CF’s Sales to Fall in 2Q16: What’s Hurting the Company?



Sales estimate

CF Industries (CF) has experienced a fall in its revenue in almost every quarter over the past three years, aside from 3Q15. In 1Q16, CF industries reported a 5% rise in sales. Note that among other fertilizer players, CF was the only company that saw sales growth in 1Q16.

To learn more, you can read Comps Happen: How Fertilizer Companies Performed during 1Q16. Let’s take a look at expectations for CF’s sales for 2Q16 and 2016.

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CF’s sales are expected to fall

For 2Q16, CF’s combined sales (from ammonia, urea, UAN, AN, and other segments) are expected to fall by 13% to $1.1 billion compared to $1.3 billion in the corresponding quarter in 2Q15. Falling prices will likely be the reason for CF’s double-digit fall.

For 2016, analysts expect a 4% fall YoY (year-over-year) in CF’s revenue. Ammonia prices have fallen significantly during this planting season (MOO), and urea prices have hit multiyear lows. Read our series How Did Fertilizer Stocks and Fertilizer Prices Move Last Week? to stay updated.

Other companies

Sales for PotashCorp (POT) are also expected to fall by as much as 28% to $4.5 billion YoY. Agrium (AGU) is also expected to report a sales fall in the upcoming quarter, but the impact will be much softer compared to the above-mentioned companies.

Agrium is expected to report $6.6 billion in sales, a 2% fall YoY. Unlike CVR Partners (UAN) and CF Industries, the above two companies earn revenues from phosphate and potash products as well.

Let’s look at CF’s EBITDA (earnings before interest, tax, depreciation, and amortization) expectations next.


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