 | YTD-22 |
| Net Sales ($/M) | 418 | 845 | 2,068 | 3,572 |
| Gross Margin ($/M) | 104 | 458 | 817 | 2,083 |
| Sales Volumes (000 st) | 1,812 | 1,690 | 7,237 | 6,788 |
| Avg Selling Price ($/st) | 231 | 500 | 286 | 526 |
| AN | 4Q-23 | 4Q-22 | YTD-23 | YTD-22 |
| Net Sales ($/M) | 120 | 189 | 497 | 845 |
| Gross Margin ($/M) | 25 | 50 | 138 | 248 |
| Sales Volumes (000 st) | 414 | 367 | 1,571 | 1,594 |
| Avg Selling Price ($/st) | 290 | 515 | 316 | 530 |
| Other | 4Q-23 | 4Q-22 | YTD-23 | YTD-22 |
| Net Sales ($/M) | 146 | 165 | 564 | 787 |
| Gross Margin ($/M) | 61 | 59 | 236 | 367 |
| Sales Volumes (000 st) | 571 | 479 | 2,206 | 2,077 |
| Avg Selling Price ($/st) | 256 | 344 | 256 | 379 |