OCI NV this week said work continues on preparations for a potential IPO of its Fertiglobe joint venture (with Abu Dhabi National Oil Co. [ADNOC]) in Abu Dhabi, subject to market conditions.
OCI confirmed that the company and ADNOC were considering a potential IPO in early April (GM April 16, p. 1), and in early May said preparations had begun for the IPO following board approvals, but provided few details (GM May 7, p. 43).
The company sees the IPO as helping “crystallize” the value of Fertiglobe’s underlying business in the future.
OCI Group CFO Hassan Badrawi told analysts at a company earnings call on Aug. 2 that the company has always said the IPO is subject to market conditions. However, he added that the current market backdrop for OCI’s products, specifically the nitrogen export market, is “extremely robust” and “certainly bodes well” for the IPO project. OCI, he said, believes the offering would be attractive for all shareholders.
Fertiglobe was established in September 2019, and combines ADNOC’s fertilizer business into OCI’s Middle East and North Africa (MENA) nitrogen fertilizer platform (GM Oct. 4, 2019). OCI holds a 58 percent stake and ADNOC a 42 percent stake in the jv, which has a total production capacity of 5 million mt/y of urea and 1.5 million mt/y of merchant ammonia.
In its earnings report, OCI reported “particularly strong” performance improvements at Fertiglobe in the second quarter and for the first half of 2021. It highlighted the joint venture’s “significantly strengthened competitive position” in light of higher feedstock pricing in other regions, Europe in particular, given that it has attractive long-term fixed gas arrangements in place. Consequently, the recovery of nitrogen end markets is benefitting Fertiglobe in particular, said OCI.
Fertiglobe’s second-quarter adjusted EBITDA increased 219 percent over a year-ago, reaching $304.2 million, up from the year-ago $95.5 million, and its adjusted EBITDA margin expanded to 42 percent from 26 percent in second-quarter 2020.
Fertiglobe’s total own-produced volumes increased by 6 percent in quarter two, driven by a doubling in ammonia own-produced sales volumes to 316,000 mt, up from the year-ago 158,000 mt. But this was partly offset by a 6 percent drop in urea own-produced sales volumes from 1.19 million mt to 1.12 million mt.
Six-month ammonia sales for the jv increased 48 percent to 734,000 mt, while urea volumes were flat year-on-year, at 2.21 million mt.
Fertiglobe’s six-month traded third party sales (ammonia and urea) grew by 62 percent, to 522,000 mt from the year-ago 322,000 mt.
Fertiglobe Product Sales Volumes
| ‘000 mt | 1H-2021 | 1H-2020 | FY2020 |
| Own product | |||
| Ammonia | 734 | 495 | 896 |
| Urea | 2,209 | 2,232 | 4,565 |
| Total own product sold | 2,943 | 2,726 | 5,460 |
| Traded third party | |||
| Ammonia | 64 | 51 | 130 |
| Urea | 458 | 270 | 563 |
| Total traded third-party products | 522 | 322 | 693 |
| Total own product and traded third party | 3,465 | 3,048 | 6,154 |