25/05/2016
Press-release: PhosAgro Q1 2016 Net Profit up 60% to RUB 22.6 bln
Result |
Q1 2016 |
Q1 2015 |
year-on-year change (RUB vs. RUB), % |
||
RUB |
USD |
RUB |
USD |
||
million |
million |
||||
Revenue |
56,073 |
751 |
50,224 |
808 |
12% |
EBITDA* |
25,249 |
338 |
24,590 |
395 |
3% |
EBITDA margin |
45% |
49% |
(4 p.p.) |
||
Net profit |
22,631 |
303 |
14,164 |
228 |
60% |
|
RUB |
USD |
RUB |
USD |
|
Earnings per share |
175 |
2 |
109 |
2 |
61% |
Sales volumes |
Kmt |
Kmt |
|||
Phosphate-based products |
1,431.6 |
1,304.8 |
10% |
||
Nitrogen-based fertilizers |
429.8 |
412.5 |
4% |
||
Apatit mine and beneficiation plant |
843.7 |
724.3 |
16% |
||
Other products |
21.1 |
32.3 |
(35%) |
- At its meeting on 24 May 2016, PhosAgro’s Board of Directors recommended that shareholders approve a dividend of RUB 8,159 million, which represents RUB 63 per share (RUB 21 per Global Depositary Receipt). Shareholders will vote on the dividend recommendation at the Extraordinary General Meeting of Shareholders scheduled for 29 July 2016.
- As a result of debottlenecking activities, the Company managed to increase production and sales volumes by 10% and 8%, respectively, year-on-year during Q1 2016. Revenue for the period grew by 12% year-on-year, supported by an 8% increase in sales volumes and depreciation of the RUB against the USD.
- In January 2016 PhosAgro signed an 18-month loan agreement for RUB 3 billion with Eximbank of Russia. This will enable the Company to strengthen flexibility of sales on export markets and to improve the turnover of PhosAgro’s financing resources.
- In March 2016, PhosAgro launched another trading office: PhosAgro Baltics (Warsaw, Poland). This will strengthen the Company’s position in its priority European market. New sales offices enable PhosAgro to better understand the needs of local customers, help it to react faster to market demand, facilitate promotion of the PhosAgro brand as the supplier of the best-quality phosphate-based fertilizers, and ensure that the Company offers local customers the right nutrient solutions.
- The average price of DAP was USD 370/tonne FOB Tampa in Q1 2016, down by 12% from 4Q 2015 (USD 421/tonne), and by 23% from Q1 2015 (USD 483);
- Weak oil and soft commodities prices were the main factors behind the downwards pressure on fertilizer prices. Increased competition between the world’s main fertilizer producers also affected the market, with seasonally slow demand from India and Latin America;
- Lower prices led Chinese producers to curtail production and export volumes. Chinese DAP/MAP exports in Q1 2016 declined by 37% year-on-year to 888 kt. Overall Chinese export of phosphate-based fertilizers fell by 40% year-on-year to 508 kt of P2O5;
- The decline in Indian subsidy levels was small relative to the decrease in global phosphate-based fertilizer prices, leading to active import demand from the country in late-March and April 2016;
- Brazil’s programme to subsidise interest rates for farmers has been in place since the beginning of the year. February and March saw a significant increase in import demand from Brazil, as well as from Argentina, where export duties for most agricultural products were lowered or removed early in the year. Demand from these countries helped to stabilise global prices, with Brazilian demand for phosphate-based fertilizers (DAP/MAP/TSP/NP/NPK) in Q1 2016 amounting to 1,024 kt, up by 34% year-on-year. Argentina imported 278 kt of DAP/MAP during Q1 2016, an increase of 84% year-on-year;
- Global urea prices were also under pressure in Q1 2016, due to seasonally low demand in India and Latin America, as well as heightened competition in western European and US markets due to factors like the launch of new US capacities and higher utilisation rates for north African capacities;
- The average price of urea in Q1 2016 was USD 194/tonne FOB Baltic, which was 21% lower than 4Q 2015 (USD 246/tonne), and down by 33% from Q1 2015 (USD 289/tonne).
Result |
Q1 2016 RUB mln |
Q1 2015 RUB mln |
year-on-year change, % |
Revenue |
49,499 |
42,860 |
15% |
Cost of goods sold |
(20,565) |
(16,712) |
23% |
Gross profit |
28,934 |
26,148 |
11% |
- MAP/DAP fertilizers: Revenue from DAP/MAP sales was down 6% year-on-year, from RUB 21,113 million (USD 339 million) in Q1 2015 to RUB 19,862 million (USD 266 million) in Q1 2016, reflecting the overall 4% year-on-year growth in sales volumes and a 10% decrease in DAP/MAP average revenue per tonne denominated in RUB.
- NPK fertilizers: Revenue from NPK sales was up by 11% year-on-year, from RUB 8,910 million (USD 143 million) in Q1 2015 to RUB 9,898 million (USD 133 million) in Q1 2016, reflecting the overall 2% year-on-year growth in sales volumes and a 9% increase in NPK average revenue per tonne denominated in RUB.
- Phosphate rock: revenue from phosphate rock sales rose by 55% year-on-year to RUB 7,858 million (USD 105 million) in Q1 2016. Revenue per tonne in RUB terms increased by 27% year-on-year. Sales volumes increased by 22% year-on-year as a result of increased supplies to the domestic market.
Result |
Q1 2016 RUB mln |
Q1 2015 RUB mln |
year-on-year change, % |
Revenue |
6,422 |
7,028 |
(9%) |
Cost of goods sold |
(3,068) |
(2,730) |
12% |
Gross profit |
3,354 |
4,298 |
(22%) |
Item |
Q1 2016 |
Q1 2015 |
Change y-on-y |
|||||
RUB mln |
USD mln |
% of cost of sales |
RUB mln |
USD mln |
% of cost of sales |
RUB mln |
% |
|
Materials and services |
5,891 |
79 |
25% |
4,361 |
70 |
22% |
1,530 |
35% |
Salaries and social contributions |
2,644 |
35 |
11% |
2,303 |
37 |
12% |
341 |
15% |
Sulphur and sulphuric acid |
2,390 |
32 |
10% |
2,231 |
36 |
11% |
159 |
7% |
Depreciation |
2,253 |
30 |
9% |
1,884 |
30 |
10% |
369 |
20% |
Natural gas |
2,108 |
28 |
9% |
1,977 |
32 |
10% |
131 |
7% |
Ammonia |
2,041 |
27 |
8% |
2,136 |
34 |
11% |
(95) |
(4%) |
Potash |
1,816 |
24 |
8% |
1,519 |
24 |
8% |
297 |
20% |
Chemical fertilisers and other products for resale |
1,599 |
22 |
7% |
1,076 |
18 |
5% |
523 |
49% |
Electricity |
1,102 |
15 |
5% |
977 |
16 |
5% |
125 |
13% |
Ammonium sulphate |
814 |
11 |
3% |
821 |
13 |
4% |
(7) |
(1%) |
Fuel |
626 |
9 |
3% |
641 |
10 |
3% |
(15) |
(2%) |
Heating energy |
265 |
4 |
1% |
241 |
4 |
1% |
24 |
10% |
Other items |
2 |
- |
- |
3 |
- |
- |
(1) |
(33%) |
Change in stock of WIP and finished goods |
219 |
3 |
1% |
(426) |
(7) |
(2%) |
645 |
(151%) |
Total |
23,770 |
319 |
100% |
19,744 |
317 |
100% |
4,026 |
20% |
- An increase of RUB 1,530 million (USD 21 million), or 35%, year-on-year in the cost of materials and services primarily due to a 29% increase in apatite-nepheline ore mining, 10% growth in fertilizer production volumes, and 4% year-on-year inflation.
- A year-on-year increase in personnel costs of RUB 341 million (USD 5 million), or 15%, primarily due to payroll indexation.
- An increase in expenditure on sulphur and sulphuric acid of RUB 159 million (USD 2 million), or 7%, year-on-year from RUB 2,231 million (USD 36 million) in Q1 2015 to RUB 2,390 million (USD 32 million) in Q1 2016. This was driven by a 14% year-on-year increase in volumes consumed due to higher production of phosphate-based fertilizers, mainly MAP/DAP and NPK, balanced by a 6% decline in sulphur and sulphuric acid purchased prices denominated in RUB.
- A year-on-year decrease in expenditure on purchased ammonia of RUB 95 million (USD 1 million), or 4%, from RUB 2,136 million (USD 34 million) in Q1 2015 to RUB 2,041 million (USD 27 million) in Q1 2016. This was due to a 20% decline in RUB-denominated prices, balanced by higher purchase volumes, year-on-year. Growth in ammonia purchase volumes was due to increase in fertilizer production volumes.
- A year-on-year increase in expenditure on potash of 20%, from RUB 1,519 million (USD 24 million) in Q1 2015, to RUB 1,816 million (USD 24 million) in Q1 2016. This was mainly due to a 9% rise in RUB-denominated potash purchase prices and 10% growth in potash purchase volumes as a result of a 7% increase in NPK production volumes with higher potash content.
- A year-on-year increase in expenditure on natural gas of RUB 131 million, or 7%, to RUB 2,108 million (USD 28 million) in Q1 2016. This was due to growth in RUB-denominated natural gas purchase prices by 7%.
- A year-on-year increase in expenditure on electricity of RUB 125 million, or 13%, to RUB 1,102 million (USD 15 million) in Q1 2016. This was due to growth in RUB-denominated electricity purchase prices by 11% year-on-year.
- A decrease in expenditure on fuel of 2%, from RUB 641 million (USD 10 million) in Q1 2015 to RUB 626 million (USD 9 million) in Q1 2016. This was mainly driven by an 8% increase in heating oil consumption balanced by a 10% decline in overall fuel purchase prices denominated in RUB. Heating oil is primarily used for drying of phosphate rock and nepheline concentrate, for which production volumes grew by 6% and 8% year-on-year, respectively.
- Russian Railways infrastructure tariff and operators’ fees increased by 37% from RUB 1,530 million (USD 25 million) in Q1 2015 to RUB 2,093 million (USD 28 million) in Q1 2016. This was mainly due to an increase in railway tariffs in Q1 2016 by 9% as well as a 31% increase in shipments to the domestic market, where the basic delivery term is CPT.
- Growth of 20% in materials and services from RUB 866 million (USD 14 million) in Q1 2015, to RUB 1,039 million (USD 14 million) in Q1 2016. This was mainly driven by an increase in multimode shipment volumes on the export market.
- June marks the start of seasonal demand from key markets in Asia (India, Pakistan) and Latin America (Brazil, Argentina), with the highest levels of activity taking place from June to September; this is expected to have a stabilising effect on the market;
- At the same time, the decline in prices during Q1 2016 has made fertilizers more accessible to consumers, with the ratio of fertilizer prices to agricultural products prices currently more favourable for fertilizers, meaning that stable demand can be expected from all fertilizer-consuming regions;
- In addition, recent increases in soft commodities prices, especially corn and soy, may stimulate farmers to increase crop acreage, as well higher fertilizer application volumes;
- On the supply side, China clearly remains a key player for global markets. However, following the decline in prices, Chinese export this year is likely to decrease and loss-making capacities are expected to remain shut;
- Reduced Chinese export is more likely to be compensated by increase of export from OCP with the launch in Morocco of a new 1 million tonne/year DAP/MAP/NPK capacity at the end of 2015, and another 1.0 million tonnes due to come online in mid-2016. Otherwise, high levels of competition may continue to hold back fertilizer price growth.
- The rouble depreciation, which accelerated at the end of 2015, continued in Q1 2016, and there is limited potential for significant appreciation unless oil prices increase dramatically.
- As a result of marketing efforts at new sales offices, the Company expects to further increase sales in its target regions, and intends to invest further into expanding the number of NPK and other fertilizer grades it produces.
- All major development projects are on track, including the new ammonia plant designed to increase cost efficiency and support further expansion of PhosAgro’s complex fertilizer production capacity.
https://www.phosagro.com/press/company/item11953.php
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