Terra Industries to restart Donaldsonville plant; posts 2007 net income of $201.9 M

Terra Industries Inc. said Feb. 7 that it plans to restart its Donaldsonville, La., ammonia plant during the third quarter of 2008. The output will replace 400,000 st/y of purchased imported ammonia at more favorable gross margins. The facility will undergo turnaround and startup activities during the first half of 2008. The facility ceased production in December 2004; however, Terra says it maintained the facility for a potential restart and retained the skilled workforce needed to operate it.

Terra added that a 500,000 st/y Kellogg ammonia plant remains at Donaldsonville. Another Donaldsonville ammonia plant and a urea plant were sold and moved.

Terra is also looking to upgrade existing facilities. “In response to increasing demand and improved margin realization for upgraded nitrogen products, we are evaluating projects to increase upgrading capacity at several of our facilities,” said Michael Bennett, Terra President and CEO. “We believe additional investment in our upgrading capacity will enhance the strong market position of our operations and improve Terra’s long-term earnings capability.”

On Feb. 7, Terra Industries reported net income of $201.9 million ($1.90 per diluted share) on sales of $2.36 billion for the year ending Dec. 31, 2007. This compared to 2006’s net income of $4.2 million (-.01 per share) and $1.84 billion. The revenue improvement for 2007 was mainly due to higher sales volumes and sales prices, driven by strong nitrogen products demand. UAN and ammonium nitrate sales volumes increased by 19 and 21 percent, respectively. UAN and AN selling prices increased by 41 and 10 percent, respectively.

Fourth-quarter net income was $69.6 million ($.66 per share) on sales of $570.2 million, versus the year-ago $11.6 million ($.11 per share) and $449.5 million, respectively. The quarterly revenue increase was due primarily to higher nitrogen selling prices. Ammonia, UAN, and AN prices improved 16, 69, and 20 percent, respectively, while ammonia and UAN volumes increased 9 and 5 percent, respectively. AN volumes decreased 22 percent. The company reported that equity earnings from its stake in Point Lisas Trinidad nitrogen plant were up $5 million for the quarter.

“The nitrogen market environment remained very positive in the fourth quarter,” said Bennett. “Nitrogen products selling prices remained strong as high commodity grain prices continued to support very healthy nitrogen demand. Our plants operated well, with high on-stream factors and efficient utilization during the fourth quarter.”

Bennett expects strong demand for the first half of 2008, citing a record level of customer prepayments accepted for delivery. “Grain prices continue to be robust, providing ample incentive for growers to optimize yields.”

* Gas is in mmBtu and does not include UK gas for the fourth quarter of 2007, as Terra UK properties were placed into GrowHow UK joint venture.