CF Industries (CF) posted earnings of $1.04 in the fourth quarter of 2009, down from the Zacks Consensus Estimate of $1.25. Year-on-year, earnings declined 71%. Sales of $506.7 million in the quarter, more than halved from last year’s $1072 million, have been driven by lower price realizations for all fertilizer products.
For the full year 2009, the company recorded net earnings of $7.42 per share as against $12.13 per share in 2008. Earnings also missed the Zacks Consensus Estimate of $7.59 for the year. Net sales were $2.61 billion, down 33% from $3.92 billion in 2008.
Nitrogen Fertilizer Segment
Nitrogen segment sales totaled $352.1 million, down 50% from the fourth quarter of 2008. Volumes remained flat at 1.5 million tons. Overall, average nitrogen selling prices remained depressed.
The selling price for ammonia declined to $308 per ton, a decline of 13% sequentially and about 53% year over year. The company sold 305,000 tons of ammonia in the quarter, down 16% from the year-earlier period.
For UAN, the selling price was down 56% year over year to $156 per ton and remained almost flat sequentially. Sales volume of 494,000 tons was almost equal to the volume in the previous year’s quarter, with exports of 63,000 tons offsetting a decline in domestic sales volume.
During the quarter, the U.S. urea market changed significantly, from being one of the lowest-priced in the world to one of the highest priced. For the quarter, CF Industries realized an average price of $272 per ton of urea, which was 5% higher than the third quarter but 43% lower than the fourth quarter of 2008. Urea sales volume for the quarter was 662,000 tons, up 7% from year-ago levels.
CF Industries benefited from lower sales under its Forward Pricing Program (FPP), which increased its exposure to spot prices for natural gas. Nitrogen sales under the company’s FPP totaled 400,000 tons during the quarter, representing 27% of nitrogen sales volume compared with 75% in the previous year.
Phosphate Fertilizer Segment
Phosphate segment net sales crashed 58% year over year to $154.7 million despite a 36% increase in volumes to 404,000 tons. The company realized an average price of $277 per ton of diammonium phosphate (DAP), about the same as the third quarter, but down 69% from the prior year’s quarter. Prices for DAP rose rapidly in December and continued to rise in January. Tampa contract prices for sulfur increased from $10 per ton for the third quarter to $30 per ton for the fourth quarter.
CF Industries Florida Phosphate Complex operated at 94% capacity during the quarter. Phosphate sales under the company’s FPP totaled about 59,000 tons, representing 11% of segment volume, down from 206,000 tons sold or 51% of segment volume in the fourth quarter of 2008. Phosphate segment volume for the full year 2009 was 2.2 million tons, up 26% from 1.8 million tons in 2008. However, sales of $769.1 million were 42% lower than the $1,330 million in 2008, as average DAP selling prices fell from $760 per ton in 2008 to $321 per ton in 2009.
At December 31, 2009, the company’s cash, cash equivalents and short-term investments totaled approximately $882.1 million, compared to $625.0 million at December 31, 2008. The company stands debt free as of December 31, 2009.
CF Industries expects strong spring market conditions based on higher planted corn acreage and the need to replenish soil nutrients absorbed by last year’s record crop. Shares of CF were up 3.6% to $104.11 in afternoon trading Tuesday.
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