21/03/2018
Press release: PhosAgro’s revenue in 4Q 2017 increased by 14% y/y to RUB 45.8 billion
RUB million or % |
4Q 2017 |
4Q 2016 |
Chng, %YoY |
FY 2017 |
FY 2016 |
Chng, %YoY |
Revenue |
45,778 |
40,135 |
14% |
181,351 |
187,742 |
-3% |
EBITDA** |
12,752 |
13,442 |
-5% |
51,263 |
72,365 |
-29% |
EBITDA margin |
27.8% |
33.5% |
-6 pp |
28.3% |
38.5% |
-10 pp |
Net income |
4,256 |
11,371 |
-63% |
25,331 |
59,886 |
-58% |
Net income adj* |
3,700 |
7,431 |
-50% |
21,190 |
42,924 |
-51% |
|
31-12-2017 |
31-12-2016 |
||||
Net debt |
119,985 |
105,115 |
||||
ND/LTM EBITDA |
2.3x |
1.5x |
||||
Sales, 000' mt |
4Q 2017 |
4Q 2016 |
Chng, %YoY |
FY2017 |
FY2016 |
Chng, %YoY |
Phosphate-based |
1,599 |
1,418 |
13% |
6,489 |
5,829 |
11% |
Nitrogen-based |
411 |
327 |
26% |
1,616 |
1,394 |
16% |
Phosphate rock |
734 |
609 |
21% |
2,732 |
2,448 |
12% |
- The average price of DAP (FOB Tampa) in 4Q 2017 was USD 364 per tonne, which implies a year-on-year increase of USD 41, or 13%, per tonne.
- The key reasons behind the recovery in phosphate prices were: 1) a nearly 30% year-on-year decrease in phosphate exports (DAP/MAP/NP/TSP) from China in 4Q 2017 due to a spike in feestock prices and stricter environmental regulations; 2) robust activity on the Indian market, where overall DAP imports grew by more than 60% year-on-year to 900k+ tonnes; and 3) idling of Plant City by Mosaic.
- The average price of urea (FOB Baltic) in 4Q 2017 was USD 241 per tonne vs. USD 206 per tonne in 4Q 2016. The price increase was supported by seasonal demand in South Asia and Brazil, coupled with a substantial decrease in exports from China.
RUB million |
4Q 2017 |
4Q 2016 |
Chng, % YoY |
FY 2017 |
FY 2016 |
Chng, % YoY |
DAP/MAP |
14,955 |
13,505 |
11% |
62,188 |
63,906 |
-3% |
NPK(S) |
12,297 |
10,543 |
17% |
48,487 |
49,693 |
-2% |
PhosRock |
5,357 |
5,760 |
-7% |
21,158 |
26,037 |
-19% |
Nitrogen-based |
6,362 |
4,266 |
49% |
21,766 |
18,754 |
16% |
- The phosphate-based segment saw a 10% year-on-year decrease in gross profit to RUB 18.4 billion (USD 315 million), with a gross margin of 48%, compared to 58% in 4Q 2016.
- Gross profit for the nitrogen-based segment more than doubled year-on-year to RUB 2.5 billion (USD 43 million). The gross margin for the segment increased by 10 p.p. year-on-year to 37%.
RUB million |
4Q 2017 |
4Q 2016 |
Chng, % YoY |
FY 2017 |
FY 2016 |
Chng, % YoY |
Materials and services |
7,785 |
6,734 |
16% |
31,597 |
27,199 |
16% |
D&A |
4,173 |
2,725 |
53% |
13,719 |
9,424 |
46% |
Salaries |
3,082 |
2,637 |
17% |
11,234 |
10,937 |
3% |
Natural gas |
3,159 |
2,149 |
47% |
9,715 |
8,084 |
20% |
Potash |
2,136 |
1,659 |
29% |
8,772 |
7,104 |
23% |
Sulphur and sulph. acid |
1,991 |
1,036 |
92% |
6,471 |
6,065 |
7% |
Electricity |
1,493 |
1,212 |
23% |
5,539 |
4,462 |
24% |
Ammonium sulphate |
1,071 |
759 |
41% |
2,424 |
2,547 |
-5% |
Ammonia |
884 |
1,242 |
-29% |
6,650 |
5,801 |
15% |
Fertilisers for resale |
833 |
621 |
34% |
4,753 |
4,254 |
12% |
Fuel |
827 |
655 |
26% |
3,034 |
2,299 |
32% |
Heating energy |
199 |
214 |
-7% |
671 |
676 |
-1% |
Other items |
-3 |
32 |
n/m |
9 |
42 |
n/m |
Change in stock of WIP |
-2,931 |
-2,924 |
n/m |
-3,159 |
-850 |
n/m |
Total |
24,699 |
18,751 |
32% |
101,429 |
88,044 |
15% |
- Spending on materials and services grew by 16% year-on-year to RUB 7.8 billion (USD 134 million), driven by a 6% year-on-year increase in phosphate rock processing, 13% growth in overall fertilizer production and 2.6% year-on-year CPI inflation.
- D&A was up significantly by 53% year-on-year to RUB 4.2 billion (USD 72 million), due to the commissioning of assets (Main Shaft #2 at the Kirovsk mine, as well as newly built assets including those related to the new ammonia and urea unit) and depreciation of capitalised repairs.
- Salaries increased by 17% year-on-year to RUB 3.1 billion, mainly due to additional headcount hired for the newly built ammonia and urea units and additional accruals for vacation and bonuses.
- Spending on natural gas increased by 47% year-on-year to RUB 3.2 billion (USD 55 million), mainly due to a 60% year-on-year increase in ammonia production, for which natural gas is the main feedstock.
- A year-on-year increase in expenditure on potash of 29%, to RUB 2.1 billion (USD 36 million), due to 11% growth in purchased volumes (thanks to the greater share of NPKs with high potash content) and a 16% increase in RUB-denominated prices.
- Expenditures on sulphur and sulphuric acid were up by 92% year-on-year to RUB 2.0 billion (USD 34 million). The key reason behind this was the almost doubling of RUB-denominated prices (in sulphur equivalent)
- Electricity costs increased by 23% year-on-year to RUB 1.5 billion (USD 26 million), mostly on the back of 21% growth in the average electricity price.
- A 29% year-on-year decrease in spending on purchased ammonia, to RUB 0.9 billion (USD 15 million), was mainly due to a 38% year-on-year decrease in purchase volumes after the launch of PhosAgro’s new ammonia unit. The drop in purchased volumes was partially compensated by an 18% year-on-year increase in average RUB-denominated prices
- Spendings on ammonium sulphate increased by 41% year-on-year to RUB 1.1 billion (USD 19 million), mostly on the back of 18% growth in average RUB-denominated prices and 19% growth in consumption (on the back of the higher NPK and NPS production).
- Phosphate exports from China in 1Q 2018 remain limited due to the traditional high season for domestic consumers.
- We expect the US to be active on DAP/MAP import markets after the cut in domestic production due to the idling of Plant City by Mosaic.
- The supply/demand balance in 1Q /early 2Q18 will remain tight in the light of export and production cuts in Tunisia (due to a shortage of phosphate rock production) and Morocco (due to bad weather), and this may push prices up to USD 410-415 per tonne of DAP FOB Tampa.
- Significant growth in the price of phosphoric acid in India (by USD 110 per tonne of P2O5 to USD 678 CFR India in 1Q 2018), coupled with low inventories will lead to earlier than usual import activity.
- We expect Latin America to be active on the market in 2Q 2018.
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