May 3, 2012 / 8:44 PM / 5 years ago

UPDATE 3-Surging nitrogen sales boost CF Industries profit

* Q1 EPS $5.54 vs year-ago $3.91

* Revenue up 31 percent to $1.53 bln; beats Street

* $55.9 million loss on natural gas derivatives

* Shares down slightly in after-hours trading

By Ernest Scheyder

NEW YORK, May 3 (Reuters) - Fertilizer producer CF Industries Holdings Inc’s quarterly profit easily beat Wall Street’s expectations due to strong demand for nitrogen during the North American spring planting season.

The company posted first-quarter net income of $368.4 million, or $5.54 per share, compared with $282 million, or $3.91 per share, in the year-ago period.

Excluding a loss on natural gas derivatives, the company earned $6.06 per share.

By that measure, analysts expected earnings of $4.83 per share, according to Thomson Reuters I/B/E/S.

Revenue rose 30 percent to $1.53 billion. Analysts expected $1.24 billion.

Sales of nitrogen, the most important fertilizer for farmers to apply, rose 37 percent and the company’s gross margin jumped to 52 percent from 48 percent.

Falling natural gas prices due to shale-derived natural gas has been a boon for CF, though prices fell so much last quarter that the company actually lost $55.9 million on its hedging program. Components of natural gas are used to make nitrogen fertilizer.

Sales of phosphate fertilizer rose only 3 percent and the gross margin slipped 19 percent from 33 percent due to higher supply costs.

The company said it has high expectations for the 2012 planting season due to rising global population.

“Long term, we believe tight global grain stocks will sustain high farm profits, plantings and fertilizer demand,” Chief Executive Stephen Wilson said in a statement.

Last month, rival fertilizer producer Mosaic Co said it now expects fertilizer sales this year to be at the top end of a previously announced forecast due to a strong start to the North American planting season.

Shares fell slightly to $195.60 in after-hours trading. As of Thursday’s close, the stock has gained 36 percent so far this year.

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