CVR 4Q nitrogen income off 67 percent; sales volumes up 27 percent

CVR Energy Inc. reported a 67 percent drop in fourth-quarter nitrogen operating income, to $7 million on sales of $39.3 million compared to the year-ago $21.2 million and $67.4 million, respectively. While prices sank from year-ago levels, total nitrogen volumes were up at 211,500 st from 166,400 st.

Full-year nitrogen income dropped 58 percent to $48.9 million on sales of $208.4 million, down from 2008’s $116.8 million and $263 million. Total volumes were up at 845,900 st from 693,600 st.

Company-wide, CVR reported fourth-quarter net income of $9.5 million ($.11 per diluted share) on sales of $921.9 million, down from the year-ago $11.1 million ($.13 per share) and $699.7 million.

“We are pleased with our fourth-quarter results in a difficult environment,” said CEO Jack Lipinski. “Refining margins remain under pressure because of the current economic downturn, with demand for transportation fuels down as people drive fewer miles and manufacturers ship fewer goods. However, nitrogen fertilizer prices continue a healthy improvement from their low point last June. Because of the investments we have made in the past, we are in a good position to weather the current downturn and expect a stronger company when the economy more fully recovers.”

Even with current low natural gas prices, CVR said that it still has the lowest-cost nitrogen facility in North America. Petroleum coke, which CVR uses as feedstock, saw a 55 percent price drop in the fourth quarter versus year-ago levels. CVR plants are also running at high capacity rates. Ammonia and UAN production in 2009 set a new record for the facility. Going forward, CVR is planning a nitrogen turnaround in the fall that will last about 16-17 days and cost $5-$7 million.

CVR told analysts that while it expects some economic growth in 2010, it is operating its business as if this year will be no better than 2009. “We continue to control costs and discretionary capital expenditures, and keep our focus on strengthening our balance sheet,” said Lipinski. “One reason the refining industry is struggling right now is the large overhang of product inventory. This is similar to what we experienced last year in our fertilizer business. Fertilizer inventories have cleaned up, and margins have improved. We expect the same to happen to our refinery margin, when demand improves.”

For the year ending Dec. 31, 2009, CVR net income was $69.4 million ($.80 per share) on sales of $3.14 billion, compared to 2008’s $163.9 million and $5 billion, respectively.

CVR’s refining business reported fourth-quarter operating income of $9 million on sales of $883.2 million for the fourth quarter, compared to a year-ago loss of $153.8 million. Full-year earnings were up, at $170.2 million on sales of $2.9 billion, over 2008’s $31.9 million and $4.8 billion, respectively.