Top line impacted
Agricultural fertilizer companies that sell NPK[1. nitrogen, phosphorous, and potassium] fertilizers to the market (XLB) have faced severe headwinds in 2015. These headwinds have followed the decline in crop prices, which has lingered into 2016.
The impact is clearly visible in the top-line performances of these companies, which declined by an average of 18%.
During the recent quarter ended March 2016, most of the agricultural fertilizer companies saw a YoY (year-over-year) decline in the top-line revenue by a median of 18%. The exception was CF Industries (CF), which was the only company to see growth during the quarter. CF Industries grew up by 5%.
How bad was it?
Intrepid Potash (IPI) recorded a 37% decline in its top line, which was followed by PotashCorp’s (POT) 27% drop. Both companies have a high exposure to potash fertilizers, which have been facing a challenging pricing environment.
Mosaic Company (MOS), which produces phosphorous as well as potassium fertilizers, experienced a decline of 22%. CVR Partners (UAN), which produces only nitrogen fertilizers, saw its revenue fall by 21% during the quarter. Terra Nitrogen (TNH), which also produces nitrogen fertilizer, saw its revenue decline by 15%.
Israel Chemicals’s (ICL) revenue declined by 10% and Agrium’s (AGU) revenue declined by 5%. ICL earns most of its revenue from the agricultural segment. Phosphorous fertilizers account for 56% of this segment’s sales, followed by 46% of potash fertilizers.
Looking at the chart above, phosphorous and nitrogen fertilizer producers have fared much better than fertilizer producers, which have a high exposure to potassium products.
Let’s look at the shipments for these companies by fertilizer products, starting with nitrogen.