CF Industries Granted Air Permits

Zacks Equity Research
July 17, 2013

CF Industries Holdings, Inc. (CF) announced that it has received final air emission permits from the regulators for capacity expansion projects in Louisiana and Iowa.

CF Industries’ project in Louisiana consists of new urea and UAN plants that are expected to come on stream in the second half of 2015 and a new ammonia plant which may come online in 2016. The Port Neal, the company’s Iowa project consists of new ammonia and urea plants slated to come on stream in 2016.

CF Industries expects to start construction work at both the projects in 2013. The company is hopeful about the projects being among the first in North America to be in production.

CF Industries, which is among the prominent players in the fertilizer industry along with Potash Corp of Sakatchewan Inc. (POT), Agrium Inc. (AGU) and The Mosaic Company (MOS), posted its first-quarter 2013 results on May 8. The company’s adjusted earnings for the first quarter beat the Zacks Consensus Estimate. However, revenues fell at a double-digit clip on declines across nitrogen and phosphate businesses and missed expectations. Nevertheless, CF Industries is optimistic about the second quarter based on higher grain prices.

CF Industries is benefiting from high global prices for commodities, declining natural gas costs in North America and a solid start to the domestic planting season. Moreover, the company has a strong cash flow profile, which allows it to return value to shareholders and invest in growth initiatives.

However, CF Industries faces intense pricing competition from both domestic and foreign fertilizer producers. It is also susceptible to cyclical and seasonal changes. Moreover, the prices of its products are highly sensitive to demand and supply. CF Industries is also exposed to volatility in raw material costs and has significant debt.

CF Industries currently retains a Zacks Rank #5 (Strong Sell).

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