CF Industries profit widely beats; shares jump

CF Industries profit widely beats; shares jump

Stock Market Predictions

NEW YORK (Global Markets) - Fertilizer producer CF Industries Holdings Inc's (CF.N) quarterly profit soundly beat Wall Street's expectations as higher nitrogen prices offset a dip in sales due to a wet spring.

Shares rose 5.8 percent in after-hours trading on Thursday, partly erasing a steep drop in regular trading with the broader markets.

CF makes nitrogen and phosphate fertilizers, both crucial material for farmers.

CF is bullish on the 2011 U.S. corn crop, saying that despite the wet spring it expects more than 90 million acres of the grain to be harvested and farmers to still be extremely profitable.

"We're in for a pretty good return here," CF Industries Chief Executive Steve Wilson told Global Markets. "We're going to have a good corn crop this year."

The company quadrupled its quarterly dividend to 40 cents per share, said it would spend $1 billion to $1.5 billion in the next four years on capital projects, and authorized a stock repurchase plan of up to $1.5 billion.

Most of the capital spending will go to improve existing plants, Wilson said.

CF has benefited from sliding prices for natural gas, one of the main building blocks for nitrogen. It also is partly immune to the global economic crisis given the essential nature of its products.

"The demand-driver for us is the need to feed the world," Wilson said. "We are very confident with our outlook."

EARNINGS BEAT

For the second quarter, the company posted net income of $487.4 million, or $6.75 per share, compared with $105.1 million, or $1.54 per share, in the year-ago quarter.

Excluding a drop in the market value of natural gas trading positions, CF earned $6.87 per share.

By that measure, analysts expected earnings of $5.94 per share, according to Thomson Global Markets I/B/E/S estimates.

Revenue rose 38 percent to $1.8 billion. Analysts expected $1.77 billion.

CF controls about two-thirds of the ammonia supply in the U.S. corn belt. Urea and other nitrogen-based fertilizers come from ammonia.

While CF's ammonia sales dipped about 18 percent to 981,000 tons during the quarter, its average selling price jumped 57 percent. Ammonia is CF's largest product group.

CF's buyout of rival Terra Industries last year made CF the world's second-largest producer of nitrogen, after Norway's Yara (YAR.OL), by increasing its number of fertilizer plants to seven from two.

Shares of CF rose 5.8 percent to $149.26 in after-hours trading. The stock had plunged nearly 9 percent in regular trading as major stock market indexes dropped more than 4 percent on broader economic woes.

(Reporting by Ernest Scheyder; Editing by Gary Hill)