US CF Industries record Q4 caps strong 2012 performance

19 February 2013 23:59  [Source: ICIS news]

HOUSTON (ICIS)--CF Industries Holdings on Tuesday announced record 2012 Q4 earnings, riding the surging wave of North American corn production and its growing demand for ammonia and nitrogen crop nutrients.

The US-based fertilizer producer and distributor reported its Q4 earnings at $470.7m for 2012 compared to $438.9m year on year, based primarily on record ammonia shipments.

The upswing in movement also helped cap a strong financial picture for 2012 as the company posted net earnings of $1.8bn versus $1.5bn in 2011.

As farmers wrapped up harvest in the Corn Belt early this past fall, there was more opportunity for a full application period, which bolstered overall sales within the ammonia and nitrogen markets. This combined with the reduction in natural gas prices and foreign nitrogen production help increase both the margins and market share for domestic producers.    

“With a strong ammonia market, favourable natural gas costs and excellent execution, we again achieved record earnings for a quarter,” said Stephen R. Wilson, CF chairman and CEO.

“Economics for North American corn farmers are exceptionally attractive and this led to robust demand for nitrogen products, especially ammonia," Wilson said. "As the leading domestic producer of nitrogen plant nutrients, CF Industries has responded to this demand, meeting our customers’ needs and delivering strong results for our shareholders.”

In the fourth quarter, the company sold 905,000 tons of ammonia at an average price of $567/ton compared to 2011 with 847,000 tons at an average price of $633. The company said their ammonia plants operated at a rate capacity of 98% during the quarter.

CF officials said the net sales for the full year 2012 were $6.1bn, a 2% increase from the 2011 adjusted net sales. Nitrogen volume was the same at 13m tons for the full year 2012, while phosphate volume increased 5% from 1.9m tons in 2011 to 2m tons in 2012.

CF's ammonia plants performed at high levels, with four of its 13 plants setting production records and nine of its 21 terminals setting ammonia shipments records. For 2012, the company sold 2.8m tons of ammonia at an average price of $602/ton, a rise from 2.7m tons at $586/ton in 2011.

Looking forward, the company expects that due to tight stock-to-use ratios for agricultural commodities, most notably corn, that there will be significant demand for their fertilizers. Company officials stated on Tuesday that their estimates peg the upcoming corn crop at 97m acres with a forecasted yield of 160 bushels/acre.

They expected the nitrogen market to be balanced to tight during the first half of 2013, and that in the Midwest the ammonia market conditions will be tight to balanced going into the full swing of the spring planting season.

“Agricultural market conditions are as attractive today as at any time in recent history and give us confidence in the demand outlook for our products,” Wilson said.

By: Mark Milam
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