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How CF Industries’ Per-Ton Margins Performed in 4Q17

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Margins

With an increase in selling prices, CF Industries (CF) saw an overall improvement in its per-ton margins. Except for the UAN (urea ammonium nitrate) and the Other segments, the remaining segments saw a year-over-year expansion on a per-ton basis.

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Gross margins per ton

CF’s Ammonia segment’s gross margin per ton expanded from $1.00 per metric ton to $36.00 per metric ton. This segment’s margins increased due to the absence of startup expenses related to the company’s Port Neal facility in 4Q17. A higher average selling price also led to an increase in per-ton margins for this segment.

Similarly, the AN (ammonium nitrate) segment’s per-ton gross margin grew from flat in 4Q17 to $17.00 per metric ton. Once again, the company cited higher average selling prices for the per-ton margin expansion for this segment.

The Granular Urea segment’s per-ton margins were slightly higher from $57.00 per ton to $58.00 per ton in 4Q17. According to the company, the higher selling prices for this segment were offset by gains in natural gas derivatives this year.

Among its peers (MOO), Nutrien (NTR), Mosaic (MOS), and Terra Nitrogen (TNH) enter into derivatives contract for natural gas to lock in the price and be protected from any future increase in prices. The gains and losses on these contracts are marked to market and reported as a part of the gross margins.

In contrast to the three segments above, the UAN (urea ammonium nitrate) segment and the Other Nitrogen Products segment saw a year-over-year contraction in per-ton gross margins.

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