18/03/2019

Press release: Togliattiazot announces financial results for 2018

The company’s revenue totalled RUB 53.5 billion at the end of the year, which is 27% up on 2017 (RUB 42.2 billion). Net profit soared to RUB 7.1 billion, which is over 8 times that of 2017 (RUB 842 million).

The key driver of growth in financial performance in 2018 was an increase in revenue which was fuelled by an increase in sales of company’s major products (ammonia sales grew by 9 per cent), as well as the rise of prices on the global market for ammonia and urea, and increase of US dollar vs Russian Rouble exchange rate.

Key Financials:

Over the period under review, the key chemical product at TOAZ—ammonia—reached an output of 2.754 million tons (in comparison to 2.642 million tons in 2017). Due to the scheduled successive shutdown of both urea production units, the total output of this product amounted to 659,000 tons (as opposed to 720,200 tons in 2017).

Milestones in 2018

Implementing the strategic investment programme which aims to modernise and increase the efficiency of production capacities is still a priority at Togliattiazot; the programme is already showing positive results, improving the company’s overall performance and operating rate. Since 2012, the total volume of capital investment within the framework of the modernisation programme has exceeded RUB 32 billion.

The key investment projects implemented in 2018 include:

·The large-scale major overhaul of Ammonia Production Unit No. 3, which included the introduction of an advanced process control (APC) system by Honeywell;

·Modernisation of Ammonia Production Unit No. 5, which has enabled the company to increase its capacity to 1,750 tons per day;

·Performed the major scheduled overhaul for Ammonia Production Unit No. 7;

·The major overhaul of both urea production units, which included the introduction of Yokogawa control systems (APC), which has had a positive impact on the stability and safety of the units;

·A unique operation which involved replacing the urea synthesis reactor at Urea Production Unit No. 2;

·The capacity of the onsite railway tracks has increased by 40%.

In addition, the following major investment projects continued into 2018:

·The modernisation of biological treatment facilities;

·The Order of the Federal Agency for Maritime and River Transport (Rosmorrechflot) approved the planned site layout and granted planning permission for the construction of TOAZ’s ammonia and urea transshipment complex at Taman sea port.

The most significant event which took place as part of TOAZ’s investment programme in 2018 was launch of the construction of the third urea plant with a capacity of 2,200 tons per day. The project was developed in cooperation with Casale S.A. (Lugano, Switzerland) using cutting-edge industrial and environmental safety technologies to ensure a substantial decrease in emissions released into the atmosphere while achieving a urea purity level of 93%. In particular, the new plant will allow almost all the carbon dioxide which is generated in ammonia production to be reused in further production.

The project for the construction of the third urea plant is financed by TOAZ’s own funds and with the help of financial support attracted by the company. In March 2018, Togliattiazot signed a loan contract worth EUR 180 million with a syndicate of Commerzbank AG (Zurich, Switzerland) and Landesbank Baden-Wuerttemberg (Stuttgart, Germany) for a term of 9 years. Swiss Export Risk Insurance (SERV) acted as a guarantor. The borrowings are earmarked to finance the design and supply of equipment and technologies for the construction of the plant. As part of these financing activities, an independent audit was conducted to confirm the Togliattiazot project conforms to the requirements of the International Finance Corporation (IFC, a member of the World Bank Group), including environmental and occupational safety, and social policies.

Taxes and Social Contributions

In 2018, Togliattiazot fulfilled all of its obligations for the tax payments and social contributions, which were made in a full and timely manner, and also implemented an extensive social responsibility programme aimed at supporting the development of the Samara Oblast, the main region where the company operates.

The amount of tax payments made to budgets at all levels in 2018 totalled RUB 4.9 billion. The enterprise has once again confirmed its status as one of the major taxpayers in the Samara Oblast.

TOAZ has also continued to implement a number of social security policies to benefit employees at the enterprise. In 2018, the salaries and wages of all employees at PJSC Togliattiazot were subject to 5% indexation with the average level of pay exceeding RUB 49,000, which is almost 1.5 times greater than the average salary in the Samara Oblast. In 2018, the collective labour agreement which was made in 2017 between the staff of the enterprise and the management of TOAZ was recognized as the best in the region for the second time in a row as part of the competition organized by the Samara Region Federation of Trade Unions.

CEO Comment

CEO of CJSC Corporation Togliattiazot (the managing organisation of PJSC TOAZ) Vyacheslav Suslov commented on the year-end results:  “The results of 2017 became a challenge for the entire team of Togliattiazot, and the volatile market forced us to become more efficient in our everyday operations. I believe we have taken very good advantage of the existing market environment, and the high stability of our production which has been achieved thanks to the modernisation programme, has been truly instrumental here.

At the same time, the impressive results for 2018 will allow us to focus on continuing to implement investment projects to help us ensure stable operations, as well as reliable and safe production in the long run.”

About Togliattiazot

Public Joint Stock Company Togliattiazot (PJSC TOAZ) is Russia’s largest ammonia producer. Togliattiazot ranks among the world’s top three companies which are capable of producing over 3 million tonnes of ammonia each year. TOAZ is also one of Russia’s key urea producers. It produces urea formaldehyde concentrate and other chemicals to supply a market which stretches across five different continents.

One of the major taxpayers in Samara Region, Togliattiazot ranks among Russia’s largest companies according to RBC, Forbes and Expert magazines.

In 2019, Togliattiazot will celebrate the 40^th anniversary: on the 7 April 1979 TOAZ produced first batch of ammonia.

For more information on TOAZ, please visit our website www.toaz.ru and find us on social media.

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