All Posts from November 12, 2012

CVR 3Q earnings off, turnaround cited

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Sugar Land, Texas — CVR Partners LP reported a 12.9 percent drop in net income for the third quarter ending Sept. 30, 2012, to $31.6 million ($0.43 per unit) on sales of $75 million, compared to the year-ago $36.3 million ($0.50 per unit) on sales of $77.2 million. EBITDA was $37.6 million, down from $42.4 million. CVR said overall plant efficiency was lower due to a two-year cycle turnaround held in October. Despite the turnaround, ammonia sales were up at 30,200 at an average plant gate price of $578/st, versus the year-ago 22,500 st and $568/st, respectively. UAN sales were 175,100 ($290/st), down from 179,200 st ($294/st). Nine-month net income was up at $96.9 million ($1.32 per unit) on sales of $234.7 million, versus $91.2 million ($0.92 per unit) on sales of $215.3 million. EBITDA was up at $115.7 million from $107.6 million. Nine-month ammonia sales were 89,500 st ($586/st) versus 83,500 st ($569/st), while UAN was down at 510,500 st ($311/st) versus 524,700 st ($266/st).

Israeli committee approves port bid

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Tel Aviv — The Israeli government’s tenders committee has approved an improved bid by Papo Maritime to operate Eilat port for the next 15 years, with an option to extend the franchise for another 10 years. Papo Maritime – which is owned by the U.S.-based Nakash family – will pay the government $30 million for the franchise after agreeing to raise its initial bid. The government has agreed to undertake repairs to the potash pier at the port, which are expected to cost $12 million. Papo Maritime has accepted an agreement between Israel Chemicals Ltd. (ICL) and the Eilat Port management to grant the company priority on 216 days a year for its shipments. The two sides agreed that payments by ICL to Eilat Port would be on a progressive rate: $1/mt for the first 2.5 million mt, $1.90 for handling of an additional 500,000 mt, and $2/mt for each additional amount above 3 million mt/y. The amounts are over and above a flat rate of $2.15/mt. In the past ICL opposed the privatization, fearing it would have an adverse impact on its operations out of Eilat. Eilat is Israel’s third largest port and has been handling an increasing share of the burgeoning trade with the Far East. ICL, which accounts for nearly 20 percent of the port’s revenues, ships some 2.5 million mt of potash and other chemicals via the Eilat port, whose importance has continued to grow in recent years.

Haifa NH3 facility must close by 2017

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Tel Aviv — Israel’s Environmental Protection Ministry has granted Haifa Chemicals a one-year permit for poisonous substances at its ammonia plant in Haifa. The permit stipulates that the facility must stop operations within five years. This is the first time the ministry has set a deadline for transfer of the plant. Its location in the Haifa area has led to strong opposition by the Haifa municipality and environmental groups that have been lobbying to get the facility moved as quickly as possible. The ministry explained that the ammonia storage facility will have to shut down by the beginning of 2017. In March, the ministry, in cooperation with the Industry and Trade Ministry, decided to order the transfer of the ammonia plant to southern Israel. The decision set 2015 as the target date for removal of the ammonia plant from Haifa. The environmental ministry said that the two ministries are determined that the ammonia facility be transferred within five years or less.

Sherritt 3Q volumes up 36 percent

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Toronto — Fertilizer was a bright spot for Sherritt International Corp. for the third quarter ending Sept. 30, 2012. Third-quarter fertilizer volumes were up 36 percent, to 20,451 mt from the year-ago 15,055 mt, while revenues were up 28 percent to C$12.2 million from $9.5 million. Cost of sales was down slightly, to $6.6 million from $6.7 million. Production was 67,065 mt, up from 58,083 mt. Potash royalties were down at $3 million from $4.8 million. The average natural gas price dropped during the quarter to $2.27/mmBtu from the year-ago $3.45/mmBtu, as did sulfuric acid – $184/mt versus $192/mt – while the average sulfur price was up slightly, to $263/mt from $261/mt. Company-wide net income was a negative C$22.6 million ($0.08 per diluted share) on sales of $422.2 million, compared to the year-ago positive $45.5 million ($0.15 per share) on sales of $466.4 million. EBITDA dropped to $17.2 million from $44.4 million. Sherritt cited lower nickel prices and volumes, and lower coal export volumes. Nine-month fertilizer volumes were up 14.5 percent, to 118,372 mt from 103,400 mt, while sales were up 38 percent, to $70.9 million from $51.3 million. Cost of sales declined 12 percent, to $34.2 million from $39 million. Production was 200,950 mt, up from 173,249 mt. Potash royalties dropped to $9.8 million from $14.8 million. The average natural gas price was $2.13/mmBtu for the first nine months, down from the year-ago $3.64/mmBtu. Sulfuric acid prices were level at $188/mt, while sulfur was up at $266/mt from $235/mt. Sherritt-wide nine-month earnings were $50.5 million ($0.17 per share) on sales of $1.37 billion, down from the year-ago $169.2 million ($0.57 per share) on sales of $1.44 billion. EBITDA was $95.9 million, down from $164.7 million.

Magellan 3Q NH3 volumes, margins up

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Tulsa — Magellan Midstream Partners LP anhydrous ammonia volumes were up 57 percent during the third quarter ending Sept. 30, 2012, to 210,000 st from the year-ago 134,000 st. Ammonia margins were $4 million on revenues of $7.7 million, up from a year-ago loss of $1.7 million on revenues of $4.64 million. Year-ago volumes were negatively impacted due to hydrotesting on the pipeline and some pipe relocation at certain river crossings. In addition, tariff increases of about 8.6 percent went into effect in July 2012. Nine-month ammonia volumes were up 8 percent, to 592,000 st from 546,000 st. Margins tripled to $12.4 million on revenues of $20.7 million, up from the year-ago $4 million on revenues of $17.4 million. Company-wide, Magellan net income was $50.5 million ($0.22 per diluted share) on revenues of $325.9 million, off from the year-ago $110.2 million ($0.49 per share) on revenues of $435.5 million. Magellan cited mark-to-market adjustments related to hedging positions for the drop. Nine-month net income was $281.9 million ($1.25 per share) on revenues of $1.27 billion, down from the year-ago $303.3 million ($1.34 per share) and $1.26 billion, respectively.

The Andersons reports lower plant nutrient margins

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Maumee, Ohio — Fueled by record income from its Rail Group, The Andersons Inc. on Nov. 5 announced third-quarter net income of $16.9 million ($0.90 per diluted share) on revenues of $1.1 billion, up from last year’s third-quarter income of $10.9 million ($0.59 per diluted share) on revenues of $939 million. Nine-month earnings were $64.5 million ($3.43 per diluted share) on revenues of $3.6 billion, compared with $73.4 million ($3.92 per diluted share) on revenues of $3.3 billion in 2011. Third-quarter operating income from the Plant Nutrient Group, at $0.8 million on revenues of $135 million, was down from last year’s $6.6 million and $138 million, respectively, due to lower margins. Nine-month operating income for the group was $34.5 million on revenues of $619 million, compared with $35.8 million and $521 million, respectively, in 2011. Higher year-to-date revenues were attributed to increased volume and higher selling prices. Driven by higher lease and sales income, the Rail Group saw third-quarter income soar to $19.1 million on revenues of $60 million, compared with $1.1 million and $24 million, respectively, in last year’s quarter. Thanks to an early harvest, the Grain Group also saw third-quarter operating income climb to $10.8 million on revenues of $677 million, compared with last year’s $8.3 million and $539 million, respectively. Third-quarter results for the company’s Ethanol, Turf & Specialty, and Retail groups were disappointing, however. Citing lower ethanol margins, the Ethanol Group posted a third-quarter operating loss of $0.9 million on revenues of $210 million, compared with earnings of $4.4 million and revenues of $179 million in 2011. The Turf & Specialty Group had a third-quarter operating loss of $1.6 million on revenues of $22 million, compared with last year’s operating loss of $1.2 million on $23 million of revenues. The Retail Group had a third-quarter operating loss of $1.8 million on revenues of $35 million, compared with last year’s operating loss of $1.2 million and revenues of $36 million. “Our expectations for the remainder of the year still remain tempered by the drought, which will continue to impact our grain and ethanol businesses through the first half of 2013,” said CEO Mike Anderson. Anderson highlighted the company’s recent Green Plains Grain Company LLC acquisition (GM Nov. 5, p. 13), and said this and other expansions will pay dividends in the future. “We will effectively manage through the 2012 drought, as we have to date, and will continue our focus on long term earnings growth,” he said.

CPS tries again on ammonia tank site

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Davenport, Iowa — Agrium Inc.’s Crop Productions Services (CPS) is back with its plan to locate an anhydrous ammonia tank in the Long Grove area, and some residents are just as unhappy about it as they were the first time around. It’s the same location on five acres rezoned from agriculture preserve to agriculture service that CPS gave up on the day of a public hearing in September, presumably because of local opposition (GM Sept. 24, p. 10). The location is not for manufacturing but permits retail distribution. “They resubmitted late last month with a new site plan and a little more detail,” reported Brian McDonough, planning and development specialist with Scott County. “There will be a public hearing Nov. 20, and we’ve notified all those residing nearby, including personal heads-up in the form of telephone calls to about a half dozen people.” But it’s not sitting well with some of the neighbors, who are concerned about their family’s safety and feel that another ammonia tank isn’t necessary because of those located in Eldridge, DeWitt, and Dixon that sell the same anhydrous ammonia. CPS didn’t give a reason for its earlier withdrawal, but McDonough assumed that it was because there were surrounding residents, including six people – two of whom owned homes – who were expected to speak in opposition. The application requested that the site contain – in addition to the 30,000-gallon above-ground storage tank – one fill station, one above-ground scale, and one attendant station/utility station. The facility was to be open 120 days per year in both the spring and fall months.

Iowa plant to break ground Nov. 19

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Wever — Orascom Construction Industries is hosting a groundbreaking ceremony for its wholly-owned subsidiary Iowa Fertilizer Co. Nov. 19 at 3 p.m. The $1.4 billion greenfield nitrogen plant is expected to produce a combined 1.5-2 million tons of products, including ammonia, urea, UAN, and DEF per year. Construction time is put at 35 months. It is expected to create 165 permanent jobs and 2,500 construction jobs.

CHS reports record results

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St. Paul — CHS Inc. reported record fiscal net income of $1.26 billion for 2012, the first time a U.S. agricultural cooperative has surpassed the $1 billion earnings mark. Net income of $1.26 billion for the year ending Aug. 31, 2012, increased 31 percent from the $961.4 million reported for fiscal 2011, which was also a record. Largely as a result of increased values for the energy, crop nutrients, grains, and other commodities that comprise the majority of the company’s business, CHS also set a new mark for revenues at $40.6 billion in fiscal 2012. That figure represents a 10 percent increase from the previous record of $36.9 billion, also set in fiscal 2011. Based on fiscal 2012 earnings, CHS expects to return a record nearly $600 million in cash to its owners during fiscal 2013. For the fourth quarter of fiscal 2012 (June 1 – Aug. 31, 2012), CHS reported earnings of $360.9 million, compared with $206.5 million for the same period a year ago. Revenues for the fourth quarter of fiscal 2012 were $11.0 billion, compared with $10.6 billion for the final quarter of fiscal 2011. The company’s Ag segment earnings were led by record profitability for the CHS Country Operations unit. Earnings for Country Operations – which consists of local retail facilities, livestock nutrition, and sunflower processing – were largely due to strong local crop nutrients movement and solid grain volume during fiscal 2012. The overall CHS crop nutrients business also recorded strong performance driven by significant product movement in spring 2012. Wholesale crop nutrient earnings improved $8.1 million for the year, and Country Operations by $4.6 million. Wholesale crop nutrient sales for the year totaled $2.8 billion, up from $2.4 billion. Fertilizer prices were up 13 percent ($58 per ton), and volumes 2 percent.

BioNitrogen receives bond approval for urea plant

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Doral, Fla. — BioNitrogen Plant FL I LLC announced on Nov. 7 that approval has been granted by the Hardee County Board of County Commissioners for the Florida Development Finance Corporation to issue up to $150 million in bonds for the construction of BioNitrogen’s biomass-to urea plant in Florida’s Hardee County. The approval was granted on Nov. 1, along with a Major Special Exception that allows the construction of the plant to proceed without re-zoning. BioNitrogen Plant FL I LLC is a wholly-owned subsidiary of BioNitrogen Corporation. “The County’s approval sets the stage for the initiation of the construction process of what will be the first environmentally-friendly plant in the United States that converts biomass into urea fertilizer,” said Carlos A. Contreras, president and CEO of BioNitrogen. “We are excited to be another step closer to providing domestically produced urea fertilizer for the North America market." Construction on the site is slated to commence in early 2013. The proposed plant will be able to produce 15 tons of urea fertilizer per hour, or 124,200 tons annually.

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