Cf Industries Holdings, Inc. · NYSE:CF
Cf Industries — Credit Suisse Basic Materials Conference 2008
33 slides from Cf Industries's conference presentation, May 6, 2008
Slide 1: CF Industries Holdings, Inc. – Credit Suisse Basic Materials Conference
Corporate Development Supply Chain Sales Finance Legal Operations Human Resources Dv Sc Sa Fi Le Op Hr CF Industries Holdings, Inc. NYSE: CF Credit Suisse Basic Materials Conference May 6, 2008
Slide 2: For CF Industries Today . . .
2 For CF Industries Today . . . Tony Nocchiero Senior Vice President & CFO
Slide 3: Safe Harbor Statement
3 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 historical information or current condition, are forward-looking stat
Slide 4: Today's Presentation
4 Today’s Presentation • A quick overview of today’s robust agricultural markets • A look at CF Industries’ ability to capitalize on those markets • Our Q1 performance – and outlook for Spring ‘08
Slide 5: 'The Lay of the Land'
5 ‘The Lay of the Land’ • Start with a tight supply/demand balance for major crops – globally • Add in strong – and sustained – new demand from biofuels • Prices for major crops reflect the supply/demand balance • Crop prices are driving farmers to increase total acreage • To maximize profits, farme
Slide 6: A Robust First Half Outlook
6 A Robust First Half Outlook • For phosphate fertilizer, global demand is strong and worldwide supply is tight – with little new capacity coming for several years • For nitrogen, another strong year, with higher acreage for wheat, sorghum, and other crops likely offsetting any decline in corn acrea
Slide 7: Can CF Industries Capitalize on This Opportunity?
7 •A leading manufacturer and distributor of nitrogen and phosphate fertilizer, with Corn Belt* market shares of 26% nitrogen and 19% phosphate •An extensive Corn Belt-based distribution system •A global growth platform via KEYTRADE acquisition Can CF Industries Capitalize on This Opportunity? *ND,
Slide 8: Nitrogen – World Class and Flexible Existing Capacity
8 Nitrogen – World Class and Flexible Existing Capacity Increasingly Valuable At Time When High Capital Costs Have Limited Nitrogen Supply Response Donaldsonville Medicine Hat
Slide 9: Nitrogen – World Class and Flexible Existing Capacity
9 Nitrogen – World Class and Flexible Existing Capacity Increasingly Valuable At Time When High Capital Costs Have Limited Nitrogen Supply Response Largest complex in Canada Largest complex in North America Serves Northern Tier U.S. markets Serves Corn Belt & other markets Ships to U.S. terminals by
Slide 10: Phosphate: 'Uncharted Waters'
10 Phosphate: ‘Uncharted Waters’ • Phosphate operations include industry’s newest rock mine and beneficiation plant, modern chemical plant with 2.1 million tons of DAP/MAP capacity, and warehouse/terminal at Port of Tampa • Company has strong phosphate rock position, with 24 years of proven reserves
Slide 11: India DAP Production Cost – Imported Rock
11 India DAP Production Cost – Imported Rock ($/Tonne) Source: Fertecon, FMB, Green Markets Skyrocketing Sulfur And Rock Prices Have Pushed Production Costs Up, Especially For Nonintegrated Producers Estimated Cost For Non-integrated Producer In India 0 100 200 300 400 500 600 700 J07 F M A M J J A
Slide 12: Industry Leading Flexibility in Distribution
12 Nitrogen Manufacturing Complex • Ammonia Terminal Ammonia Terminal & UAN Terminal UAN Terminal Urea & Phosphate Warehouse Industry Leading Flexibility in Distribution • One of the industry’s largest networks • In-market storage capacity is approximately 1.2 million tons for nitrogen and 200,000 t
Slide 13: Proposed Strategic Initiatives
13 Proposed Strategic Initiatives • Nitrogen complex in Perú Growth and diversification – and lower-cost natural gas – in an under-served market • Gasification installation at Donaldsonville Nitrogen Complex Production flexibility and diversification from North American natural gas • Uranium extract
Slide 14: Discipline in Capital Deployment
14 Discipline in Capital Deployment • We have a strong balance sheet and continue to generate positive cash flow • We have demonstrated strong operational discipline in coping with challenging and volatile business environments • We are committed to demonstrating the same discipline in capital deplo
Slide 15: An Outstanding First Quarter
15 An Outstanding First Quarter Sales Millions of Dollars Earnings Millions of Dollars $472.4 $667.3 0 100 200 300 400 500 600 700 2007 2008 $57.2 $158.8 0 20 40 60 80 100 120 140 160 2007 2008 41% 178%
Slide 16: Positioned to Win
16 Positioned to Win • Worldwide demand for grain has created robust crop pricing and fertilizer demand • After a wet early spring, field work and planting are underway • CF Industries is well positioned to capitalize on today’s opportunity
Slide 17: @CFindustries
™ @CFindustries :
Slide 18: Appendix
APPENDIX
Slide 19: Innovative Forward Pricing Program
19 Innovative Forward Pricing Program • Locks in assured supply and price for customers – and nitrogen margins – for CF Industries • Prices and margins reflect expectations for market conditions • Our forward prices for phosphate reflect higher sulfur and ammonia costs In Q1’s Rising Natural Gas Cos
Slide 20: Innovative Forward Pricing Program
20 Innovative 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
Slide 21: Demand Growth Is a Global Phenomenon
21 Demand Growth Is a Global Phenomenon 0 200 400 600 800 1000 1200 90 92 94 96 98 00 02 04 06 08 10 12 14 Source: USDA Rest of World (3.2 %) EU (-1.3 %) China (2.6 %) U.S. (5.1%) Growth: 1.5% Growth: 3.6% MM Metric Tons Coarse Grain Consumption Wild cards: China, world economic growth, energy price
Slide 22: World Coarse Grain Ending Stocks
22 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 09 Source: USDA Note: Certain columns/rows may not “tie” due to “rounding” U.S. China Rest of World CF Fct. 1998 2001 2004 2007 United States 51.4 45.0 58.8 39.4 China 123.4 85.6 37.0 29.5 EU-
Slide 23: Growth in U.S. Corn Demand Has Accelerated
23 Growth in U.S. Corn Demand Has Accelerated Billion Bushels Source: USDA 0.0 2.0 4.0 6.0 8.0 10.0 12.0 14.0 16.0 91 93 95 97 99 01 03 05 07 09 Exports Ethanol Food & Industrial Feed Ethanol remains the big driver behind U.S. corn demand Vast potential for export growth is limited by current domest
Slide 24: Continued Growth for Ethanol
24 Continued Growth for Ethanol • Margins for ethanol are positive, thanks to increased prices for ethanol and Distillers Dried Grains • U.S. Renewable Fuel Standard mandates 15 billion gallons of corn-based ethanol by 2015 • Capacity today is 7.9 billion gallons, with 5.6 billion more due to come o
Slide 25: U.S. Corn Demand for Ethanol Production
25 U.S. Corn Demand for Ethanol Production Billion Bushels Source: USDA, Doane % of Production Marketing Years 0.0 1.0 2.0 3.0 4.0 5.0 6.0 1995 1997 1999 2001 2003 2005 2007 2009 2011 0% 5% 10% 15% 20% 25% 30% 35% 40%
Slide 26: Demand-Driven Environment Supported Strong Nitrogen Pricing
26 Demand-Driven Environment Supported Strong Nitrogen Pricing (World Nitrogen Price Index: Average 2002 = 100) 0 100 200 300 400 500 J02 J03 J04 J05 J06 J07 J08 NH3 Urea Source: FMB Group January 2002 – Current Price Index
Slide 27: World Nitrogen Capacity Growth to Exceed Demand
27 World Nitrogen Capacity Growth to Exceed Demand 2008 and 2009, but Balance Will Remain Tight 0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 4.0 4.5 5.0 5.5 6.0 07 08 09 10 11 Capacity Increase Demand Increase Calendar Years Source: Fertecon, CF Industries MM tonnes of P2O5
Slide 28: World Phosphate Market Is Tighter than Nitrogen
28 World Phosphate Market Is Tighter than Nitrogen 0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 4.0 07 08 09 10 11 Capacity Increase Demand Increase Calendar Years Source: Fertecon, CF Industries MM tonnes of P2O5
Slide 29: The Battle for Acreage is On!
29 The Battle for Acreage is On! U.S. Planted Acreage – Major Crops (MM Acres) Source: USDA, CF Industries Projected Change 2006 2007 2008 2007-08 Corn 78.3 93.6 86.0 -7.6 Wheat 57.3 60.5 63.8 3.3 Soybeans 75.5 63.7 74.7 11.0 Cotton 15.3 10.9 9.2 -1.7 Other 89.5 91.5 87.3 -4.2 Total 315.9 320.2 321.
Slide 30: East European Nitrogen Capacity and Exports
30 East European Nitrogen Capacity and Exports (000/Tonnes) Source: Fertecon, CF Note: Certain columns/rows may not “tie” due to “rounding” 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
Slide 31: Increased Productivity at Florida Phosphate Operation
31 Increased Productivity at Florida Phosphate Operation Natural Gas and Capacity Gains at Medicine Hat MMBtu of Natural Gas Per Ton 30.00 31.00 32.00 33.00 34.00 35.00 36.00 37.00 38.00 39.00 40.00 1980 1981 1982 1983 1984 1985 1986 1986 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2
Slide 32: Steady Efficiency Improvements at Donaldsonville
32 Steady Efficiency Improvements at Donaldsonville * Representative of complex’s four ammonia plants DONALDSONVILLE AMMONIA NO. 3 PLANT MMBTU/TON * 31.5 32.0 32.5 33.0 33.5 34.0 34.5 35.0 35.5 36.0 1980 1985 1990 1995 2000 2005 2010 YEAR MMBTU/TON Significantly less natural gas per product ton We A
Slide 33: Camisea Project General Description
33 CAMISEA PROJECT GENERAL DESCRIPTION
CF Industries Holdings — Credit Suisse Basic Materials Conference 2008 on 6ix