November 4, 2013 / 9:33 PM / in 5 years

UPDATE 2-CF Industries profit falls 42 pct as nitrogen sales slip

By Rod Nickel

Nov 4 (Reuters) - U.S. fertilizer producer CF Industries reported a 42 percent drop in quarterly profit on Monday as nitrogen sales and prices slipped, due to weak global fertilizer markets.

Lower fertilizer prices, combined with buyer expectations that they will fall further, and competition from a high volume of Chinese nitrogen exports, resulted in a weaker quarter year-over-year, the company said.

Part of the global uncertainty and slowdown in fertilizer sales was triggered by the midsummer breakup of Belarusian Potash Company and forecast by potash producer Uralkali OAO for lower potash prices.

Shares of CF, the world’s No. 2 nitrogen fertilizer maker behind Norway’s Yara International ASA, dipped 0.3 percent after normal trading hours in New York. The stock had closed at $217.63.

Net earnings for the third quarter fell to $234.1 million, or $4.07 per share, from $403.3 million, or $6.35 per share a year ago, the company said on Monday after markets closed.

Net sales for the Deerfield, Illinois company fell 19 percent to $1.1 billion.

Analysts had on average expected CF to earn $4.00 a share on sales of $1.14 billion, according to Thomson Reuters I/B/E/S.

CF sold 2.8 million tons of nitrogen products during the quarter, down from 3 million during the prior year period. Net sales of nitrogen fertilizers for the quarter totaled $876.3 million, down 20 percent from a year earlier.

CF’s sales volume and prices of all major nitrogen products fell year-over-year, with the average selling price for granular urea tumbling 28 percent to $338 per ton.

The company sold 526,000 tons of phosphate products in the period, up from 517,000 tons a year earlier. Net sales were worth $220.7 million, down 16 percent from the prior-year quarter. The average selling price fell for both diammonium phosphate (DAP) and monoammonium phosphate (MAP), to $422 and $416 per ton respectively.

CF forecast that U.S. farmers will plant 92 million acres (37 million hectares) of corn in 2014, down from 2013, but still high historically.

CF Industries said on Oct. 28 that it would sell its phosphate business to fellow U.S. fertilizer producer Mosaic Co for $1.2 billion to focus on its core nitrogen fertilizer products.

CF also agreed to a long-term ammonia supply agreement with Mosaic, strengthening CF’s confidence in its expansion at the Donaldsonville, Louisiana nitrogen complex.

Rival North American nitrogen producer Agrium Inc is scheduled to report quarterly results on Tuesday.

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