The world's second-largest producer of nitrogen fertilizer,
CF Industries Holdings Inc.
) fourth-quarter 2012 adjusted earnings (excluding one-time
items) of $7.27 per share, exceeded the year ago earnings of
$7.13 and the Zacks Consensus Estimate of $7.03.
After including one-time items, the company earned a record
$7.40 a share in the quarter, up 11.1% from $6.66 in the year-ago
quarter. Strong ammonia market, favorable natural gas costs and
excellent execution helped the company to achieve record earnings
for the quarter.
For full-year 2012, earnings excluding one-time gains and
charges were $27.92 compared with $21.98 a year ago and exceeded
the Zacks Consensus Estimate of $27.87 per share. After including
one-time items, earnings came in at a record $28.59 per share in
Sales were down 13.8% to $1.48 billion in the quarter from
$1.72 billion in the prior-year quarter. It also missed the Zacks
Consensus Estimate of $1.58 billion. The decrease reflected the
impact of a retroactive modification to the selling price
calculation methodology used for products sold by Canadian
Fertilizers Limited (CFL), which was made in connection with CF
Industries' pending acquisition of the outstanding interests in
For the full year, sales inched up 0.1% year over year to $6.1
billion but missed the Zacks Consensus Estimate of $6.2
Costs and Margins
Cost of sales stood at $825.2 million in the reported quarter
compared with $853.2 million in the year-earlier quarter. Gross
profit decreased 24.2% year over year to $656.2 million in the
quarter. Selling, general and administrative expenses jumped 9.2%
to $40.2 million from $36.8 million in the year-ago quarter. The
company reported an operating income of $616.1 million, up 25.7%
from $829.1 million in the prior-year quarter.
Sales declined 16% year over year at $1.2 billion in the
fourth quarter. Gross margin plunged 21.1% to $620 million. Total
sales volumes were up 3% year over year to 905,000 tons of
ammonia in the quarter due to strong fall applications across the
U.S. Corn Belt. Cost of sales declined in the quarter due to
lower realized natural gas costs. Realized natural gas price in
the quarter declined to $3.61 per MMBtu from $4.06 a year
Sales almost remained flat year over year at $255.8 million.
Gross margin declined 54% to $36.2 million due to lower prices
and higher phosphate production costs. Volumes sold in the
quarter were 509,000 tons compared with 439,000 tons a year ago,
attributed to higher domestic sales to support strong fall
application. The average selling prices of diammonium phosphate
(DAP) and monoammonium phosphate (MAP) were $499 and $527,
respectively, down 13.4% and 12.7% year over year.
Cash and cash equivalents totaled $2.27 billion as of Dec 31,
2012, compared with $1.21 billion as of December 31, 2011.
Long-term debt stood at $1.60 billion as of Dec 31, 2012,
compared with $1.61 billion as of Dec 31, 2011.
CF Industries remains positive regarding the first half of
2013 based on high corn planting expectations, strong domestic
fertilizer demand and favorable natural gas costs. The company
expects capital expenditures for its announced capacity expansion
projects at Donaldsonville, La., and Port Neal, Iowa, to be in
the range of $1-$1.3 billion in 2013. Capital expenditures for
the company's existing facilities are anticipated to be about
Another fertilizer company
Potash Corp of Sakatchewan Inc.
) recently released its fourth-quarter 2012 results. The
company's adjusted earnings (excluding a provision for settlement
of antitrust claims) of 52 cents per share missed the Zacks
Consensus Estimate of 59 cents. Earnings, as reported, fell to 48
cents per share from 78 cents per share a recorded a year
Sales came in at $1,642 million in the quarter, down 12% from
$1,865 million registered a year ago, missing Zacks Consensus
Estimate of $1,853 million. The year-over-year decline was due to
reduced contributions from all three nutrients arising from slack
global fertilizer markets and lower demand.
Another leading fertilizer company
) is slated to release its fourth- quarter 2012 results on Feb
Currently, CF Industries retains a Zacks Rank #2 (Buy).
Another company in the fertilizer industry having favorable
Zacks Rank is
Rentech Nitrogen Partners, L.P.
). It holds a Zacks Rank #2 (Buy).
AGRIUM INC (AGU): Free Stock Analysis Report
CF INDUS HLDGS (CF): Free Stock Analysis
POTASH SASK (POT): Free Stock Analysis Report
RENTECH NITROGN (RNF): Free Stock Analysis
To read this article on Zacks.com click here.