Businessmodel of CF Industries

Customer Segments

CF Industries serves a range of agricultural and industrial customers. The Company’s principal customers are:

• Cooperatives, comprising regional agricultural marketing and supply cooperatives, and community farming projects;
• Independent fertiliser distributors, including independent sales agents and distributors;
• Farmers, comprising individual farmers and commercial agricultural producers; and
• Industrial entities, including chemicals producers and metals companies. In 2015 none of CF Industries’s customers accounted for more than 10% of the Company’s consolidated net sales for the year.

CF Industries’s principal market is the US, with domestic US customers accounting for around 80% of the Company’s total 2015 sales. The majority of the Company’s remaining sales are made to customers in Canada; however, CF Industries does serve customers across Europe, the Middle East, and Latin America.

Value Propositions

CF Industries provides value to its customers in the following ways:

• The quality of its products, with the Company providing high-quality, industry-leading products that are utilised by numerous high-profile customers across the US and abroad;
• Its efficient and reliable production processes, with the Company operating state-of-the-art manufacturing facilities in the US, Canada, and the UK, and implementing effective logistic and distribution channels for on-time delivery;
• Its safety practices, with the Company having a positive safety record and implementing thorough environmental and safety protocols; and
• Its commitment to innovation, with the Company devoting a significant portion of its funds to the development of new and innovative products and processes. ### Channels

CF Industries operates a website at www.cfindustries.com, through which it provides information on its various products, activities, and corporate developments. The Company, however, does not operate an online sales channel.

The vast majority of CF Industries’s sales are made through its own internal marketing and sales force, which is organised both product segment and by geographic region. The Company operates a network of offices and facilities, with the Company making sales across the Americas, Europe, the Middle East.

The operations of CF Industries’s in-house sales force is supported by a network of third-party channel partners, including independent sales agents and fertiliser distributors.

Customer Relationships

CF Industries does not make any of its products available to customers on a self-service basis. Instead, customers must consult directly with the Company’s relevant in-house sales team, taking time to agree the terms of a mutually beneficial sales contract. CF Industries seeks to establish long-term relationships form its customers, with a view to securing recurring business, often agreeing multi-year sales contracts.

CF Industries provides customer support services to its clients throughout the lifespan of its sales agreements, offering personal care to existing customers in relation to production and delivery processes. Potential and existing customers are able to contact the Company’s sales and support staff directly over the phone, via email, or by mail, receiving a personal response to queries and enquiries.

Customers are able to access information on the Company’s activities, products and performance through its Insights and News portal. They are also able to interact directly with the Company through its social media accounts with LinkedIn and YouTube.

Key Activities

CF Industries is a manufacturer and distributor of nitrogen fertiliser and other nitrogen products, primarily serving agricultural cooperatives, farmers, and industrial companies across the Americas, Europe, and the Middle East. The Company provides a broad range of nitrogen fertiliser products through six product-focused operating segments, namely ammonia, granular urea, urea ammonium nitrate solution, and ammonium nitrate.

It also operates segment dedicated to the production of other nitrogen products such as diesel exhaust fluid, urea liquor, nitric acid and aqua ammonia, which are sold primarily to its industrial customers, as well as compound fertiliser products. The Company also generates some revenue through the production and sale of phosphate products; however, CF Industries appears to be exiting this business.

Key Partners

CF Industries collaborates with various partner companies throughout the process of developing, manufacturing and distributing its products. These partners can be categorised broadly as:

• Supplier Partners, comprising suppliers of tools, resources, technology and services that support the Company’s development and manufacturing operations;
• Channel Partners, comprising independent sales agents, and agricultural and fertiliser distributors;
• Joint Venture Partners, comprising a range of companies – principally agricultural, fertilisers and financial companies – that collaborate with the Company on various projects and regional operations through jointly-owned entities; and
• Strategic and Alliance Partners, comprising a range of companies with which the Company shares resources and collaborate son joint projects. CF industries also partners with a range of industry bodies and regulatory organisations, including Agricultural Industry Confederation, British Compressed Gas Association, Energy Intensive Users Group, and National Farmers Union.

Key Resources

CF Industries’s key resources are its technologies and intellectual properties, its manufacturing infrastructure, its supply chain, its sales and distribution channels – including storage and logistics facilities, its partnerships, and its personnel.

CF Industries owns or leases six nitrogen fertiliser manufacturing facilities in the US, and two nitrogen manufacturing complexes in the UK, as well as a network of distribution terminals. The Company also has an interest in a nitrogen fertiliser manufacturing facility through Terra Nitrogen Company, and an interest in an ammonia production plant through Point Lisas Nitrogen.

Cost Structure

CF Industries incurs costs in relation to the development of its products and processes, the operation of its manufacturing and production facilities, the purchase of supplies, the operation of its sales and distribution channels, the management of its partnerships, and the retention of its personnel.

In 2015 CF Industries accrued selling, general and administrative expenses – including the payment of salaries and benefits to its 2,800 full-time employees and 100 part-time employees – amounted to $169.8 million. The Company also accrued transaction costs – attributable primarily to consulting and legal services associated with various strategic agreements – totaling $56.9 million.

Revenue Streams

CF Industries generates revenue through the production and sale of various nitrogen-based fertiliser products, as well as, to a lesser degree, of phosphate products. This includes the sale of ammonia products, granular urea products, urea ammonium nitrate solution products, ammonium nitrate products, diesel exhaust fluid, urea liquor, nitric acid and compound fertiliser products.

In 2015 CF Industries generated total net sales of $4.31 billion, down on the $4.74 billion recorded by the Company in 2014. The Company attributed this decrease to a general decline in product sales. The Company’s largest revenue generator is its ammonia products division, which generated sales in 2015 of $1.52 billion. This was followed by the Company’s urea ammonium nitrate solution division which generated annual sales in the amount of $1.48 billion.