CF Industries’ (CF) overall sales come from nitrogen fertilizers. The company reports its sales in five segments: UAN (urea ammonium nitrate), Granular Urea, Ammonia, AN (ammonium nitrate), and Other Nitrogen Products.
In 1Q17, more than 80% of the company’s sales came from the first three segments listed.
Agricultural fertilizer companies’ (MOO) sales growths in the last 12 months took hits across the board. CF Industries’ sales fell 14.7% year-over-year (or YoY) in the last four quarters. However, more recently, its sales have recovered. In 1Q17, CF Industries’ overall sales rose 3% YoY.
CVR Partners (UAN), which also produces nitrogen fertilizer, saw an impressive 17% rise YoY in 1Q17, while Terra Nitrogen’s (TNH) sales rose 10% YoY. These three companies exclusively produce nitrogen fertilizers. PotashCorp (POT), which produces all three NPK (nitrogen, phosphorus, and potassium) fertilizers, saw its sales rise 8% over the same period.
A change in global trends primarily affects the sales of agricultural fertilizer companies due to the commodity-based nature of their businesses. If a change in global trends affects one company, it may also affect another. Therefore, it’s better for an investor to compare performances among peers. For one report that you can use to make such a comparison, read Major Fertilizer Companies Had Mixed Performances in 1Q17.
Next, we’ll discuss two key global trends that affect CF Industries in more detail.