Acron Group, Moscow, swung to an IFRS net loss of $153 million in the first quarter of this year versus a $133 million net profit in the same prior-year quarter, on ruble devaluation.
The group said the loss was primarily the result of non-cash items, in particular a $148 million foreign exchange loss from the revaluation of foreign currency-denominated assets and liabilities, due to a slump in the U.S. dollar-to-ruble exchange rate in the latest reporting period.
EBITDA was down 31 percent year-over-year, at $110 million. Revenues were 5 percent lower at $423 million compared with the year-ago, with the group citing lower global prices for most of its products.
“A weaker dollar to ruble exchange rate in the late first quarter has yet to result in higher operating profit, but generated a foreign exchange loss from the revaluation of the loan portfolio and negative net profit,” said Acron Chairperson Alexander Popov. “The loss is non-cash and, therefore, not representative. A weaker ruble coupled with growing output will prop up our financials in future periods.”
Acron saw a 1 percent increase in output of key product, to 1.948 million mt in the first-quarter versus a year ago. Sales volumes of key products increased 11 percent to 1.994 million mt, up from 1.8 million mt.
Popov noted that the 11 percent in sales volumes “almost offset” the decrease in global prices for complex fertilizers (-19 percent) and UAN (-31 percent), with first-quarter revenue falling just 5 percent short of the first-quarter 2019 revenue.
“That said, financials did improve quarter-on-quarter, with revenue up 7 percent and EBITDA up 11 percent on fourth-quarter 2019,” said Popov. “Despite the COVID-19 pandemic, we are seeing strong demand for fertilizers globally. Supplies of key products to the domestic market are our priority, and these increased 45 percent to 682,000 mt.”
Average Indicative Prices FOB Baltic Sea/Black Sea ($/mt)
| 1Q-2020 | 4Q-2019 | 1Q-2019 | |
| NPK 16-16-16 | 252 | 270 | 312 |
| AN | 187 | 179 | 182 |
| UAN | 123 | 137 | 178 |
| Urea | 217 | 216 | 243 |
| Ammonia | 222 | 225 | 276 |
Acron said it had reduced its capex in view of the uncertain dynamics on global markets due to the COVID-19 pandemic. It said the capex reduction has affected the implementation rate of its flexible investment program and will help reduce its debt burden, but it did not provide any further details.
Acron’s net debt increased by 4 percent to $1.258 billion as of March 31, 2020, compared with the end-March 2019 position of $1.215 billion.