NEWS FILE PHOTO
The CF Industries facility in Medicine Hat is seen in this News file photo. CF Industries shares gained 5.6 per cent, to $52.35, as the firm reported its sales had fully recovered following flooding in a large portion of U.S. cropland in early 2019.
cgallant@medicinehatnews.com@CollinGallant
Shareholders sent the stock of two majors companies with operations in Medicine Hat in different directions Thursday as CF Industries and Methanex released second-quarter financial reports.
With industrials generally hampered by new trade tension between the United States and China, Methanex shares fell by about 8 per cent to sit at $47.62 after it reported lower sales and slightly lower methanol prices in the quarter.
CF Industries shares gained 5.6 per cent, to $52.35, as the firm reported its sales had fully recovered following flooding in a large portion of U.S. cropland in early 2019.
On a conference call with analysts, Methanex CEO John Floren also covered the company’s recent announcement it would would begin construction on a third 1.8-million tonne plant at its Geismar complex in Louisiana.
“We are well positioned to meet our financial commitments, execute our growth project in Louisiana and (plant restarts in) Chile and deliver on our commitment to return excess cash to shareholders through dividends and share repurchases,” Floren stated.
The company will build the $1.3-billion plant beginning next month while still seeking a partner company at the site to either supply feedstock or take off production of the chemical used as an industrial antifreeze, fuel alternative or base of plastic production.
Company officials have previously said “de-risking” the venture by spreading capital costs to another company could make other expansion projects, such as a plan to twin Medicine Hat plant, more attractive in a nearer term.
“(Geismar 3 has) substantial capital and operating cost advantages and we expect it will deliver outstanding returns,” said Floren, later adding, “Our preference is to have a strategic partner but we’re not going to give away a ton of value to have one.”
CF Industries stocks were boosted as the company announced it was able to recoup sales lost in the early year due to widespread flooding.
“The CF team operated exceptionally well during a challenging spring season,” said Tony Will, CF’s president. “We shifted our production mix, favouring urea over UAN to capture higher margin opportunities, we leveraged our transportation flexibility to overcome the impact of historic flooding and we reliably supplied our customers where and when they needed product.”
He predicted the long-term result of losses on corn acres this year will be a higher number of corn acres in the next two years.
The company reported mid-year net earnings of $373 million, compared to $283 million in early 2018, and record production of ammonia and record sales of urea and ammonia.
