Coffeyville nitrogen income off 34 percent YTD; 3Q turnaround, cracked converter cited

Operating income was off 34 percent for Coffeyville Nitrogen Fertilizers Inc. for the first nine months ending Sept. 30, 2006, to $34.1 million from the year-ago $52 million. Net sales were up 2 percent, to $128.2 million from $125.9 million. Coffeyville did not break out figures for the third quarter; however, it is a fair bet that the year-to-date decline was due to a negative third quarter. For the first six months of the year ending June 30, operating income was up 6 percent and sales 16 percent (GM Oct. 2, p. 1).

Coffeyville attributed the nine-month decline to reduced sales volumes, increased direct operating expenses related to repairs and maintenance ($.6 million), a turnaround ($2.6 million), outside services ($.7 million), and utilities ($.9 million), partially offset by a reduction in catalyst expenses ($.6 million) and higher ammonia prices.

The company said on-stream factors (total number of hours operated divided by total hours in the reporting period) were down for the gasifier, ammonia, and UAN plants due to a July turnaround and a cracked converter in the ammonia plant. Ammonia production was off 6 percent and UAN 2 percent YTD. Ammonia prices were up 13 percent and UAN was off 2 percent.

Coffeyville-wide, results were up for the first nine months. YTD net income was $170.8 million on total sales of $2.3 billion, up from the year-ago net loss of $200.2 million and sales of $1.76 billion. YTD operating income was also up, at $267.0 million versus the year-ago $208.1 million. Coffeyville’s refinery business represents about 84 percent of company operating income.

Coffeyville announced in September 2006 a plan to sell $300 million worth of stock in an IPO called CVR Energy Inc. (GM Oct. 2, p. 1), under which the fertilizer and refinery businesses are subsidiaries. One company goal is to double UAN production to 1 million st/y. The company reports that it has expanded a spare gasifier at the ammonia plant to increase production by at least 6,500 st more per year.

Coffeyville (thousand st)