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Dec 31, 2020
CF Industries Q4 2020 Earnings Report
CF Industries reported net earnings and strong operational performance driven by record production and sales volume.
Key Takeaways
CF Industries Holdings, Inc. reported Q4 2020 net earnings of $87 million, or $0.40 per diluted share. The company achieved record quarterly gross ammonia production of 2.7 million tons and continued to focus on its clean energy strategy.
Full year net earnings of $317 million, or $1.47 per diluted share; EBITDA of $1,316 million; adjusted EBITDA of $1,350 million
Fourth quarter net earnings of $87 million, or $0.40 per diluted share; EBITDA of $334 million; adjusted EBITDA of $338 million
Company-record quarterly gross ammonia production of 2.7 million tons in the fourth quarter of 2020
Nitrogen industry dynamics entering 2021 are the most favorable we’ve seen in nearly a decade, as rising grain values and higher global energy prices are driving significant price appreciation for nitrogen products.
CF Industries
CF Industries
Forward Guidance
The global nitrogen pricing outlook for 2021 is significantly more positive compared to 2020, underpinned by higher commodity crop futures prices and substantially higher energy prices in Asia and Europe.
Positive Outlook
- Global commodity crop near-term and futures prices have risen to their highest levels since 2014.
- Corn prices have increased significantly as lower yields in North America in 2020, poor growing weather in South America and strong demand for corn from China have resulted in the U.S. Department of Agriculture projecting the corn stocks to use ratio for marketing year 2020/21 at 10.6% in January 2021, its lowest level since 2013.
- These factors, along with U.S. government support for the agriculture industry, have resulted in strengthened farm economics and greater resources available to crop producers for 2021 crop inputs.
- The Company projects that nitrogen-consuming coarse grain acres in North America will stay at or above 2020 levels despite an expected significant increase in soybean plantings as high crop prices and reduced prevent plant acreage in 2021 will result in higher overall planted acres in the year.
- Demand for nitrogen should also be supported by higher canola plantings in Canada.
Challenges Ahead
- Chinese producers have reported lower operating rates due to higher costs for coal, increased environmental inspections and natural gas being diverted to meet heating needs.
- The Company expects sales volumes to return to a range of 19-19.5 million product tons in 2021 due to lower year-end inventory than the year before and lower expected production due to a higher number of planned maintenance activities than in 2020.
- CF Industries expects gross ammonia production in 2021 to be in a range of 9.5-10.0 million tons due to a higher number of planned maintenance activities than in 2020.
- Global nitrogen requirements are expected to remain robust throughout the year, driven by continued strong demand for urea imports from India and Brazil. The Company projects urea tender volumes in India in 2021 to ease from record highs, but to be well above the five-year average of 6.5-7.0 million metric tons.
- The Company also believes that improved farm incomes and no active domestic urea production in Brazil will support demand for approximately 6.5 million metric tons of urea in 2021, similar to 2020.