PhosAgro, Moscow, reported a 25 percent increase in third-quarter net income to RUB9.76 billion on revenues of RUB64.55 billion ($1.0 billion), up from the year-ago RUB7.8 billion and RUB62.68 billion, respectively. However, net income adjusted for non-cash foreign exchange items fell by 8 percent, to RUB11.8 billion ($183 million) versus the prior-year’s RUB12.86 billion.
Third-quarter EBITDA was 9 percent off at RUB21.3 billion ($330 million), down from year-ago RUB23.39 billion, which the group attributed to a correction in global fertilizer prices.
“Despite a decrease in average fertilizer prices in the third quarter, our EBITDA margin of 33 percent was one of the highest in the sector [3Q 2018: 37 percent]. We were able to achieve this thanks to the completion of upgrades to a number of production facilities at the end of last year and higher levels of self-sufficiency in key inputs,” said PhosAgro CEO Andrey Guryev.
“Our decision to postpone a significant part of planned overhauls until the fourth quarter…made it possible to take advantage of solid demand in our priority markets and to significantly ramp up production,” he said. “Overhauls in the fourth quarter will not affect our sales on account of the traditional decrease in fertilizer demand in the period.”
PhosAgro’s results for the third quarter were better than analysts were expecting due to a decrease in the cost of sales of DAP because of self-sufficiency for certain raw materials and decreased prices for third-party products, as well as increased sales volumes, Bloomberg reported. The EBITDA result beat the average analyst estimate of RUB20.41 billion (Interfax, average of four estimates), as did the adjusted net income (estimate RUB10.81 billion, based on three estimates) and revenue (estimate RUB62.63 billion), Bloomberg reported.
Third-quarter revenues were up 3 percent, mainly driven by higher sales to Europe, Latin America, and Asia. However, the group noted that growth was mitigated by the correction in global fertilizer prices, as well as the appreciation of the ruble.
Phosphate-based fertilizers sale revenues showed a marginal 1 percent uptick to RUB44.2 billion in the third quarter versus a year-ago, which the group attributed to a faster rise in revenue from the sale of NPK(S) grades – up near 8 percent year-over-year. However, third-quarter gross profit for the phosphates business segment was 5 percent off at RUB23.8 billion ($368 million) due to the lower global prices. Phosphate fertilizer sales volumes increased 12 percent to 1.96 million mt, up from 1.74 million mt a year-ago. Exports were up 24 percent, to 1.07 million mt versus the year-ago 890,000 mt.
Nitrogen fertilizer sales revenues increased 7 percent to RUB9.2 billion, primarily driven by an increase in the sale of urea and ammonium nitrate to Latin American markets. Nitrogen’s third-quarter gross profit came in 8 percent higher year-over-year, reaching RUB5.4 billion ($83 million). Nitrogen fertilizer sales volumes were up 12 percent year-over-year at 512,000 mt, up from 458 million mt. Exports were 14 percent higher, at 495,000 mt, compared with the year-ago 435,000 mt.
For the nine months, PhosAgro reported a more than doubling in net income to RUB42.71 billion on revenues of RUB194.98 ($3.0 billion), up from the year-ago RUB17.63 billion and RUB173.76 billion, respectively. However, nine-month net income adjusted for non-cash foreign exchange items increased just 12 percent, to RUB34.53 billion against the year-ago RUB30.84 billion. Nine-month revenues were up 12 percent.
Nine-month EBITDA came in 14 percent higher year-over-year at RUB64.4 billion ($989 million), up from RUB56.35 billion.
Guryev expects to see continued pressure on the price of phosphate-based fertilizers during the fourth quarter due to the off-season in the group’s key markets, combined with high stockpiles in India and the U.S. Moreover, he sees excess supply persisting in the global market until next spring, despite a decrease in production in the U.S. and China.
For urea markets, the PhosAgro CEO warned that “a slow resumption” of seasonal demand in key urea markets, coupled with “considerable” supply of Chinese product, could continue to curb prices.
Revenue by Key Products (RUB million)
| 3Q-2019 | 3Q-2019 | % Change | 9M-2019 | 9M-2018 | % Change | |
| Total Revenue | 64,550 | 62,684 | +3% | 194,983 | 173,761 | +12% |
| DAP/MAP | 21,174 | 21,046 | +0.6% | 64,109 | 58,560 | +10% |
| NPK(S) | 19,782 | 18,381 | +8% | 55,044 | 46,926 | +17% |
| PhosRock | 6,107 | 5,435 | +12% | 19,207 | 15,789 | +22% |
| MCP | 2,260 | 2,751 | -18% | 7,993 | 7,678 | +4% |
| Other Phosphate-Based Products | 1,388 | 1,792 | -23% | 5,037 | 4,696 | +7% |
| Nitrogen Fertilizers | 9,172 | 8,584 | +7% | 28,968 | 26,777 | +8% |