US CF reports record quarter, earnings up 1,865%

07 February 2008 22:48  [Source: ICIS news]

HOUSTON (ICIS news)--US fertilizer producer CF Industries reported on Thursday the results of its strongest quarter since its initial public offering, with operating earnings up 1,865% from the fourth quarter of 2006.

CF reported earnings of $214.2m (€145.7m) for the quarter, compared with $10.9m for the same time in 2006.

Net sales reached $852.5m in the fourth quarter, up from $526.4m reported for 2006. Net income reached $135.4m, compared with $8.0m for 2006.

In terms of net sales and income, the fourth quarter was CF's strongest since its initial public offering in August 2005, the company said.

Cost of sales were $616.5m in the fourth quarter, up from $483.5m reported for the same time in 2006.

Gross margins reached $236.0m, up from $42.9m reported for the same time in 2006.

By segment, gross margins for nitrogen fertilizer were $153.1m, up from $31.8m reported for the fourth quarter of 2006. Net sales were $630.7m, up from $399.3m for 2006.

Gross margins for phosphate were $82.9m in the fourth quarter, up from $11.1m reported for 2006. Net sales were $221.8m, up from $127.1m for 2006.

For all of 2007, operating earnings were $601.6m, up from $71.3m reported for 2006. Net sales reached 2.757bn in 2007, up from $2.033bn in 2006.

Cost of sales were $2.087bn in 2007, up from $1.886bn in 2006. Gross margins were $670.0m, up from $147.2m in 2006.

For the upcoming North American spring planting season, market conditions could exceed those in 2007, said Stephen Wilson, CF chief executive.

Farm income hit a record in 2007, and prices for most major crops are either close to or at record highs, he said.

Farmers are expected to grow 88m-89m acres of corn in the 2008 growing season, the company said. While down from the near record of 93.6m acres in 2007, it is still well above the 79.1m acre average for 1997-2006.

Moreover, acreage is expected to increase for wheat, sorghum and other nitrogen-consuming crops, CF said.

The world's phosphate market should remain tight for the next several years, the company said.

However, CF and other phosphate producers are facing rising costs - especially for sulphur.

Sulphur markets should loosen some in the later part of 2008, when refineries are expected to produce more of the element at higher rates, CF said.

($1.00 = €0.68)

By: Al Greenwood
+1 713 525 2653

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