CF Industries Q2 2022 Earnings Report
Key Takeaways
CF Industries Holdings, Inc. reported first half 2022 net earnings of $2.05 billion and adjusted EBITDA of $3.60 billion. The company delivered a strong operational performance and leveraged manufacturing and logistics flexibility to drive outstanding results despite weather-related challenges.
First half net earnings of $2.05 billion, or $9.78 per diluted share and EBITDA of $3.47 billion; adjusted EBITDA of $3.60 billion
Second quarter net earnings of $1.17 billion, or $5.58 per diluted share, and EBITDA of $1.80 billion; adjusted EBITDA of $1.95 billion
Trailing twelve months net cash from operating activities of $4.45 billion, free cash flow of $3.61 billion
Repurchased approximately 6.6 million shares for $590 million during the first half of 2022
CF Industries
CF Industries
Forward Guidance
Management expects the global nitrogen supply-demand balance to remain tight for the foreseeable future, underpinned by resilient agricultural-led demand and uncertainty about global production and export supply availability. Additionally, energy spreads between low-cost producers and marginal production in Europe and Asia are projected to remain historically wide.
Positive Outlook
- The need to replenish global grains stocks is expected to support continued positive demand for nitrogen products.
- Global grains stocks-to-use ratios for 2022/2023 are forecast to be similar to those of 2021/2022, which should sustain continued strength for global grains prices, incentivizing nitrogen fertilizer application.
- Urea consumption in Brazil is forecast to remain strong in 2022, supported by high crop prices, expected high planted corn acres in 2022 and 2023 and improved farm incomes.
- India is expected to tender on a regular basis into 2023 as increased domestic production is unlikely to fully meet increased demand as farmers maximize grain production.
- 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.
Challenges Ahead
- The outlook for global nitrogen supply availability remains challenged due to high natural gas costs in Europe and Asia.
- High natural gas costs in Europe and Asia have been exacerbated by uncertainty about the future of natural gas flows from Russia and the knock-on effect of greater competition for liquefied natural gas cargoes.
- The resulting high production costs are likely to result in lower ammonia production in Europe and Asia.
- Corn plantings in the United States will be lower than its expectations of 91-93 million acres at the start of 2022 due to poor weather in parts of the country during the spring that affected planting decisions.
- Urea exports from China have been sharply reduced by, and remain subject to, measures the Chinese government has implemented to promote the availability and affordability of fertilizers domestically.