PhosAgro OJSC reported a RUB36.44 billion ($598 million) net profit in full-year 2015 on revenues of RUB189.73 billion ($3.11 billion), compared with 2014’s net loss of RUB13.40 billion ($349 million) and revenues of RUB123.12 billion ($3.21 billion). EBITDA more than doubled in 2015 to RUB82.46 billion ($1.35 billion), up from RUB37.61 million ($979 million).
Fourth-quarter 2015 net profit was RUB4.89 billion on revenues of RUB47.43 billion, up from the year-ago net loss of RUB19.67 billion and revenues of RUB36.37 billion. Fourth-quarter 2015 EBITDA was up 66 percent, to RUB19.66 billion from the year-ago RUB11.86 billion.
PhosAgro said the significantly higher USD exchange rate during 2015 in comparison with 2014 had a net positive impact on the company’s results in the reporting period, as prices for most of the company’s products are denominated in USD while costs are primarily rouble-based. The company had cited rouble depreciation, as well as losses from derivative financial instruments, as causing 2014’s net loss (GM May 1, 2015). Even so, the significant depreciation of the rouble as of Dec. 31, 2015, compared with Dec. 31, 2014, resulted in a foreign exchange loss of RUB22.18 billion ($364 million) in 2015 against RUB33.55 billion ($873 million) in 2014.
PhosAgro reported a doubling in gross profit to RUB97.09 billion for its Phosphate segment for the full-year 2015, up from RUB47.68 billion a year-ago, and a 58 percent rise in revenues to RUB167.43 billion. Phosphate-based volumes were up 11 percent, to 5.38 million mt from 4.84 million mt.
Nitrogen gross profit increased 20 percent to RUB9.51 billion on a 30 percent rise in revenues, to RUB21.57 billion. Nitrogen-based volumes, however, were 1 percent lower in 2015, down to 1.37 million mt, from 1.39 million mt.
PhosAgro said its sales to Europe grew by over 30 percent year-on-year in 2015, with the company now selling directly to local distributors following the opening of a new trading offices in the region, in Zug, Switzerland (GM Oct 19, 2015), and it expects to achieve even better results this year.
PhosAgro launched a new sales office in Warsaw, Poland, in March 2016, which it said will continue to strengthen the company’s position in that part of Europe. However, the company noted that the proportion of revenue contributed by certain other regions fell in the fourth quarter of 2015 compared to the same year-earlier quarter. India fell to just 1 percent of the total in fourth-quarter 2015 from the year-ago 5 percent, while North and South America was down to 23 percent from 29 percent, with Brazil the weakest market last year.
PhosAgro believes the phosphate market is ready for recovery in Brazil. “Brazil’s farmers are [now] in a better situation, with the subsidy pushed through the banking system and solid farmers’ margins on the back of the weak real,” CEO Andrey Guryev said. Brazilian farmers may import up to 6.7 million mt of phosphate fertilizers this year, up from around 5 million mt in 2015, when the country’s economic crisis cut demand. The company also has started trading directly with local distributors in the country since opening a sales office in São Paulo.
Guryev believes there is significant potential for increased agricultural output in Argentina. Following the election of a new president and a new government there and the liberalization of agricultural exports, he said a significant increase in imports of phosphate fertilizers already had been observed this year, with the country buying 300,000 mt already this quarter after cutting purchases to about 600,000 mt last year. PhosAgro also expects consumption in Asian to be strong, with India this year buying a similar level of phosphate-based imports to 2015’s 6 million mt or so.
PhosAgro said its major projects under development are on track. It expects to finish construction of the new 760,000 mt/y ammonia and 500,000 mt/y granular urea plants at PhosAgro-Cherepovets in August 2017, with first production anticipated one to two months thereafter. The new ammonia production will enable PhosAgro to be self-sufficient in ammonia. It also intends to invest further in expanding the number of NPK and other fertilizer grades it produces.