Cf Industries Holdings, Inc. · NYSE:CF
Cf Industries — TD Newcrest Agriculture Conference 2007
35 slides from Cf Industries's conference presentation, Nov 5, 2007
Slide 1: TD Newcrest Agriculture Conference – CF Industries Holdings
“We Will Become A Leading Global Marketer, Producer And Supplier Of High-Quality, Low-Cost Fertilizer Products And Services, Creating Sustained Value For Shareholders, Customers And Employees.” CF Industries Holdings, Inc. NYSE: CF TD Newcrest Agriculture Conference “Harvesting Great Ideas” November
Slide 2: Safe Harbor Statement
Safe Harbor Statement Certain statements contained in this presentation may constitute “forward-looking statements” within the meaning of federal securities laws. All statements in this presentation, other than those relating to our historical information or current condition, are forward-looking st
Slide 3: A Quick Overview of CF Industries
A Quick Overview of CF Industries A leading North American manufacturer and distributor of nitrogen and phosphate fertilizer, with world class manufacturing and extensive distribution capabilities The largest nitrogen fertilizer complexes in the U.S. and Canada A large, integrated phosphate operatio
Slide 4: A Quick Overview of CF Industries – Distribution System
A Quick Overview of CF Industries Extensive Corn Belt-based distribution system U.S. market shares for fertilizer year 2006: 21% nitrogen 14% phosphate Corn Belt* states share in fertilizer year 2006: 26% nitrogen 19% phosphate KEYTRADE AG acquisition provides global growth platform *ND, SD, NE, MN,
Slide 5: An Exceptional Third Quarter Performance
An Exceptional Third Quarter Performance Net earnings totaled $86.5 million, or $1.52 per common share, well above Q3’06 Improved pricing drove substantial margin improvement in nitrogen and phosphate CF Industries entered Q4’07 with strong forward order book at attractive margins Q3 is typically a
Slide 6: The 'Investable Idea'
The ‘Investable Idea’ Demand and prices for major crops are robust but volatile But it’s a demand-driven volatility – as crop prices bid for ‘08 acres Absent weather problems, overall planting should be strong in ‘08 – and that bodes well for fertilizer demand and pricing CF Industries is well posit
Slide 7: The Markets
The Markets Source: USDA Marketing Year Near Record HIgh Record High Record High Soybeans Wheat Corn 0.00 1.00 2.00 3.00 4.00 5.00 6.00 7.00 8.00 9.00 2000 2001 2002 2003 2004 2005 2006 2007F Corn Wheat Soybeans
Slide 8: The Battle for Acreage is On!
The Battle for Acreage is On! U.S. Planted Acreage – Major Crops (MM Acres) But Record Farm Level Net Cash Income Should Drive Strong Acreage – Again – in 2008 Source: USDA, CF Industries CF Fct. Change 2006 2007 2008 ‘07- ‘08 Corn 78.3 93.6 89.0 -4.6 Wheat 57.3 60.5 64.5 4.0 Soybeans 75.5 63.7 69.1
Slide 9: Creating Growing Demand For U.S. N & P
Creating Growing Demand For U.S. N & P Source: CF Industries Fertilizer Years 0.0 5.0 10.0 15.0 20.0 25.0 91 93 95 97 99 01 03 05 07 09 Phosphate Nitrogen
Slide 10: What About New Capacity?
What About New Capacity? In nitrogen, less new capacity than previous cycles In phosphate, new demand should exceed new capacity through end of decade 18 -0.5 0.0 0.5 1.0 1.5 2.0 06 07 08 09 Projected Capacity Increase Projected Demand Increase Calendar Years MM Tonnes of P 2 O 5 Source: Fertecon Qu
Slide 11: Globalized Natural Gas Pricing And Transportation Costs
Globalized Natural Gas Pricing And Transportation Costs Could Put Floor Under World Market Calendar Years Source: Industry Forecasts, Fertecon $ per Tonne Ammonia Cost Delivered to U.S. Eastern Europe has nearly 13 million tons of export-oriented nitrogen 0.0 50.0 100.0 150.0 200.0 250.0 300.0 350.0
Slide 12: U.S. Netback Prices to the Middle East vs. Middle East FOB Price
U.S. Netback Prices to the Middle East vs. Middle East FOB Price ($/Tonne – FOB Port) Source: Fertecon January 2004- Current U.S. Urea Prices Below Middle East Prices – i.e. ME shipments shifted to non-U.S. markets 0 50 100 150 200 250 300 350 J04 J05 J06 J07 Middle East U.S. Gulf
Slide 13: Key Competitive Strengths Serving Fertilizer Markets
Key Competitive Strengths Serving Fertilizer Markets World-scale manufacturing facilities Strategically located, flexible distribution system Long-standing customer relationships Leading positions in key U. S. Corn Belt states (26% nitrogen, 19% phosphate) Forward Pricing Program (FPP) Strong financ
Slide 14: Nitrogen – World Class And Flexible
Nitrogen – World Class And Flexible Two of North America’s largest nitrogen complexes: efficient and operated with a “continuous improvement” philosophy Unique “make versus buy” capability in nitrogen: Donaldsonville Nitrogen Complex can import product to supplement or replace production Ability to
Slide 15: Phosphate
Phosphate A balanced, productive phosphate business, with a strong phosphate rock reserve position Capacities of rock mine and fertilizer plant are matched 25 years of proven reserves, with 16 years fully permitted at 1/1/07 Hardee County, FL Plant City, FL
Slide 16: Industry Leading Flexibility in Distribution
Industry Leading Flexibility in Distribution One of the industry’s largest networks of terminals and warehouses, many with access to multiple transportation modes Ability to serve Midwestern ammonia terminals and urea warehouses from either Medicine Hat or Donaldsonville In-market storage capacity i
Slide 17: Value of Ammonia Distribution System
Value of Ammonia Distribution System Source: Green Markets June 2003 - Current MW – Gulf $ Spread @ Record Level Ammonia Price ($/short ton) 0 100 200 300 400 500 J00 J01 J02 J03 J04 J05 J06 J07 Gulf Midwest
Slide 18: The 'Investable Idea'
The ‘Investable Idea’ Demand and prices for major crops are robust but volatile But it’s a demand-driven volatility – as crop prices bid for ‘08 acres Absent weather problems, overall planting should be strong in ‘08 – and that bodes well for fertilizer demand and pricing CF Industries is well posit
Slide 19: @CFindustries
™ @CFindustries |
Slide 20: Thank You!
THANK YOU ! @CFindustries’
Slide 21: Appendix
APPENDIX
Slide 22: Implications? World Coarse Grain Ending Stocks
Implications? 9 World Coarse Grain Ending Stocks (MM Tonnes) 0 50 100 150 200 250 96 97 98 99 00 01 02 03 04 05 06 07 08 Source: USDA 1998 2004 2007 U.S. 51.4 58.8 42.5 China 123.4 37.0 30.4 Europe 25.1 25.0 11.8 FSU 4.5 7.3 4.0 L. America 8.4 14.8 14.9 ROW 24.8 35.0 27.2 Total 237.5 177.9 130.9 Wor
Slide 23: East European Nitrogen Capacity & Export
East European Nitrogen Capacity & Export (000/Tonnes) Source: Fertecon, CF Nitrogen Capacity Ammonia Urea UAN AN Total N Lithuania 853 82 9 352 129 572 Bulgaria 929 16 25 0 94 135 Poland 2,446 123 58 200 51 432 Romania 2,276 25 437 200 119 781 Ukraine 4,964 1,394 1,622 56 306 3,378 Russia 10,995 3,0
Slide 24: World Phosphate Market Has Also Tightened Dramatically
World Phosphate Market Has Also Tightened Dramatically Source: FMB Group DAP (price$/ton) Rebound in demand in the U.S. and Latin America combined with continued demand growth in Asia Reduced U.S. production and low producer inventory going into the ‘07 fall season June 2001 - Current 0 50 100 150 2
Slide 25: Positioned in the "Sweet Spot"
Positioned in the “Sweet Spot” Medicine Hat Ammonia Terminal and UAN Terminal Urea Warehouse Ammonia Terminal UAN Terminal Low High Donaldsonville U.S. Ethanol Biorefinery Locations Nitrogen Complex Biorefineries in Production (115) Biorefinereis under Construction (79) Source: Renewable Fuels Assoc
Slide 26: Strategic Themes
Strategic Themes Supply Base: Invest in supply sources to serve growth markets Distribution/Logistics: Strengthen our gateway position through the U.S. Gulf Continuous Improvement: Continually seek ways to improve our operations and management processes
Slide 27: Specific Strategic Initiatives: Gasification Project
Specific Strategic Initiatives: Gasification Project Gasification/ammonia complex at Donaldsonville Nitrogen Complex Reduce dependence on North American natural gas Convert substantial portion of complex to low-cost petcoke/coal blend Increase operational flexibility An equity investment with the po
Slide 28: Specific Strategic Initiatives: Uranium Recovery
Specific Strategic Initiatives: Uranium Recovery Uranium recovery installation at Plant City Phosphate Complex Extracted from phosphate fertilizer production Key is procuring long-term supply contracts with utilities Economic returns promising
Slide 29: Specific Strategic Initiatives: KEYTRADE AG Acquisition
Acquisition of 50 percent ownership in KEYTRADE AG Firm is 3 million metric tons per year global fertilizer trading organization Buys fertilizer in 35 countries and markets in 65 nations Acquisition provides established, extensive global platform to pursue growth and diversification Specific Strateg
Slide 30: World-Scale Manufacturing – Donaldsonville, LA
World-Scale Manufacturing – Donaldsonville, LA Largest nitrogen fertilizer complex in North America Produces ammonia, urea, and UAN
Slide 31: World-Scale Manufacturing – Medicine Hat, AB
World-Scale Manufacturing – Medicine Hat, AB Largest nitrogen fertilizer complex in Canada, No. 3 in North America Produces ammonia and urea
Slide 32: World-Scale Manufacturing – Central Florida
World-Scale Manufacturing – Central Florida Hardee County – rock mine with 25 years of reserves* Plant City Complex – one of the largest, integrated DAP/MAP complexes in U.S Port of Tampa – access to domestic and international markets *16 fully permitted as of 1/1/07
Slide 33: 2006 Stock Performance
2006 Stock Performance Negative hurricane forecast “No-Show” hurricanes Corn optimism $25.64 $22.85 $20.01 $17.07 $15.57 $15.84 $14.26 $17.15 $17.30 $17.00 $18.45 $17.02 $12.00 $14.00 $16.00 $18.00 $20.00 $22.00 $24.00 $26.00 $28.00 01/06/06 01/13/06 01/20/06 01/27/06 02/03/06 02/10/06 02/17/06 02/2
Slide 34: 2007 YTD Stock Performance
2007 YTD Stock Performance $85.43 $75.80 $26.59 $31.56 $36.56 $38.55 $43.08 $42.38 $60.06 $63.68 $54.56 $64.04 $20.00 $30.00 $40.00 $50.00 $60.00 $70.00 $80.00 $90.00 1/5/2007 1/12/2007 1/19/2007 1/26/2007 2/2/2007 2/9/2007 2/16/2007 2/23/2007 3/2/2007 3/9/2007 3/16/2007 3/23/2007 3/30/2007 4/5/2007
Slide 35: Forward Pricing Program
Forward Pricing Program > 52% N and 41% P sold under FPP in Q1 ‘07 Challenge Natural gas and nitrogen fertilizer prices are highly volatile Benefits Margin certainty Improved production scheduling Reduced inventory risk Enhanced liquidity Integration with customers Solution Customers purchase produc
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