Driven by the surge in global demand and a sharp rise in agricultural product prices, North American fertilizer producers experienced a significant improvement in performance last year. In early 2008, several major companies reported strong fourth-quarter results for 2007, reflecting a robust industry outlook.
Agrium, a leading Canadian provider of agricultural products, services, and technology, posted a net profit of $172 million in Q4 2007, compared to a loss of $62 million in the same period in 2006. Annual sales revenue surged by 58% to $1.5 billion, with retail sales rising 45% to $555 million and wholesale sales jumping 69% to $908 million. According to Agrium’s CEO, Mike Wilson, the record-high grain prices have significantly boosted farmers’ willingness to invest in crops. He also noted that limited new capacity for nitrogen, phosphorus, and potash fertilizers is keeping the global market tight.
CF Industries, a U.S.-based producer of nitrogen and phosphate fertilizers, saw its Q4 2007 profits jump to $135.4 million from $10.9 million in the same period the previous year. Sales revenue rose 62% to $852.5 million, with nitrogen sales up 58% to $630.7 million and phosphate sales climbing 75% to $221.8 million. The company is currently evaluating the construction of a new ammonia and urea complex in Peru, targeting the Central and South American markets.
Terra Industries reported a Q4 2007 profit of $69.7 million, up from $11.6 million in 2006. Sales revenue increased 26% to $570 million, driven by higher prices for nitrogen-based products. Ammonia, nitrogen solution, and ammonium nitrate prices rose by 16%, 69%, and 20%, respectively. While ammonia and urea sales grew by 9% and 5%, ammonium nitrate sales fell 22%.
Tracy Industries’ CEO, Mike Bonnet, said the company is exploring projects to expand existing facilities in response to growing global demand for nitrogen products. Additionally, they plan to restart a 400,000-ton-per-year liquid ammonia plant in Louisiana, which had been shut down in 2004 due to high natural gas costs.
Compass Mining International, one of North America’s largest potash producers, reported a 92% increase in Q4 2007 net profit to $50.4 million, with sales revenue rising 54% to $326.1 million. The company attributed the growth to strong demand and sharply rising prices. Overall, the fertilizer sector is showing signs of sustained strength as global agriculture continues to benefit from favorable market conditions.
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