Highlights
Full year net earnings of $917 million(1), or $4.24 per diluted share, and EBITDA(2) of $2.17 billion, which include the impact of pre-tax non-cash impairment charges of $521 million related to the Company’s U.K. operations; adjusted EBITDA(2) of $2.74 billion
Fourth quarter earnings of $705 million(1), or $3.27 per diluted share, and EBITDA of $1.19 billion; adjusted EBITDA of $1.26 billion
Full year net cash from operating activities of $2.87 billion, free cash flow(3) of $2.17 billion, both Company records
Repurchased approximately 7.5 million shares for $490 million during the fourth quarter, effectively completing the $1 billion share repurchase authorization that expired December 31, 2021
The U.S. Department of Commerce (Commerce) made preliminary determinations in January 2022 that Russian urea ammonium nitrate (UAN) imports are dumped into the U.S. at margins ranging from 9.15% to 127.19%, and that Trinidadian UAN imports are dumped into the U.S. at a margin of 63.08%
“The CF Industries team delivered outstanding results in 2021 as strong global nitrogen demand, lower global operating rates and favorable energy spreads drove Company-record free cash generation,” said Tony Will, president and chief executive officer, CF Industries Holdings, Inc. “We expect global nitrogen fundamentals to remain positive, underpinned by the need to replenish global grains stocks, increased economic activity and global energy dynamics. We are well-positioned to continue to drive strong cash generation, enabling us to invest in our clean energy initiatives, return substantial capital to shareholders and achieve our goal of $3 billion of gross debt by 2023.”
Nitrogen Market Outlook
Management expects the global nitrogen supply and demand balance to remain tight for the foreseeable future and for the commercial environment to be highly favorable for producers in low-cost regions.
Global nitrogen inventory entering 2022 is believed to be low following a year of strong demand and lower production due to the impact of energy-related production curtailments and shutdowns in Europe, weather-related disruptions in North America and stagnant production levels in countries such as India. High energy prices in Europe and Asia, along with ongoing restrictions on exports of certain nitrogen products from Russia, Egypt, Turkey and China, suggest global nitrogen supply will continue to be challenged.
At the same time, management expects global demand for nitrogen to remain robust. The need to replenish global grains stocks continues to support high front month and forward prices for nitrogen-consuming crops. These crop prices support high levels of planting and incentivize fertilizer application. Additionally, increased economic activity continues to drive strong demand for diesel exhaust fluid for emissions abatement as well as ammonia, urea and nitric acid for industrial uses.
Energy differentials between Europe and Asia versus low cost regions remain significant. This has steepened the global nitrogen cost curve and increased margin opportunities for low-cost North American producers. Forward curves suggest that these favorable energy spreads will persist throughout 2022 and into 2023.
North America: Management projects corn plantings in the United States will be 91 to 93 million acres in 2022 based on positive economic returns for farmers and a robust fall ammonia application season. The Company believes that other nitrogen-consuming crops (wheat, cotton and canola) will be planted at high levels in 2022 as well. Industrial activity in the region continues to increase in line with economic activity, supporting further demand for nitrogen products.
India: Urea imports to India from April-December 2021 were approximately 2 million metric tons lower and domestic urea production was flat compared to the same time period in 2020. Published reports indicate that this lower-than-expected level of imports and domestic production has resulted in low urea inventory levels in India. A new urea tender for India was issued in January, and management expects India will tender regularly in the coming months to meet urea demand in the country, which is projected to remain strong.
Brazil/South America: Strong global corn prices coupled with drought conditions in Southern Brazil and Argentina, which has reduced production forecasts for the current first crop corn, support higher planted corn acres in 2022 and continued strong demand for nitrogen and urea imports.
Europe: A substantial supply of liquefied natural gas cargoes rerouted to Europe in January 2022 allowed energy prices in the region to moderate from record highs, though they remain elevated compared to the prior year. Forward curves for natural gas in Europe remain above historical norms, challenging producer profitability and likely resulting in continued lower operating rates in the region.
China: Urea exports from China are expected to be limited through at least the first half of 2022 as the Chinese government has implemented measures to discourage urea exports and promote the availability and affordability of fertilizers domestically. Additionally, published reports indicate that the Chinese government has issued supply contracts to build temporary reserves for summer application. It is estimated that over 1 million metric tons of urea could be accumulated for the country’s first-ever summer fertilizer reserve plan.