DEERFIELD, Ill., May 04, 2022--(BUSINESS WIRE)--CF Industries Holdings, Inc. (NYSE: CF), a leading global manufacturer of hydrogen and nitrogen products, today announced results for the first quarter ended March 31, 2022.
Highlights
First quarter net earnings of $883 million(1), EBITDA(2) of $1.68 billion and adjusted EBITDA(2) of $1.65 billion
Trailing twelve months net cash from operating activities of $3.69 billion, free cash flow(3) of $2.80 billion
North American manufacturing network achieved record first quarter gross ammonia, urea ammonium nitrate (UAN) and diesel exhaust fluid (DEF) production volumes
Board of Directors increased quarterly dividend by 33 percent to $0.40 per share
Company redeemed $500 million in debt on April 21, 2022, lowering gross long-term debt to $3 billion
Repurchased approximately 1.3 million shares for $100 million during the first quarter of 2022
Mitsui & Co., Ltd. and CF Industries announced intention to jointly develop an export-oriented greenfield ammonia production facility in the United States to produce blue ammonia
"We ran our plants extremely well during the first quarter and expanded our considerable logistics capabilities to help North American customers prepare for the spring fertilizer application season," said Tony Will, president and chief executive officer, CF Industries Holdings, Inc. "Global grains stocks remain extremely low, an issue that has become amplified because of Russia’s invasion of Ukraine. We think it will take at least 2-3 years to replenish global grains stocks."
Nitrogen Market Outlook
Management expects global nitrogen industry dynamics to remain strong for the foreseeable future, with robust global nitrogen demand coupled with tight global nitrogen supply and wide energy differentials between North America and marginal production in Europe and Asia.
Global demand for nitrogen remains robust, underpinned by the need to replenish global grains stocks. Low global grains stocks-to-use ratios have driven corn, wheat and other grains futures prices in the U.S. to the highest levels in a decade. These futures prices have remained high as the market evaluates the impact of Russia’s invasion of Ukraine. These crop prices support high levels of grain planting and incentivize optimal fertilizer application.
Global nitrogen inventory remains extremely tight. While producers in low-cost regions appear to be operating at high rates, global supply continues to be limited by curtailments in Europe and Asia due to high energy costs, ongoing restrictions on exports of certain nitrogen products from Egypt, Turkey and China, and obstacles to nitrogen exports from Russia related to the direct and indirect impact of various sanctions as well as government-imposed export limits.
Energy differentials for Europe and Asia compared to low-cost regions remain significant. This has steepened the global nitrogen cost curve and increased margin opportunities for low-cost North American producers. Forward curves suggest that these favorable energy spreads will persist throughout 2022 and into 2023.
North America: Management projects corn plantings in the United States will be 91 to 93 million acres in 2022, above intentions reported by farmers to the U.S. Department of Agriculture (USDA). Production returns in 2022 on all crops are forecast to be historically high despite high input costs, and the Company believes that prices will bid in more corn acres than the USDA planting intentions report from March. U.S. manufacturing and mining activity has remained positive, further supporting nitrogen demand in the region.
India: Management expects that India will continue to tender on a regular basis throughout 2022 to meet the demand for urea necessary to maximize grain production. The Company expects urea imports to India in 2022 to be in the range of 8 million metric tons, below recent record years but keeping the country as the world’s largest importer of urea.
Brazil: Urea consumption in Brazil is expected to remain strong in 2022, supported by high crop prices, expected high planted corn acres and improved farm incomes. The Company believes that fertilizer tradeflows to Brazil will be among the most affected by the barriers to export of fertilizer products from Russia, with more than 90 percent of ammonium nitrate (AN) imported into Brazil in recent years having originated from Russia. Purchasers in Brazil may substitute other nitrogen fertilizers for AN.
Europe: Natural gas prices remain elevated due in part to the Russian invasion of Ukraine and the uncertainty about gas flows from Russia. Forward curves for natural gas in Europe remain above historical norms, challenging nitrogen producer profitability and forcing European production into the position of global marginal producer.
China: Urea exports from China are expected to be limited through at least the first half of 2022 as the Chinese government has implemented measures to discourage urea exports and promote the availability and affordability of fertilizers domestically. Management expects that some level of nitrogen exports will resume in the second half of 2022.