HOUSTON (ICIS)--US-based nitrogen-fertilizer producer CF Industries reported on Wednesday a sharp drop in net income because of taxes.
The company reported a tax charge of $46m in the fourth quarter versus a benefit of $520m during the same time the previous year.
Had it not been for taxes, income would have risen because sales rose while costs fell.
The following table summarises the company's fourth-quarter performance. Figures are in millions of dollars.
|Q4 18||Q4 17||Change|
|Cost of sales||890||956||-6.9%|
Revenue rose because of higher selling prices, the company said. Prices rose because of higher energy costs in Asia and Europe. Also, China continued to enforce environmental regulations.
The result lowered production in these regions and tightened global supply of nitrogen fertilizers, CF said.
Looking ahead, CF expects strong demand for nitrogen fertilizer in North America during the first half of the year.
Corn plantings in the US should rise by 4m acres (1.6m ha), and wheat should grow by 1m acre, CF said. Bad weather in the autumn delayed fertilizer applications in the Midwest, so farmers should make up for this in the first half of the year.
This year, India will likely import 6.3m tonnes of urea, and Brazil will import 5.5m tonnes, both similar to 2018.
Urea production capacity should rise by 3.5m tonnes in 2019, below the historic growth rate of 2%, CF said. Moreover, 1.2m tonnes of that new capacity will be in Iran, and it is at risk of delays because of US sanctions.
China should export 2.4m tonnes of urea, similar to 2018, CF said.
For Iran, US sanctions should disrupt urea exports, the company said.
The company expects to continue benefiting from cheap natural gas in the US, the main feedstock for nitrogen fertilizer.
The following tables show the performance of the company's segments.
|Ammonia||Q4 18||Q4 17|
|Gross profit ($m)||24||44|
|Sales price ($/tonne)||347||285|
|Urea||Q4 18||Q4 17|
|Gross profit ($m)||138||58|
|Sales price ($/tonne)||$308||$244|
|UAN||Q4 18||Q4 17|
|Gross profit ($m)||66||16|
|Sales price ($/tonne)||$177||$150|
|AN||Q4 18||Q4 17|
|Gross profit ($m)||3||10|
|Sales price ($/tonne)||$233||$217|