CF 4Q income soars; full-year results off due to combination costs

CF Industries Holdings Inc. reported a near four-fold increase in fourth-quarter net income attributable to common stockholders, to $200.3 million ($2.78 per diluted share) on sales of $1.24 billion, up from the year-ago $51.4 million ($1.04 per share) on sales of $506.7 million.

Full-year earnings were down, reflecting a $288.5 million business combination charge with respect to the acquisition of Terra Industries Inc. However, CF reports that it has already implemented synergy actions totaling $110 million on a run-rate basis and identified synergies to exceed the top end of the targeted synergy range. Full-year income was $349.2 million ($5.34 per share) on sales of $3.96 billion, compared to the year-ago $365.6 million ($7.42 per share) on sales of $2.61 billion.

“In the fourth quarter, we benefited from the increased capability of our expanded platform and a host of favorable external factors,” said CF Chairman and CEO Stephen Wilson. “Fall application of ammonia and phosphates was particularly strong because of increased expected crop plantings, higher application rates, high crop prices, an early harvest, and favorable weather in the U.S. Midwest.”

Fourth-quarter nitrogen gross margins were $420.6 million on sales of $1 billion, up from the year-ago $109.7 million on sales of $352 million. Tons sold moved up to 3.35 million st from the year-ago 1.47 million st. Much of the volume increase is attributed to the acquisition of Terra.

Full-year nitrogen gross profit was $1.03 billion on sales of $3.19 billion, up from the year-ago $784.2 million and sales of $1.84 billion. Tons sold moved up to 11.5 million st from 5.85 million st.

Fourth-quarter phosphate gross margins were $63.3 million on sales of $235 million, compared to the year-ago $16.4 million on sales of $154.7 million. Tons sold were down at 477,000 st from 551,000 st. The company said it focused on meeting domestic demand during the fourth quarter. Only 84,000 st of phosphates were exported in the fourth quarter, compared to the year-ago 274,000 st. The Plant City phosphate facility operated at 83 percent capacity during the quarter.

Full-year phosphate gross margins were $152.8 million on sales of $777.5 million, up from the year-ago $55.2 million on sales of $769.1 million. Tons sold were 1.87 million st, down from the prior year 2.2 million st.

Going forward, CF believes 92 million acres of corn will be planted in the U.S. this spring, and that about 10 million acres will be added to the farmed area, returning to 2008 levels. “We believe all the factors are in place to make 2011 a great year for CF Industries,” said Wilson. “In addition to a more complete realization of the extremely favorable fertilizer market conditions we are experiencing now, we will have the added benefit of a full year of acquisition synergies and operational integration of our expanded platform.”