17/05/2017
Press release: PhosAgro 1Q 2017 EBITDA is RUB 12.7 billion
1Q 2017 |
1Q 2016 |
YoY change (in RUB), % |
|||
RUB |
USD |
RUB |
USD |
||
million |
million |
||||
Revenue |
44,398 |
755 |
56,073 |
751 |
(21%) |
EBITDA* |
12,675 |
215 |
25,249 |
338 |
(50%) |
EBITDA margin |
29% |
45% |
(16 p.p.) |
||
Net profit |
12,263 |
208 |
22,631 |
303 |
(46%) |
Key Products Sales volumes |
Kmt |
Kmt |
|||
Phosphate-based products |
1,536.0 |
1,406.9 |
9.2% |
||
Nitrogen-based fertilizers |
460.5 |
429.8 |
7.1% |
||
Phosphate rock |
687.0 |
632.2 |
8.7% |
- At its meeting on 16 May 2017, PhosAgro’s Board of Directors recommended that shareholders approve a dividend of RUB 2,720 million, which represents RUB 21 per share (RUB 7 per Global Depositary Receipt).
- The average price of DAP (FOB Tampa) in 1Q 2017 was USD 355 per tonne, which represents a 10% quarter-on-quarter increase from USD 324 per tonne in 4Q 2016. On a year-on-year basis, the price was 4% down from USD 370 per tonne in 1Q 2016. The quarterly increase in global prices for phosphate-based fertilizers was triggered by the start of the spring season in Europe, the US and China, as well as tight product availability due to supply disruptions in the US and Morocco.
- High DAP/NPK stocks in India (more than 2 million tonnes as of year-end) lowered demand for import volumes in 1Q 2017
- The recovery in phosphate prices was supported by strong import volumes to Brazil. In 1Q 2017 the overall import of phosphates (DAP/MAP/TSP/NP/NPK) reached 1.8 million tonnes, which implies an 80% year-on-year increase.
- The average urea price (FOB Baltic) in 1Q 2017 stood at USD 237 per tonne vs. USD 194 per tonne in 1Q 2016 and USD 205 per tonne in 4Q 2016. The recovery in prices was driven by two factors: 1) the start of the high season in North and South America, as well as Europe, and 2) production curtailments in China due to rising cash costs and stricter environmental regulations. Urea exports from China in 1Q 2017 stood at 1.2 million tonnes, down by 59% year-on-year.
- In 1Q 2017 the average price of ammonia (FOB Yuzhny) was USD 300 per tonne, which implies a 10% year-on-year increase from the USD 273 per tonne levels seen in 1Q 2016, and a 57% quarter-on-quarter increase from USD 191 per tonne in 4Q 2016.
- The average price for phosphate rock (FOB Morocco with 32% P2O5 content) in the first quarter 2017 was in the range of USD 80-105 per tonne, compared to USD 95-140 per tonne in 1Q 2016.
- The phosphoric acid price for India (CFR India) was agreed at USD 545-550 per tonne of P2O5 for 1Q 2017, and USD 570-590 per tonne of P2O5 for 2Q 2017.
- MAP/DAP fertilizers: revenue from DAP/MAP sales was down by 24% year-on-year to RUB 15.2 billion (USD 258 million) in 1Q 2017, reflecting a 25% year-on-year decrease in DAP/MAP average revenue per tonne denominated in RUB and an overall 1% year-on-year growth in sales volumes.
- NPK(S) fertilizers: revenue from NPK(S) decreased by a similar 24% year-on-year, to RUB 9.7 billion (USD 165 million) in 1Q 2017. NPK(S) average revenue per tonne denominated in RUB dropped by 34% year-on-year, which was compensated by a more than 14% year-on-year increase in sales volumes.
- Phosphate rock: revenue from phosphate rock sales declined by 27% year-on-year to RUB 5.7 billion (USD 98 million) in 1Q 2017. Revenue per tonne in RUB terms decreased by 33% year-on-year. Sales volumes increased by almost 9% year-on-year due to the greater demand on export markets.
- Nitrogen-based products: revenue from urea + AN sales was down by 4% year-on-year, at RUB 6.1 billion (USD 104 million). Revenue per tonne in RUB terms for AN and urea declined by 13% and 7% year-on-year, respectively, which was partially compensated by 21% year-on-year growth in AN sales (predominantly to the domestic market).
- Phosphate-based segment saw a 40% year-on-year decrease in gross profit to RUB 17.1 billion (USD 291 million), with a gross margin of 45%, compared to a 58% margin in 1Q 2016.
- Gross profit for the nitrogen-based segment decreased by 15% year-on-year to RUB 2.9 billion (USD 48 million). Gross margin for the segment fell by 6 p.p. year-on-year to 46%.
Item |
1Q 2017 |
1Q 2016 |
Change YoY |
||||
RUB mln |
USD mln |
% of cost of sales |
RUB mln |
USD mln |
% of cost of sales |
% (RUB) |
|
Materials and services |
6,797 |
115 |
28% |
6,062 |
81 |
25% |
12.1% |
Depreciation |
2,801 |
48 |
12% |
2,265 |
30 |
9% |
23.7% |
Salaries and social contributions |
2,743 |
47 |
11% |
2,682 |
36 |
11% |
2.3% |
Ammonia |
2,262 |
38 |
9% |
2,041 |
27 |
9% |
10.8% |
Natural gas |
2,090 |
36 |
9% |
2,108 |
28 |
9% |
(0.9%) |
Chemical fertilisers and other products for resale |
1,683 |
29 |
7% |
1,599 |
21 |
7% |
5.3% |
Potash |
1,568 |
27 |
7% |
1,816 |
24 |
8% |
(13.7%) |
Electricity |
1,327 |
23 |
5% |
1,102 |
15 |
5% |
20.4% |
Sulphur and sulphuric acid |
1,231 |
21 |
5% |
2,390 |
32 |
10% |
(48.5%) |
Ammonium sulphate |
800 |
14 |
3% |
814 |
11 |
3% |
(1.7%) |
Fuel |
795 |
14 |
3% |
626 |
8 |
3% |
27.0% |
Heating energy |
245 |
4 |
1% |
265 |
4 |
1% |
(7.5%) |
Other items |
5 |
0 |
0% |
2 |
0 |
0% |
150.0% |
Change in stock of WIP and finished goods |
70 |
1 |
0% |
219 |
3 |
1% |
(68.0%) |
Total |
24,417 |
415 |
100% |
23,991 |
321 |
100% |
1.8% |
- Spending on materials and services grew by 12% year-on-year to RUB 6.8 billion (USD 115 million) driven by a 10% increase in phosphate rock processing, 2% growth in overall fertilizer production, and 4.6% year-on-year CPI inflation.
- An 11% year-on-year increase in spendings on purchased ammonia to RUB 2.3 billion (USD 38 million) was due to a 21% increase in purchase volumes, which was partially offset by a 9% decrease in RUB-denominated prices. The growth in purchased volumes was driven by an almost 4% year-on-year increase in phosphate-based fertilizer production, as well as a 6% decrease in own ammonia processing.
- Spending on natural gas was marginally down by 1% year-on-year to RUB 2.1 billion (USD 36 million). Lower consumption due to a decline in ammonia production was almost fully compensated by slightly higher gas consumption per unit of production. Gas tariffs were unchanged year-on-year.
- A year-on-year decrease in expenditure on potash of 14% to RUB 1.6 billion (USD 27 million) in 1Q 2017 was due to a 27% decrease in RUB-denominated prices, which was counterbalanced by 13% growth in purchased volumes.
- Electricity costs increased by 20% year-on-year to RUB 1.3 billion (USD 23 million) on the back of 5% growth in consumption (resulting from increased extraction of apatite-nepheline ore from underground mining, where electricity is primarily consumed) and a 15% increase in the average electricity price.
- Expenditures on sulphur and sulphuric acid were down significantly by 49% year-on-year to RUB 1.2 billion (USD 21 million), primarily triggered by a nearly identical decline in RUB-denominated prices
- Russian Railways infrastructure tariff and operators’ fees increased by 14% year-on-year to RUB 2.4 billion (USD 40 million) mainly due to a 6% increase in railway tariffs as well as growth in fertilizer sales (primarily to the domestic market, where predominantly CPT shipments increased by 27% year-on-year).
- Freight, port and stevedoring expenses decreased by 9% year-on-year primarily on the back of sizeable USD/RUB exchange rate appreciation. The majority of tariffs are USD-linked.
- The end of the spring season in North and South America, as well as in Europe resulted in some price softening at the beginning of 2Q 2017
- As the high season in South Asia (India and Pakistan), Latin America (Brazil) as well as in Russia developes, this is likely to support prices going forward.
- In India, the rainfall season (Monsoon) is expected to be within long-term averages that shall support phosphate consumption (in terms of P2O5 content).
- According to Fertecon and CRU, growth of phosphate imports to Latin America may reach 5% year-on-year in 2017
- China remains the “swing” player on the seaborn market. However, industry consolidation in the country, coupled with production and export curtailments is likely to stabilise prices.
- On the downside, additional capacity scheduled to be commissioned in 2017 in Morocco and Saudi Arabia may have a limiting factor for any significant price increases.
- 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.
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