CF reports 1Q net income down at $62.7 M; sales move up; phosphate exports double

CF Industries Holdings Inc. reported first-quarter income attributable to common stockholders of $62.7 million ($1.28 per diluted share), down from the year-ago $158.8 million ($2.76 per share). Net earnings were $83.0 million versus the year-ago $177.3 million.

Net sales were up, at $680.6 million from the year-ago $667.3 million.

“Our first quarter results demonstrate our ability to react quickly to changes in market conditions,” said CF Chairman and CEO Stephen Wilson. “Despite slow domestic shipments during the quarter and high industry inventory levels in the North American supply chain, both our net sales and volumes were up when compared to the year-earlier quarter. Realizing the difficult domestic market conditions early in the first quarter, we stepped up our actions to move product, particularly phosphate, into offshore markets.”

CF said it leveraged its Keytrade AG partnership to export phosphate to Brazil and India, as well as new markets such as Vietnam. Phosphate exports more than doubled during the quarter, to 187,000 st from the year-ago 81,000 st. Domestic sales were off at 340,000 st from 389,000 st. Overall, phosphate tons sold moved up to 527,000 st from 470,000 st.

Despite the uptick in volumes, phosphate gross margins were a negative $7.1 million on sales of $224.4 million, versus the year-ago positive gross margin of $73.7 million and sales of $229.5 million. The phosphate numbers included a $24.3 million inventory write-down on declines in potash selling prices.

CF’s Donaldsonville phosphate complex operated at 75 percent of capacity in the first quarter, though it entered 2009 at 40 percent.

First-quarter phosphate sales under the forward pricing program were 138,000 st, representing 26 percent of segment volume, down from 325,000 st sold, or 69 percent of segment volume in the year-ago quarter.

Nitrogen gross margins were $169.4 million on sales of $456.2 million, versus the year-ago $197.5 million and $437.8 million, respectively. Volumes for ammonia and urea were up 77 and 13 percent, respectively, while UAN was down 26 percent. CF’s two nitrogen complexes operated at 81 percent of capacity in the first quarter and were operating at 91 percent going into the second quarter, getting ready for the spring season.

Nitrogen sales under the FPP totaled 500,000 st during the quarter, representing 42 percent of nitrogen sales volumes. In the year-ago quarter, FPP sales were 900,000 mt, accounting for 75 percent of segment sales.

CF is very optimistic about the second quarter, saying it expects corn acreage to meet or exceed last year’s 86 million acres. Wilson said the company has seen promising levels of ammonia movement to date, and, weather permitting, anticipates a strong spring ammonia season. As with other fertilizer producers, CF said that looking ahead, the fundamentals that drive the industry are strong.

In other news, CF said anticipates signing a natural gas contract for the proposed facility in Peru during the second quarter. It expects its front end engineering and design (FEED) study on the project to be complete by the end of the year.

CF last week reported that its board of directors has declared a $0.10 per share dividend on its common stock for the second quarter. The dividend will be payable on June 1, 2009 to stockholders of record as of May 14, 2009.