CF Industries (CF -3.04%), a leading global producer of ammonia and nitrogen fertilizers, reported Q2 2025 earnings on August 6, 2025. The company posted GAAP revenue of $1.89 billion, topping the analyst estimate of $1.80 billion, fueled by higher sales volumes and stronger pricing. However, its earnings per share (EPS) (GAAP) came in at $2.37, missing the consensus of $2.50. Overall, the quarter featured operational milestones in decarbonization and strong shareholder returns, but also highlighted ongoing margin sensitivity stemming from volatile input costs.
| Metric | Q2 2025 | Q2 2025 Estimate | Q2 2024 | Y/Y Change |
|---|---|---|---|---|
| EPS (GAAP) | $2.37 | $2.50 | $2.30 | 3.0% |
| Revenue (GAAP) | $1.89 billion | $1.80 billion | $1.57 billion | 20.4% |
| Net Earnings | $386 million | $420 million | -8.1% | |
| Adjusted EBITDA | $761 million | $752 million | 1.2% | |
| Capital Expenditures | $245 million | $84 million | 191.7% |
Source: Analyst estimates provided by FactSet. Management expectations based on management's guidance, as provided in Q1 2025 earnings report.
Business Overview and Strategic Priorities
CF Industries operates one of the world's largest ammonia production and distribution networks. It manufactures ammonia—used in fertilizer and various industries—along with ammonia-derived products such as urea and UAN (urea ammonium nitrate) solutions. Its production facilities are located mostly in the United States, Canada, and the United Kingdom, supported by a global distribution system.
The business has recently focused on two main areas. First, it is investing heavily in decarbonizing production by capturing and storing carbon dioxide emissions and developing low-carbon ammonia. Second, it is maintaining cost competitiveness through efficient management of feedstock, especially natural gas, which represents a significant share of manufacturing costs. Competitiveness requires reliable access to low-cost gas, high plant utilization, and rapid adaptation to changing regulation and global trade flows.
Quarter in Review: Operations, Markets, and Decarbonization
CF Industries' revenue (GAAP) rose by 20.2% compared to the prior year period. This growth was driven by robust sales volumes and a constructive demand environment, particularly in North American agriculture. The company's operational highlights included running its production facilities at 99% capacity for 1H 2025, resulting in anticipated gross ammonia production of around 10 million tons in 2025. High uptime and geographic reach allowed it to address customer needs in a market marked by tight inventories and solid end-user demand, such as corn farming.
Profitability, however, faced headwinds from natural gas price inflation. Net earnings (GAAP) declined 8.1% compared to Q2 2024, and gross margin contracted from 43.2% in Q2 2024 to 39.9% as average natural gas costs for production climbed to $3.36 per MMBtu from $1.90 per MMBtu in Q2 2024.
Decarbonization made tangible progress during the quarter. The company launched its Donaldsonville carbon capture and sequestration (CCS) project in July 2025, now actively capturing and storing carbon dioxide at planned rates. The project generates U.S. federal 45Q tax credits, expected to add approximately $100 million in annual free cash flow for 12 years following commissioning in July 2025 and reduce Scope 1 greenhouse gas emissions by about 10 %. Construction on the Blue Point complex, a new low-carbon ammonia facility built with partners JERA and Mitsui, focused on building out the project team, ordering long lead equipment, and preparing the site, with production targeted for 2029. These investments position the company to meet evolving environmental regulations and capitalize on emerging demand for low-carbon fertilizers and industrial ammonia.
Market conditions remained favorable for most of the period. U.S. farm demand for nitrogen products was solid, while global trade shifts and inventory levels helped support pricing. However, management noted that the coming online of new ammonia capacity in North America may increase competition and introduce further price and margin volatility in future periods, with ammonia in particular benefiting from tight supply in key U.S. agricultural locations.
The company returned $297 million to shareholders through dividends and buybacks, with $827 million returned to shareholders in 1H 2025. Capital expenditures were $245 million, including $90 million for the Blue Point JV. Ongoing commodity cost swings present a persistent underlying challenge for future quarters.
Looking Ahead: Outlook and Points of Attention
Management remains constructive about the medium-term outlook, expecting global demand for ammonia to outpace new capacity through 2030. The company aims to drive annual adjusted EBITDA to $3 billion and free cash flow to $2 billion at the expected 2030 mid-cycle as new projects come online. Planned capital expenditures for 2025 are $650 million, with about $150 million allocated to the Blue Point venture. The existing share repurchase program has about $425 million remaining as of 1H 2025, with an additional $2 billion authorization running through December 2029.
Going forward, several issues warrant close observation: continuing volatility in natural gas prices, the execution and scaling up of low-carbon production projects, the impact of new ammonia capacity and global trade changes, and ongoing regulatory evolution around greenhouse gas emissions. These factors will drive the company’s future margins and ability to meet decarbonization targets.
Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.
