CF Industries Q2 Profit Down - Update

(RTTNews) - CF Industries Holdings Inc. (CF) Tuesday said its second-quarter profit dropped from a year ago, hurt largely by lower revenues and weak margins as well as on negative derivatives. Nonetheless, the fertilizer producer's earnings for the quarter beat analysts' expectations, as did revenues.

Deerfield, Illinois-based CF Industries' second-quarter profit dropped to $498.2 million or $8.38 per share from $606.3 million or $9.31 per share last year. On average, 18 analysts polled by Thomson Reuters expected earnings of $7.64 per share for the quarter. Analysts' estimates typically exclude special items.

The second-quarter results include unrealized losses on natural gas derivatives of $0.19 per share and gains on foreign currency derivatives of $0.04 per share. Share repurchases improved earnings by $0.53 per share.

Last year results included a gain of $0.60 per share related to a mark-to-market gain and accelerated amortization of capitalized financing fees.

CF Industries said sales for the second quarter dropped 1 percent to $1.71 billion from $1.74 billion last year. Analysts expected revenues of $1.67 billion for the quarter.

Nitrogen sales, the biggest segment, increased 1 percent to $1.53 billion, driven by demand for fertilizer resulting from an increase in corn prices. However, the higher volumes were partially offset by lower prices. Meanwhile, phosphate sales slipped 18 percent to $189.7 million, hurt mainly by lower demand and prices along with higher raw material costs.

"We are pleased with our performance and the earnings we generated this quarter," said Chief Executive Stephen Wilson. "Despite the challenging market conditions caused by the delayed planting and fertilizer application season, our nimbleness in reacting to those conditions allowed us to generate strong revenue, EBITDA and net earnings performance."

Gross margin, or percentage of sales left after subtracting production costs, slipped to 50.5 percent from 60.1 percent a year ago.

CF closed Tuesday's trade at $189.54, down $3.55 or 1.84%, on the NYSE. The stock, however, gained $4.56 or 2.41% in after-hours trade.