Fertilizer producer CF Industries Holdings, Inc. (CF) on Wednesday reported a 10 percent increase in profit for the first quarter, as a decline in sales was offset by a gain from natural gas hedging in addition to higher margins and lower costs. However, revenues for the quarter missed analysts' estimates.
The company's nitrogen net sales for the quarter decreased 14 percent to $1.10 billion, while phosphate net sales declined 7 percent to $238.9 million.
Gross margin for the quarter was 50.5 percent, up from 46.6 percent in the same period last year.
The company's first-quarter net income was $406.5 million or $6.47 per share, up from $368.4 million or $5.54 per share in the year-ago quarter. On average, eighteen analysts polled by Thomson Reuters expected the company to earn $6.02 per share for the quarter. Analysts' estimates typically exclude special items.
The latest quarter results include pre-tax, unrealized gains of $0.23 per share on natural gas derivatives and an after-tax benefit of $0.33 per share from the recognition of a portion of the net operating loss. Results also include pre-tax losses of $0.12 per share on foreign currency derivatives.
The prior-year quarter results included a $55.9 million non-cash mark-to-market loss on natural gas derivatives, which reduced after-tax earnings per share by $0.52.
Net sales for the first quarter declined 12 percent to $1.34 billion from $1.53 billion in the year-ago period. Analysts had a consensus revenue estimate of $1.45 billion.
The decline in sales was mainly due to lower sales volumes in nitrogen and phosphate segments as well as lower average prices for urea and phosphates. The lower sales were also due partially to the impact of a modification to the selling price calculation methodology used for products sold by Canadian Fertilizers Limited or CFL.
Looking ahead, CF Industries said its outlook was very positive for the second quarter and longer term.
The company noted that the short-term outlook is favorable as grain prices remain high, providing farmers with compelling incentives to plant corn and apply both nitrogen, which needs to be replenished annually, and phosphate. The company expects low domestic and global grain stocks to drive high plantings for the next several years.
CF Industries' board declared a regular quarterly dividend of $0.40 per common share. The dividend will be paid on May 30 to stockholders of record on May 17.
CF closed Wednesday's regular trading session at $190.71, up $3.52 or 1.88 percent on a volume of 1.27 million shares. In after-hours, the stock further gained $3.94 or 2.07 percent to $194.65.
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