(Reuters) - U.S. fertilizer producer CF Industries (N:CF) reported a 44 percent drop in third quarter profit on Wednesday, a steeper than expected fall.
Shares of CF, the world's No. 2 nitrogen fertilizer maker after Norway's Yara International ASA (OL:YAR), dropped more than 4 percent after normal trading hours in New York. They had closed at $253.63.
Chief Executive Tony Will said the higher cost of natural gas, a key input in nitrogen fertilizer production, contributed to the drop in profit. Higher storage costs also reduced earnings.
Net earnings fell to $130.9 million, or $2.62 a share, from $234.1 million, or $4.07 a share, a year earlier.
Net sales for the Deerfield, Illinois, company dropped 16 percent to $921.4 million, reflecting the sale of CF's phosphate business to Mosaic Co (N:MOS). CF's nitrogen sales volume rose 6 percent, with half of the increase due to a contract with Mosaic.
Analysts, on average, had expected CF to earn $3.47 a share on sales of $932.4 million, according to Thomson Reuters I/B/E/S.
A drop in grain prices and a delayed U.S. harvest have hampered farmers' purchases of fertilizer. But CF said it has a "positive" outlook on the current fourth quarter as farm economics remain attractive and North American natural gas costs have dropped from their 2014 highs.
An unplanned outage at its Woodward, Oklahoma, complex last month will reduce volumes of UAN (urea-ammonium nitrate) and cut cash operating earnings by $20 million, CF said.
Last month, CF and rival Yara ended talks about a potential merger.
(Reporting by Rod Nickel in Winnipeg, Manitoba; Editing by Chris Reese and Peter Galloway)