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CF Industries Q4 Profit Rises, Tops View

Fertilizer producer CF Industries Holdings, Inc. (CF: Quote) on Tuesday reported a 7 percent increase in profit for the fourth quarter despite lower revenues and margins. Adjusted earnings per share beat analysts' expectations, while revenues missed their estimates.

Stephen Wilson, chairman and chief executive officer, CF Industries Holdings said, "With a strong ammonia market, favorable natural gas costs and excellent execution, we again achieved record earnings for a quarter. Economics for North American corn farmers are exceptionally attractive, and this led to robust demand for nitrogen products, especially ammonia."

Gross margin for the quarter was 44.3 percent, down from 50.3 percent in the same period last year.

Deerfield, Illinois-based CF Industries' net income for the fourth quarter was $470.7 million or $7.40 per share, up from $438.9 million or $6.66 per share in the year-ago quarter.

The latest quarter's results include $13.1 million of non-cash pre-tax mark-to-market gain on natural gas and foreign currency derivatives, while the prior-year period results include $49.7 million non-cash mark-to-market loss on natural gas derivatives.

The one-time gains increased earnings per share for the latest quarter by $0.13, while the one-time losses reduced earnings per share for the prior-year by $0.47 per share.

Adjusted earnings per share for the quarter were 7.27, compared to 7.13 in the year-ago period. On average, 17 analysts polled by Thomson Reuters expected the company to earn $6.97 per share for the quarter. Analysts' estimates typically exclude special items.

Net sales for the quarter declined 14 percent to $1.48 billion from $1.72 billion in the same quarter last year. Analysts had a consensus revenue estimate of $1.59 billion.

The decline in sales were mainly due to the impact of a retroactive modification to the selling price calculation methodology used for products sold by Canadian Fertilizers Ltd., which was made in connection with CF Industries' pending acquisition of the outstanding interests in Canadian Fertilizers.

Nitrogen net sales in the quarter decreased 16 percent to $1.23 billion, while phosphate net sales were essentially flat with last year at $255.8 million.

For fiscal 2012, CF Industries' net earnings rose to $1.85 billion or $28.59 per share from $1.54 billion or $21.98 per share in the prior year. Net sales edged up to $6.104 billion from $6.097 billion in the previous year. Analysts expect the company to earn $27.78 per share for the year on revenues of $6.21 billion.

Looking ahead, CF Industries said that high prices for corn and other coarse grains are supporting expectations that growers in North America, Europe, Ukraine and China will plant very large areas to grain, which should create robust global demand for plant nutrients, especially nitrogen, during the first half of 2013.

Further, the company noted that while the global phosphate market was currently weak, it is expected to improve over the course of the first half of 2013.

CF Industries projects U.S. farmers will plant 97 million acres of corn in 2013.

CF closed Tuesday's trading at $218.53, up $1.86 or 0.86 percent on a volume of 1.06 million shares. In after-hours, the stock declined $0.74 or 0.34 percent to $217.79.

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by RTT Staff Writer

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