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CF Industries Holdings, Inc. release full year 2018 report

Published by , Assistant Editor
World Fertilizer,

CF Industries Holdings, Inc., a leading global fertilizer and chemical company, today announced results for its 4Q18 and year ended December 31, 2018.

Overview of results

CF Industries Holdings, Inc. has announced 4Q18 and full year 2018 net earnings attributable to common stockholders of US$49 million, or US$0.21/diluted share, and US$290 million, or US$1.24/diluted share, respectively. These results are not directly comparable to 2017 results given the impact on the 2017 periods from the US Tax Cut and Jobs Act. 4Q18 and full year 2017 net earnings attributable to common stockholders were US$465 million, or US$1.98 per diluted share, and US$358 million, or US$1.53/diluted share, respectively.

The company announced 4Q18 and full year 2018 EBITDA of US$349 million and US$1,429 million, respectively; and 4Q18 and full year 2018 adjusted EBITDA of US$341 million and US$1.403 million, respectively. These results are directly comparable to 2017 results as they were not impacted by the US Tax Cut and Jobs Act. 4Q18 and full year 2017 EBITDA were US$224 million and US$856 million, respectively; and 4Q18 and full year 2017 adjusted EBITDA were US$260 million and US$969 million, respectively.

"We delivered strong results in 2018, as higher global nitrogen prices and lower natural gas costs drove a 45% increase in adjusted EBITDA compared to 2017," said Tony Will, President and Chief Executive Officer, CF Industries Holdings, Inc. “With strong nitrogen demand anticipated in North America during the 1H19, our in-region production and extensive transportation and distribution network position us well to build on our 2018 performance.

“Longer-term, our outlook remains positive: we are positioned at the low end of the global cost curve due to our access to low-cost North American natural gas, we continue to operate exceptionally well and we expect the global nitrogen supply and demand balance to continue to tighten."

Market overview

Global nitrogen prices reached in-year highs early in the 4Q18, and then declined through the end of the year and into 2019 due to seasonally low demand in the Northern Hemisphere and moderating energy prices in Asia and Europe. As demand in the Northern Hemisphere begins to materialise, industry fundamentals should be supportive of global nitrogen prices in the 1H19.

In North America, the company expects strong nitrogen fertilizer demand during the 1H19. Corn and wheat plantings in the US are projected to increase by 4 million and 1 million acres, respectively, compared to 2018. Additionally, unfavourable weather limited fall ammonia applications in the Midwest US, suggesting a nitrogen deficit in many areas that will need to be made up by applications of ammonia or upgraded products during the 1H19.

India and Brazil, two of the largest urea-importing regions in the world, will continue to be key global demand centres. Urea imports into India and Brazil in 2018 totalled 6.3 million metric t and 5.5 million metric t, respectively. The company expects total Indian and Brazilian urea import requirements to be in a similar range in 2019.

The company projects net global urea production capacity to increase by 3.5 million metric t during 2019, below the historical nitrogen demand growth rate of 2%. However, 1.2 million metric t of this new urea production capacity in Iran that is included in the company’s projection is at risk of delay due to US sanctions on Iran.

China's role in globally traded urea continued to shrink in 2018, with exports totalling approximately 2.4 million metric t. Published reports suggest this volume may include substantial re-exports of Iranian urea. Chinese urea exports are expected to be in a similar volume range in 2019 due to continued firm energy prices and tighter environmental restrictions.

The company continues to monitor the impact of sanctions on Iran. Urea from Iranian producers is available at a significant discount to global prices with few regions of the world open to purchasing from that country due to sanctions. Iranian producers will face additional challenges should the sanctions continue due to the loss of access to technical expertise, replacement parts for current plants, and resources to support new construction.

Longer-term, industry and energy market fundamentals are expected to continue to support the global nitrogen cost curve at higher levels. Net global urea supply growth through 2022 is projected to fall short of the historical nitrogen demand annual growth rate of approximately 2%, further tightening the global supply and demand balance.

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