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CF Industries' Performance and Outlook after 2Q17

PART:
1 2 3 4 5 6 7 8 9 10
Part 5
CF Industries' Performance and Outlook after 2Q17 PART 5 OF 10

CF Industries’ Shipments Impact Its Sales

Shipments

Earlier in this series, we saw how fertilizer prices impact CF Industries’ (CF) sales. In this part, we’ll discuss another driver that impacts its sales—shipments. Together, movements in the shipments along with realized prices determine the direction of CF Industries, PotashCorp (POT), Agrium (AGU), and Intrepid Potash’s (IPI) sales.

CF Industries&#8217; Shipments Impact Its Sales

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Shipment growth

Overall, CF Industries’ shipments rose 11% YoY (year-over-year) in 2Q17 to ~5 million tons. While the shipments grew YoY, the sales didn’t grow. CF Industries’ sales fell 1% YoY.

While a company might have high shipment growth, poor price realization might offset the growth. So, fertilizer prices are very important for investors to track. Companies (XLB) can also sell at a price that might be below the production cost.

We’ve seen this taking place with nitrogen producers in China. Producers sold their products below cost, which created operations that weren’t sustainable. As a result, several Chinese producers have curtailed their facilities and some of them even suspended their expansion plans.

New capacity is expected to come online in the coming year, which continues to put pressure on fertilizer prices.

In the next part, we’ll discuss the shipments for each of CF Industries’ segments.

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