16/08/2016
Press-release: PhosAgro 6M 2016 Net Profit up 30% to RUB 36.1 bln
Result |
6M 2016 |
6M 2015 |
year-on-year change (RUB vs. RUB), % |
||
RUB |
USD |
RUB |
USD |
||
million |
million |
||||
Revenue |
102,049 |
1,452 |
93,232 |
1,624 |
9% |
EBITDA* |
41,555 |
591 |
41,496 |
723 |
- |
EBITDA margin |
41% |
45% |
(4 p.p.) |
||
Net profit |
36,114 |
514 |
27,686 |
482 |
30% |
|
RUB |
USD |
RUB |
USD |
|
Earnings per share |
279 |
4 |
214 |
4 |
30% |
Sales volumes |
Kmt |
Kmt |
|||
Phosphate-based products |
2,907.7 |
2,724.8 |
7% |
||
Nitrogen-based fertilizers |
786.7 |
715.7 |
10% |
||
Apatit mine and beneficiation plant |
1,706.6 |
1,428.2 |
19% |
||
Other products |
49.1 |
55.6 |
(12%) |
- At its meeting on 16 August 2016, PhosAgro’s Board of Directors recommended that shareholders approve a dividend of RUB 4,274 million, which represents RUB 33 per share (RUB 11 per Global Depositary Receipt). Shareholders will vote on the dividend recommendation at an Extraordinary General Meeting of Shareholders scheduled for 3 October 2016.
- As a result of debottlenecking activities, the Company managed to increase fertilizer production and sales volumes by 9% and 8%, respectively, year-on-year during 6M 2016. Revenue for the period grew by 9% year-on-year, supported by depreciation of the RUB against the USD.
- 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 361 per tonne FOB Tampa in 6M 2016, down 24% versus 6M 2015 (USD 476 per tonne) due to relatively low seasonal demand in India, weak market conditions in the main commodity markets and higher supply of fertilizers following the launch of new capacities in Morocco;
- DAP/NPK import volumes to India in 6M 2016 were about 1.9 million tonnes, against 3.2 million tonnes in 6M 2015. However, local consumption and production has increased. There are no reliable statistics on complex fertilizer imports to India, as such, it is difficult to estimate net change on P2O5 basis, more likely for the full year it remains unchanged given increased local consumption and good monsoon developments. Tighter regulation on maximum retail prices for DAP/NPK as well should help local demand;
- Liberalisation of agricultural export rules in Argentina and high prices for the main crops in Brazil triggered higher demand for phosphate-based fertilizers in the region. Import of MAP/DAP to Argentina in 6M 2016 amounted to 0.5 million tonnes, up by 74% compared to 6M 2015. Import of phosphate-based fertilizers to Brazil (DAP/MAP/NP/NPK/TSP) grew by 23% year-on-year and amounted to 2.9 million tonnes;
- Export of phosphate-based fertilizers from China continues to lag behind last year's record levels, demonstrating 26% to 57% year-on-year reductions in various grades. DAP exports in 6M 2016 decreased by 26% year-on-year and amounted to 2.1 million tonnes, MAP exports fell by 41% year-on-year to 0.83 million tonnes;
- The average price of urea in 6M 2016 was USD 195 per tonne FOB Baltic, down by 30% from the 6M 2015 average (USD 280 per tonne), driven by oversupply on the global market as a result of launching of new capacities in the US and Western Africa, as well as a significant increase in capacity utilisation in North Africa (Egypt, as a result of stabilisation of the natural gas supply).
- In 6M 2016 the average price of ammonia was USD 275 per tonne FOB Yuzhny, which implies a 32% year-on-year decline from USD 402 per tonne FOB Yuzhny for 6M 2015. The decline in ammonia prices was triggered by lower natural gas prices coupled with an excess supply of commercial ammonia on the market (due to the launch of new ammonia units in US);
- The average price for sulphur in 6M 2016 was USD 73 per tonne FOB Black Sea, vs. USD 120 per tonne in 6M 2015, primarily due to the weak pricing environment in the fertiliser and metals industries, which are the main consumers of sulphur;
- The average price for phosphate rock in 6M 2016 was USD 111 per tonne, FOB Morocco (32% P2O5 content), a year-on-year decline of or USD 14 per tonne. The price for phosphoric acid touched USD 600-605 per tonne CFR India for shipments in 3Q and 4Q 2016, vs. USD 715 per tonne CFR India in 1Q 2016 and USD 805 per tonne in 2Q 2015.
Result |
6М 2016 RUB mln |
6М 2015 RUB mln |
year-on-year change, % |
Revenue |
90,529 |
81,874 |
11% |
Cost of goods sold |
(39,983) |
(35,240) |
13% |
Gross profit |
50,546 |
46,634 |
8% |
- MAP/DAP fertilizers: revenue from DAP/MAP sales was down by 8% year-on-year, from RUB 37,595 million (USD 655 million) in 6M 2015 to RUB 34,706 million (USD 494 million) in 6M 2016, reflecting the overall 1% year-on-year growth in sales volumes and a 9% year-on-year decrease in DAP/MAP average revenue per tonne denominated in RUB.
- NPK fertilizers: revenue from NPK sales was up by 5% year-on-year, from RUB 18,683 million (USD 326 million) in 6M 2015 to RUB 19,613 million (USD 279 million) in 6M 2016, reflecting the overall 5% year-on-year increase in NPK average revenue per tonne denominated in RUB with almost unchanged sales volumes.
- Phosphate rock: revenue from phosphate rock sales rose by 56% year-on-year to RUB 14,146 million (USD 201 million) in 6M 2016. Revenue per tonne in RUB terms increased by 25% year-on-year. Sales volumes increased by 24% year-on-year as a result of increased supplies to both export and domestic markets.
Result |
6М 2016 RUB mln |
6М 2015 RUB mln |
year-on-year change, % |
Revenue |
11,207 |
11,164 |
- |
Cost of goods sold |
(5,631) |
(5,566) |
1% |
Gross profit |
5,576 |
5,598 |
- |
Item |
2016 6M |
2015 6M |
Change y-on-y |
|||||
RUB |
USD |
% of cost |
RUB |
USD |
% of cost |
RUB |
% |
|
mln |
mln |
of sales |
mln |
mln |
of sales |
mln |
|
|
Materials and services |
12,282 |
175 |
27% |
9,590 |
167 |
23% |
2,692 |
28% |
Salaries and social contributions |
5,687 |
81 |
12% |
4,812 |
84 |
12% |
875 |
18% |
Depreciation |
4,412 |
63 |
10% |
3,894 |
68 |
10% |
518 |
13% |
Natural gas |
4,104 |
58 |
9% |
3,567 |
62 |
9% |
537 |
15% |
Sulphur and sulphuric acid |
3,847 |
55 |
8% |
4,438 |
77 |
11% |
(591) |
(13%) |
Potash |
3,664 |
52 |
8% |
3,443 |
60 |
8% |
221 |
6% |
Ammonia |
3,456 |
49 |
8% |
4,408 |
77 |
11% |
(952) |
(22%) |
Chemical fertilisers and other products for resale |
2,800 |
40 |
6% |
2,228 |
39 |
5% |
572 |
26% |
Electricity |
2,159 |
31 |
5% |
1,903 |
33 |
5% |
256 |
13% |
Ammonium sulphate |
1,329 |
19 |
3% |
1,314 |
23 |
3% |
15 |
1% |
Fuel |
1,134 |
16 |
2% |
1,303 |
23 |
3% |
(169) |
(13%) |
Heating energy |
386 |
5 |
1% |
380 |
7 |
1% |
6 |
2% |
Other items |
9 |
- |
- |
5 |
- |
- |
4 |
80% |
Change in stock of WIP and finished goods |
626 |
9 |
1% |
(305) |
(6) |
(1%) |
931 |
- |
Total |
45,895 |
653 |
100% |
40,980 |
714 |
100% |
4,915 |
12% |
- An increase of RUB 2,692 million (USD 38 million), or 28%, year-on-year in the cost of materials and services primarily due to a 26% increase in apatite-nepheline ore mining, 9% growth in fertilizer production volumes, and 3% year-on-year inflation.
- A year-on-year increase in personnel costs of RUB 875 million (USD 12 million), or 18%, primarily due to payroll indexation and PhosAgro 15 year anniversary bonuses.
- A decrease in expenditure on sulphur and sulphuric acid of RUB 591 million (USD 8 million), or 13%, year-on-year from RUB 4,438 million (USD 77 million) in 6M 2015 to RUB 3,847 million (USD 55 million) in 6M 2016. This was driven by a 21% decline in sulphur and sulphuric acid purchase prices denominated in RUB, which was partially offset by a 9% year-on-year increase in volumes consumed due to higher production of phosphate-based fertilizers, mainly MAP/DAP and NPK .
- A year-on-year decrease in expenditure on purchased ammonia of RUB 952 million (USD 14 million), or 22%, from RUB 4,408 million (USD 77 million) in 6M 2015 to RUB 3,456 million (USD 49 million) in 6M 2016. This was mainly due to a 22% decline in RUB-denominated prices.
- A year-on-year increase in expenditure on potash of 6%, from RUB 3,443 million (USD 60 million) in 6M 2015, to RUB 3,664 million (USD 52 million) in 6M 2016. This was mainly due to 6% growth in potash purchase volumes as a result of an increase in the share of NPK with higher potash content in PhosAgro’s overall NPK production mix.
- A year-on-year increase in expenditure on natural gas of RUB 537 million, or 15%, to RUB 4,104 million (USD 58 million) in 6M 2016. This was mainly due to a 12% increase in ammonia production volumes as well as natural gas tariff indexation in the second half of 2015.
- A year-on-year increase in expenditure on electricity of RUB 256 million, or 13%, to RUB 2,159 million (USD 31 million) in 6M 2016. This was due to growth in RUB-denominated electricity purchase prices by 9% year-on-year and an increase in purchase volumes by 4% year-on-year.
- A decrease in expenditure on fuel by 13%, from RUB 1,303 million (USD 23 million) in 6M 2015 to RUB 1,134 million (USD 16 million) in 6M 2016. This was mainly driven by a 20% decline in overall fuel purchase prices denominated in RUB, balanced by a 9% increase in volumes of fuel consumed. The increase in consumption volumes was mainly due to a 7% year-on-year increase in volumes of purchased heating oil as well as higher mining activities at Apatit. Heating oil is primarily used for drying of phosphate rock and nepheline concentrate, for both of which production volumes grew by 7% year-on-year.
- Russian Railways infrastructure tariff and operators’ fees increased by 35% from RUB 2,922 million (USD 51 million) in 6M 2015 to RUB 3,949 million (USD 56 million) in 6M 2016. This was mainly due to an increase in railway tariffs in 6M 2016 by 9% as well as a 29% increase in shipments to the domestic market, where the basic delivery term is CPT.
- Growth of 52% in materials and services from RUB 1,091 million (USD 19 million) in 6M 2015, to RUB 1,662 million (USD 24 million) in 6M 2016. This was mainly driven by an increase in multimode shipment volumes on the export market.
- According to IFA, phosphate-based fertilizer consumption in 2016 is forecast to grow by 0.8 million tonnes, or 2%, to 41.6 million tonnes of P2O5. Looking ahead to 2020, the growth in phosphate-based fertilizers consumption is expected to average 2.1% per year, reaching 45.3 million tonnes of P2O5. The highest consumption growth rates are forecast in Latin America (4.2% per year), Africa (3.9% per year), Southern Asia (3.6% per year).
- Favourable weather conditions and seasonal demand in India should support imports though the second half of October. Annual DAP imports to India is projected to be at 5.0-5.5 million tonnes (based on CRU data, Argus-FMB).
- The highest levels of activity in Brazil and Argentina in terms of MAP purchases ahead of October soybean planting should take place in August and September; this is expected to have a stabilising effect on the market.
- In autumn 2016, seasonal demand is expected to return in Europe, USA and Africa.
- Going into the low season environment late October – November , we might see additional downside pricing risk coming from the launch of a new integrated complex with a capacity of 1.0 million tonnes of DAP/MAP/NPS/NPK per year in Morocco unless we see production curtailments globally.
- 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.
- PhosAgro France was registered in August 2016. 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.
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