Nucor earnings beat by $0.08, revenue fell short of estimates
NORTHBROOK, Ill. - CF Industries Holdings, Inc. (NYSE: CF), in partnership with JERA Co., Inc. and Mitsui & Co., Inc., has announced the formation of a joint venture to construct the world's largest low-carbon ammonia production facility in Louisiana. The venture aims to commence production in 2029 and anticipates capturing approximately 2.3 million metric tons of CO2 annually.
The joint venture has a structured ownership with CF Industries holding 40%, JERA 35%, and Mitsui 25%. The Blue Point Complex, where the facility will be built, is expected to have an annual capacity of 1.4 million metric tons of low-carbon ammonia. The total cost for the facility is estimated at $4 billion, which will be divided among the partners according to their ownership stakes. CF Industries' strong financial position, with a current ratio of 3.08 and robust free cash flow yield of 14%, positions it well for this significant investment.
CF Industries will invest an additional $550 million to construct scalable infrastructure necessary for the facility's operations, including services such as product storage and loading. The company will also be responsible for the operation and maintenance of the facility once it is operational.
The captured CO2 will be dehydrated, compressed, and transported by 1PointFive, a subsidiary of Occidental (NYSE: OXY), for sequestration at the Pelican Sequestration Hub in Louisiana. This initiative is expected to qualify for the 45Q tax credit, which provides a tax incentive for each metric ton of CO2 sequestered.
Technip Energies has been awarded the contract for engineering, procurement, and module fabrication, and Topsoe will provide the process license for the facility's technology.
This collaboration between CF Industries, JERA, and Mitsui represents a significant step towards creating a reliable and affordable low-carbon ammonia value chain, which is anticipated to meet the robust global demand for low-carbon ammonia in both traditional and emerging applications. Currently trading near its 52-week low, CF Industries appears undervalued according to InvestingPro's Fair Value analysis, which offers comprehensive insights through its Pro Research Report, available along with 12 additional ProTips and extensive financial metrics.
The information disclosed is based on a press release statement from CF Industries.
In other recent news, CF Industries reported fourth-quarter earnings that exceeded analyst expectations, with adjusted earnings per share of $1.89 compared to the anticipated $1.61. The company also posted revenue of $1.52 billion for the quarter. Berenberg has updated its outlook on CF Industries, raising the stock price target to $80 while maintaining a Hold rating. Berenberg forecasts first-quarter sales of $1.48 billion and an 18% year-over-year increase in adjusted EBITDA to $542 million. Goldman Sachs has initiated coverage on CF Industries with a neutral rating and a price target of $86, noting the company's strong nitrogen fundamentals. Meanwhile, RBC Capital Markets lowered its price target for CF Industries to $90, citing potential distractions from the Blue Point project. The company recently repurchased 18.8 million shares for $1.51 billion during 2024 and declared a quarterly dividend of $0.50 per share. Additionally, CF Industries anticipates gross ammonia production of approximately 10 million tons in 2025.
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