CF Industries Holdings Inc. reported net earnings of $57.2 million ($1.02 per diluted share) on sales of $447.7 million for the first quarter ending March 31, 2007. This was up considerably from the year-ago net loss of $24.6 million ($.45 per share) on sales of $400.5 million.
CF reported a significant increase in its nitrogen segment, with a modest decline in phosphates. Nitrogen gross profit was $90.7 million on sales of $336.3 million, up from the year-ago loss of $32.9 million and sales of $285.8 million. First-quarter average nitrogen selling prices were down for the company compared to the year-ago quarter. Year-ago ammonia and UAN prices were higher, reflecting higher costs. Urea prices for the recent quarter were up, reflecting strength in the domestic and international markets. Nitrogen sales under CF’s forward pricing program (FPP) were 745,000 st during the quarter, representing 52 percent of total nitrogen volume. The year-ago figure was 574,000 st, or 50 percent of volume. Total nitrogen volumes were 1.429 million st during the quarter, versus the year-ago 1.157 million st. Lower gas prices also helped the bottom line.
Phosphate gross margin was $14.4 million on sales of $111.4 million, up from the year-ago $10.2 million and $114.7 million, respectively. FPP phosphate sales during the quarter were 189,000 st, or 41 percent of volumes, whereas the year-ago figure was 126,000 st, or 26 percent. Total volumes sold were 461,000 st during the quarter, off from the year-ago 489,000 st.
CF was unable to take full advantage of the recent run-up in phosphate prices as it had scheduled maintenance at the Plant City phosphate fertilizer complex during the quarter. As a result, the facility ran at only 90 percent of capacity during the quarter.
“The phosphate market has clearly continued to strengthen, thanks to a combination of good demand here and abroad plus low worldwide inventories,” said Steve Wilson, CF chairman and CEO. “Pricing improved in the first quarter, particularly during March, compared to both last year’s first quarter and the fourth quarter of 2006, and we expect to benefit further from that significantly improved pricing in the second quarter.”
CF believes its overall product inventory levels are appropriate to meet expected demand in the second quarter. Wilson cautioned that weather and imports could always intervene to impact market conditions.