CF Industries Q3 Profit Down 44%

(RTTNews) - U.S. fertilizer group CF Industries Holdings, Inc. (CF) on Wednesday reported a 44 percent decline in profit for the third quarter from last year, reflecting higher cost of natural gas and lower sales as well as margins following the sale of the company's phosphate business earlier in the year. Shares of the company declined more than 5 percent in extended trades.

Tony Will, President and CEO of CF Industries Holdings, said, "The continuing strong fundamentals of our business were masked as higher natural gas costs worked their way through inventory and into the cost of goods sold and several third quarter specific items impacted our results."

The Deerfield, Illinois-based company's third-quarter net earnings were $130.9 million or $2.62 per share, down from $234.1 million, or $4.07 per share for the year-ago quarter. On average, twenty analysts polled by Thomson Reuters expected the company to earn $3.47 per share for the quarter. Analysts' estimates typically exclude special items.

Net sales for the quarter declined 16 percent to $921.4 million from $1.10 billion a year ago. Analysts had a consensus revenue estimate of $932.38 million for the quarter.

The company noted that total net sales in the prior year are not comparable due to the sale of the phosphate business. CF Industries said in mid-March that it completed the sale of its phosphate business to Mosaic Co. (MOS) for $1.4 billion.

Nitrogen products segment net sales in the quarter were $921.4 million, up 5 percent from $876.3 million in the same period last year. The increase in sales were driven by a 6 percent increase in sales volume, of which half was attributable to contractual ammonia sales to Mosaic, partially offset by marginally lower realized prices.

Natural gas costs, from sales of inventory manufactured in earlier months when gas prices were higher, and realized losses on natural gas derivatives that settled during the third quarter increased by $36.0 million over prior-year levels. Cost of natural gas per MMBtu increased to $4.39 from $3.54 in the year-ago period.

Gross margin for the quarter contracted to 32.7 percent from 35.2 percent in the prior-year period.

Looking ahead, CF Industries forecast robust nitrogen demand associated with 90 million acres of corn expected to be planted in 2015.

Will added, "While our business is subject to quarter-to-quarter volatility due to the impact of weather dynamics on our input costs and timing of end-user behavior, its long term cash flow characteristics are relatively stable and enduring."

CF closed Wednesday's trading at $253.63, up $1.16 or 0.46 percent on a volume of 1.17 million shares. However, in after-hours, the stock declined $13.63 or 5.37 percent to $240.00.