CF Industries Holdings Inc, a North American manufacturer and distributor of agricultural fertilizers, based in Illinois, is now planning to focus its attention to its expanding operations despite the slumps in the nitrogen fertilizer industry. The company shares fell by more than 15 percent last week after the second-quarter profit had fallen almost 90 percent due to low potash prices.
CF’s CEO Tony Will said that the company was much more focused on running its existing operations than acquiring other plans that might be available, for example Ukraine’s state-run Odessa Portside or OCI NV’s Iowa plant. Mr Will commented that “Our focus right now is sticking to our knitting … For me to go out and look at other assets when our own shares are trading so cheaply, it just doesn’t make sense”.
As part of this re-focus on own plants, CF scrapped a deal with its Dutch competitor OCI to acquire some plants for $6 billion after the US Treasury had announced plans to curb tax-avoiding inversion deals. OCI’s Iowa plant was part of this deal but Mr Will said CL would not pay OCI the construction cost for it, citing the weak market. Moreover, OCI does not want to take a write-off in any sale. “The last thing we need to do right now is take on another in-flight construction project,” he said.
However, CL plans to use the full capacity of its domestic operations in the US. The newly constructed Louisiana and Iowa facilities are supposed to add extra capacity of 18.9 million tones by the end of next year. “North American producers are among the lowest cost globally, so anyone that’s got assets that are producing in North America are going to run those plants full out,” Mr Will explained.
