US CF Q1 earnings jump 31% year on year on sales, nitrogen

03 May 2012 23:17  [Source: ICIS news]

HOUSTON (ICIS)--US fertilizer maker CF Industries' first-quarter net earnings rose by 31% year on year to hit $368m (€279.9m) on the strength of higher sales volume and nitrogen product prices, the company said on Thursday.

The increased earnings resulted from record first quarter net sales of $1.5bn, up from $1.2bn in the first quarter of 2011, because of higher sales volume and nitrogen product prices.

Total sales volume increased from 3.3m tons in the 2011 first quarter to 3.7m tons in 2012 largely as a result of higher volumes of ammonia and urea associated with favourable late winter and early spring application conditions.

Higher product prices resulted from strong early spring demand and tight inventory levels throughout the North American distribution chain, CF said.

“Record first-quarter sales and earnings were underpinned by the strong demand that emerged as the quarter progressed and by the continuation of a favourable cost environment,” said Stephen Wilson, CF chairman and chief executive officer.

Exceptionally mild winter and early spring weather created favourable field conditions, and pre-plant nutrient application has been well ahead of normal schedules, Wilson said.

The early application contributed to an increase in demand for ammonia and urea as the first quarter progressed.

Nitrogen prices rose, with ammonia and urea prices moving up in March and urea ammonium nitrate (UAN) prices beginning to increase at the end of the quarter.

Wilson said CF Industries’ storage and distribution network allowed it to move nitrogen products into position early in the year in anticipation of seasonal demand.

Nitrogen net sales totalled $1.3bn, up from $925.9m in the 2011 first quarter.

The increase was he result of higher sales volume and prices, and lower realised natural gas costs compared with the prior year period, according to CF.

CF delivered 3.2m tons of ammonia, urea, urea ammonium nitrate (UAN) solutions, ammonium nitrate (AN) and other nitrogen products during the first quarter of 2012 compared with 2.8m tons in 2011.

CF said it continued to benefit from the abundant supply of natural gas, driven by the increase in production of North American shale gas.

The company’s realised natural gas cost averaged $3.48/MMBtu in the first quarter of 2012, compared with $4.32 during the first quarter of 2011.

Phosphate net sales totalled $255.9m, up from $248.1m in the 2011 first quarter. Gross margin was $49.7m, down from $82.5m in the 2011 first quarter.

The company sold 516,000 tons of phosphate products in the first quarter of 2012 compared with 440,000 tons in the first quarter of 2011.

"CF Industries is positioned to benefit from a multitude of factors that support its growth and cash generation potential," said Wilson.

($1 = €0.76)

By: Frank Zaworski
+1 713 525 2653

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