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August 15, 2025 • 4 min read
CF Industries Holdings, Inc. (ticker: CF), a global leader in nitrogen fertilizer manufacturing, recently released its financial results for the second quarter of 2025. These products, including ammonia, granular urea, and urea ammonium nitrate (UAN), are essential for global agriculture. In this post, we'll dive into the company's latest 10-Q filing to unpack its performance and understand the key forces shaping its business.
At first glance, CF Industries reported a strong quarter. Net sales for the three months ending June 30, 2025, reached $1.89 billion, a significant 20% increase from the $1.57 billion reported in the same period last year. This growth was driven by higher average selling prices and a 3% rise in sales volume.
However, the story gets more complex when we look at the costs. The cost of sales surged by 27% to $1.14 billion. The primary driver of this increase was the price of natural gas, a critical raw material, or feedstock, for producing nitrogen products. The company's average cost of natural gas per MMBtu (a standard unit of measurement for natural gas) jumped by a staggering 77% compared to the second quarter of 2024.
This sharp rise in input costs squeezed profitability. While gross margin grew 11% to $755 million, net earnings attributable to common stockholders actually decreased by 8% to $386 million.
To better visualize how revenue flows through the company's costs to arrive at its profit, the following chart breaks down the income statement for the first six months of the year.
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Despite the pressure from natural gas prices, CF Industries has demonstrated resilience. Its more specialized, upgraded products performed well. The Granular Urea and UAN segments both saw gross margins expand by 23% and 25%, respectively, helping to offset some of the weakness in the foundational Ammonia segment. This highlights the value of the company's diverse product portfolio.
Furthermore, CF Industries has been actively managing its capital to boost shareholder returns. The company repurchased $636 million of its own stock in the first half of 2025. These buybacks reduce the number of shares outstanding, which in turn increases the earnings per share (EPS). For the second quarter, diluted EPS rose to $2.37 from $2.30 a year ago, even though overall net earnings declined. This is a clear example of how financial strategy can support per-share metrics in a challenging operating environment.
Looking beyond the immediate quarter, CF Industries is making strategic moves to position itself for the future. The company is investing heavily in the production of low-carbon ammonia. This is ammonia produced with significantly lower greenhouse gas emissions, a product with potential applications in clean energy, such as fuel for marine shipping and power generation.
The filing details the "Blue Point joint venture," a project to build new low-carbon ammonia capacity. This strategic pivot is not without risk—the filing notes that the growth of this market is still uncertain—but it signals the company's ambition to be a key player in the energy transition, moving beyond its traditional agricultural focus.
CF Industries' latest quarter reveals a company navigating a double-edged sword. Strong demand and pricing for its nitrogen products are providing a powerful tailwind to revenue. However, the volatility of natural gas prices remains a significant headwind, directly impacting profitability.
The company's performance shows an adept ability to pull different levers—optimizing its product sales mix, controlling other operational expenses, and using share buybacks to enhance shareholder value. Its long-term success will likely depend on its ability to continue managing these volatile input costs while successfully executing its strategic, and potentially lucrative, expansion into the nascent market for low-carbon energy solutions.
Last updated: August 15, 2025