CF · 10-Q · 2026Q2 · Full report
Gross Margin Drivers
CF Industries Holdings, Inc. · 2026-08-06 · Importance 59 · Surprise 48 · In source text
Consolidated gross margin percentage increased to 51.5% in the second quarter of 2026 from 39.9% in the second quarter of 2025 and to 44.9% for the six months from 37.3%. Second-quarter cost of sales declined 5% to $1.08 billion despite a 12% increase in cost per ton to $253, because lower volume reduced costs by $129 million; maintenance activity and unabsorbed fixed costs from plant downtime partially offset the benefit. Six-month cost of sales increased 4% to $2.32 billion, including a $73 million increase from natural gas costs, partly offset by a $173 million volume-related reduction. Segment gross margin expanded particularly in Granular Urea to $732 million for six months, up 62%, and UAN to $600 million, up 46%, while AN gross margin fell to a $15 million loss from $41 million of income.
Key facts
- Gross margin increased by $390 million, or 52%, to $1.145 billion for Q2 2026 compared to $755 million for Q2 2025. source
- The increase in gross margin was due primarily to a $588 million increase from a 39% increase in average selling prices to $523 per ton, partially offset by a $127 million decrease from lower sales volume and higher maintenance and unabsorbed fixed costs. source
- Ammonia gross margin Q2 2026: $229 million vs $136 million in Q2 2025; gross margin percentage 39.1% vs 27.7%. source
- Granular Urea gross margin Q2 2026: $477 million vs $279 million in Q2 2025; gross margin percentage 62.8% vs 51.0%. source
- UAN gross margin Q2 2026: $350 million vs $270 million in Q2 2025; gross margin percentage 57.1% vs 44.3%. source
- Ammonia gross margin increase attributed primarily to 50% increase in average selling prices which increased gross margin by $192 million; partially offset by 20% decrease in sales volume (decreased gross margin by $46 million), net increase in manufacturing/maintenance/other costs (decreased by $39 million), and increase in realized natural gas costs (reduced gross margin by $15 million). source
- Other segment gross margin Q2 2026: $93 million vs $45 million in Q2 2025; gross margin percentage 48.2% vs 36.0%. source
- Decrease in cost of sales due primarily to decrease in sales volume which decreased cost of sales by $129 million; partially offset by higher maintenance and unabsorbed fixed costs including at idled Yazoo City complex. source
Impact estimates
| metric | direction | stage | expected | basis |
|---|---|---|---|---|
| operating_income | positive | realized | +26.5% | The increase in gross margin was due primarily to a $588 million increase from a 39% increase in average selling prices to $523 per ton,… |
| operating_income | positive | realized | +17.6% | Gross margin increased by $390 million, or 52%, to $1.145 billion for Q2 2026 compared to $755 million for Q2 2025. |
| operating_income | positive | realized | +8.9% | Granular Urea gross margin Q2 2026: $477 million vs $279 million in Q2 2025; gross margin percentage 62.8% vs 51.0%. |
| operating_income | positive | realized | +8.6% | Ammonia gross margin increase attributed primarily to 50% increase in average selling prices which increased gross margin by $192 million;… |
| operating_income | positive | realized | +5.8% | Decrease in cost of sales due primarily to decrease in sales volume which decreased cost of sales by $129 million; partially offset by… |
| operating_income | negative | realized | -5.7% | The increase in gross margin was due primarily to a $588 million increase from a 39% increase in average selling prices to $523 per ton,… |
| operating_income | negative | realized | -4.1% | Cost of sales Jan–Jun 2026: $2.32 billion, increased $91 million or 4% from $2.23 billion in prior year; higher maintenance/unabsorbed… |
| operating_income | positive | realized | +3.6% | UAN gross margin Q2 2026: $350 million vs $270 million in Q2 2025; gross margin percentage 57.1% vs 44.3%. |
| operating_income | positive | realized | +2.2% | Other segment gross margin Q2 2026: $93 million vs $45 million in Q2 2025; gross margin percentage 48.2% vs 36.0%. |
| operating_income | negative | realized | -2.1% | Ammonia gross margin increase attributed primarily to 50% increase in average selling prices which increased gross margin by $192 million;… |
| operating_income | negative | realized | -1.8% | Ammonia gross margin increase attributed primarily to 50% increase in average selling prices which increased gross margin by $192 million;… |
| operating_income | positive | realized | +0.8% | Gross margin in our Other segment increased by $18 million, or 18%, to $118 million in the six months ended June 30, 2026 from $100… |