PhosAgro, Moscow, swung to a first-quarter IFRS net profit of RUB18.34 billion versus the year-ago loss of RUB15.57 billion. Adjusted for non-cash-cash forex gain/loss, net profit came in at RUB21.23 billion ($286 million), up 28 percent on RUB16.59 billion the previous year.
EBITDA rose 65 percent to RUB34.31 billion ($461 million), up from the prior year RUB20.74 billion, while revenue increased 37 percent to RUB87.58 billion ($1.2 billion), up from RUB64.06 billion.
The group in a May 19 statement cited higher global fertilizer prices as behind the EBITDA increase. Higher sales volumes, coupled with the recovery in global prices for phosphate and nitrogen-based fertilizers at a time when the rouble was weakening against the U.S. dollar, boosted revenue growth.
PhosAgro CEO Andrey Guryev reported that the EBITDA result was a new record for the group since it went public in 2011.
“The efficiency of our production facilities and the availability of key feedstocks enabled us to increase our EBITDA margin by 39.2 percent and generate free cash flow of more than RUB15 billion,” said the CEO.
Total sales volumes increased 3 percent year-over-year to 2.86 million mt, up from 2.79 million mt.
First-quarter EBITDA in the group’s Phosphate-based fertilizer segment increased 64 percent on the year, reaching RUB26.3 billion ($353 million). The group reported that higher profits were recorded for all phosphate products, mainly due to “the record-high” purchasing power of farmers on the back of high prices for agricultural products.
Phosphate-based fertilizer sales volumes in the first quarter were marginally off (-0.5 percent) compared with a year-earlier at 2.08 million mt, down from 2.09 million mt. Latin America and Europe were the main sales markets in the quarter.
For the group’s Nitrogen-based fertilizer segment, EBITDA increased 61 percent year-over-year to RUB7.6 billion ($102 million). Sales volumes increased 12 percent to 787,000 mt, up from the previous year’s 703,000 mt. North America and Europe were the main sales markets.
“The significant increase in profitability was due to the substantial investments in the development the group has been making since 2013, combined with favorable market conditions since the beginning of 2021,” said Guryev.
PhosAgro said it invested RUB9.9 billion ($133 million) into its production assets in the first quarter. Much of this investment went into the construction of the large industrial complex at the group’s Volkhov site in Russia’s Leningrad region, where the first production lines already have been launched with a design capacity of almost 300,000 mt/y of MAP (GM March 19, p. 29; March 12, p. 33).
Once the project is complete, total MAP production capacity of the new complex will reach 870,000 mt/y.
Commenting on market conditions, Guryev noted fertilizer prices in world markets currently remain high despite a slight correction in early April following the end of the season in the northern hemisphere.
In the near term, he expects high prices for agricultural products and increased seasonal demand in the Indian and Brazilian markets to support prices.
The CEO sees risk factors in the short term as including an increase in fertilizer exports from China and a possible decrease in import demand from India due to higher global prices while that country’s subsidies for fertilizer purchases remain unchanged from India’s previous fiscal year. (The CEO’s comments were made before the Indian government announced it had raised the subsidy for DAP from Rs500/45 kg bag to Rs1,200/bag (see Markets).
PhosAgro’s net debt as of March 31, 2021, was RUB145.4 billion ($1.9 billion), down from RUB156.9 billion as of Dec. 31, 2020. As of March 31, 2021, the ruble denominated net debt/EBITDA ratio was 1.45x versus 1.86x at the end of 2020.
The group’s Board has recommended the payment of dividends of RUB105 per share (or RUB35 per global depositary receipt) from retained net earnings as of March 31, 2021, a total of RUB13.5975 billion.