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CF Industries Wraps Up Port Neal Capacity Expansion Project

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CF Industries Holdings, Inc. (CF - Free Report) has announced the completion of its capacity expansion projects, with the successful start of new ammonia and urea plants at its Port Neal, IA, Nitrogen Complex.

CF Industries’ ammonia plant began operations late last month and has been producing roughly at its nameplate capacity of 2,425 tons per day. Recently, the backend of the plant was taken offline to replace a gasket. Production in this division of the plant, which carries out ammonia synthesis, is expected to resume soon. The frontend of the plant is functional and continues to produce carbon dioxide which is used to feed the new urea plant.

The new urea plant of CF Industries was commissioned earlier in December and has produced on specification granular urea. This plant was recently taken offline to replace a relief valve. Production is expected to resume soon. The company has completed its capacity expansion projects and management believes this will help in the company’s growth and increase its cash generation capability.

The annual gross ammonia capacity at Port Neal now stands at 1.2 million tons, higher than the previous capacity of 380,000 tons. Output from the new ammonia capacity is expected to be mostly upgraded to urea. The total annual urea capacity at the facility is now 1.4 million tons, up from the previous capacity of 50,000 tons. Total annual UAN capacity remains stable at 800,000 tons.

While shares of CF Industries dipped 1% to $31.63 on Dec 28, the company’s shares have gained 29.9% in the last three months. The Zacks categorized ‘Fertilizers’ industry has gained 15.5% over the same period.

In the third quarter of 2016, CF Industries reported a loss of $30 million or 13 cents per share as against a profit of $90 million or 39 cents per share, recorded a year ago. However, adjusted earnings of 13 cents per share beat the Zacks Consensus Estimate of 5 cents.

The company noted that the agricultural outlook for North America suggests sustained profitability at the farm level for corn and soybeans notwithstanding the less profitable acreage in the Western Corn Belt and Southeast. Consequently, planted acres for corn are expected to fall to about 88 million acres in 2017 vis-à-vis about 94 million acres planted in 2016.

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CF Industries carries a Zacks Rank #3 (Hold).

Stocks to Consider

Some better-ranked companies in the basic materials space include The Chemours Company (CC - Free Report) , FMC Corp. (FMC - Free Report) and Celanese Corporation (CE - Free Report) .

Chemours has an expected long-term growth of 15.5% and sports a Zacks Rank #1 (Strong Buy). You can the complete list of today’s Zacks #1 Rank stocks here.

FMC, sporting a Zacks Rank #1, has an expected long-term growth of 10.88%.

Celanese has an expected long-term growth of 8.75% and holds a Zacks Rank #2 (Buy).

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