CF Industries Holdings Inc. reported first-quarter net income of $230.6 million ($4.79 per diluted share) on net sales of $953.6 million. Overall, CF reported a three percent year-over-year decrease in revenues from the sales of nitrogen products during the quarter, primarily driven by a decrease in overall sales volumes. Nitrogen sales volumes were 2.91 million st, down from the year-ago 3.02 million st.
While year-ago net income was much higher at $708.5 million ($12.90 per share) on sales of $1.13 billion, it included $461 million, or $8.39 per EPS, for the after-tax gain on the sale of the phosphate business. First-quarter 2015 gross margins were $415.8 million, compared to the year-ago $442.8 million (prior to the addition of the phosphate sale).
Going forward, CF remains upbeat that the U.S. will achieve 89-90 million of corn acreage, and it also cites a growing industrial market. It said its new Donaldsonville urea plant is on track to be up in the third quarter, and the UAN plant in the fourth.
CF said it expects a strong second-quarter performance relative to overall market conditions. It reports a robust set of orders for second-quarter ammonia, though it said first-half 2015 ammonia volumes will likely be slightly lower than the record first-half 2014’s due to lower inventories on hand at the start of 2015.
CF said those lower ammonia inventories at the start of the quarter spelled higher prices. While sales volumes were down at 531,000 st, average prices were up at $542/st compared to the year-ago 577,000 st and $472/st, respectively. Gross margins per ton were $226/st, up from $215/st. Overall, ammonia gross margins were $119.9 million on sales of $287.7 million, compared to the year-ago $124.3 million and $272.4 million, respectively.
CF said its first-quarter average cost of natural gas was $3.48/mmBtu, down from the year-ago $4.34/mmBtu. It said it has booked 20 percent of its April-December gas within a collar of $2.30-$3.20/mmBtu, and another 30 percent at an average strike price of $2.86/mmBtu. It has hedged 15 percent of its January-October 2016 gas at an average strike price of $3.04/mmBtu.
CF reported granular urea gross margins of $112.1 million on sales of $212.2 million, up from the year-ago $101.7 million and $216.2 million, respectively. CF volumes were 616,000 st with an average price of $344/st, compared to the year-ago 578,000 st and $374/st, respectively, with CF citing Chinese exports as pressuring pricing. CF noted that 2015 urea imports are some 32 percent above the five-year average through March. However, CF’s own margins per ton were up at $182/st from $176/st.
CF said a high level of UAN imports and low urea prices are expected to pressure UAN prices. First-quarter UAN gross margins were $158.7 million on sales of $355.7 million, down from the year-ago $182.1 million and $400 million st, respectively. Sales volumes were 1.32 million st, down from 1.45 million st, while average prices were $270/st, down from $276/st. Gross margins per ton were $121/st, down from $125/st.
CF’s Other segment, which contains ammonium nitrate, diesel exhaust fluid (DEF), and urea liquor, reported a gross margin of $25.1 million on sales of $98 million, down from $26.2 million and $99 million, respectively. Sales volumes were up at 448,000 st from 412,000 st, while average prices were down at $219/st from $240/st. Gross margins per ton were $56/st, down from $64/st.
CF’s board of directors has declared a quarterly dividend of $1.50 per common share.