) reported a roughly 37 % fall in its profit for second-quarter
2014 to $312.6 million or $6.10 per share from $498.2 million or
$8.38 per share a year ago. Earnings per share missed the Zacks
Consensus Estimate of $6.46.
Sales slipped around 14% year over year to $1,472.7 million in
the quarter, but exceeded the Zacks Consensus Estimate of $1,322
Cf Industries Holdings, Inc - Earnings Surprise
Sales from the Nitrogen Segment fell 5% year over year to
$1449.4 million in the quarter as lower average selling prices more
than offset an increase in tons of product sold. Gross margin slid
31% to $588.7 million due to lower selling prices, a spike in
natural gas costs and increased cost absorption due to unscheduled
down time including about $20 million related specifically to the
Woodward, OK complex.
Ammonia sales volume increased 33% year over year to 1,112,000
tons due to favorable weather conditions that led to a prolonged
agricultural application window and higher industrial sales, partly
resulting from the supply deal with The Mosaic Company (
However, granular urea sales volume decreased 4% due to lower
inventory availability. Urea ammonium nitrate (UAN) sales volume
decreased 6% to 1,526,000 tons due to strong ammonia and urea
shipments along with reduced UAN production.
Ammonia average selling prices decreased 23% year over year to
$544 per ton due to high global supply and the impact of high North
American ammonia inventories in 2014.
In Mar 2014, CF Industries sold its phosphate business to Mosaic
for $1.4 billion to focus on its core nitrogen fertilizer products.
The company recognized revenues in the reported quarter from sales
of phosphate inventory that remained in its distribution system
after closing the sale.
CF Industries exited the quarter with cash and cash equivalents of
$2.2 billion, up around 16% from $1.9 billion as of Jun 30, 2013.
Long-term debt jumped 48% year over year to $4.6 billion.
CF Industries completed its $3 billion share repurchase
program with the repurchase of 3.1 million shares during the
quarter for $756.8 million. The company completed the authorization
before its termination date of Dec 31, 2016. CF Industries
announced that it will buy back an additional $1 billion worth of
shares through Dec 31, 2016, as a part of its strategy to return
excess cash to shareholders.
During the quarter, CF Industries' board of directors approved a
50% increase in the company's quarterly cash dividend from $1.00 to
$1.50 per share.
CF Industries expects to benefit from a number of factors
supporting its growth and potential to generate sustainable cash
flows. A rise in global population, transition toward higher
protein diets and continued use of crops as a source of renewable
fuels are increasing the need for grain and plant nutrients.
The company expects over 90 million acres of corn to be planted
in 2015 and expects robust nitrogen demand during the second half
CF Industries also made significant progress on its two capacity
expansion projects during the reported quarter, which will increase
its annual nitrogen production capacity by 25% when the plants come
on-line (expected in 2015 and 2016). The company anticipates total
capital expenditures of roughly $2.2 billion in 2014 (down from
previous expectation of $2.5 billion), of which, $1.7 billion has
been earmarked for capacity expansion projects.
CF Industries is a Zacks Rank #3 (Hold) stock.
Some other stocks worth considering in the fertilizer industry
include Potash Corp. of Saskatchewan Inc. (
) and Yara International ASA (
). Both of them hold a Zacks Rank #2 (Buy).
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