PhosAgro PJSC, Moscow, swung back to profit in the third quarter compared with a year-ago, reporting an IFRS net profit of RUB39.19 billion (approximately $552.4 million at current exchange rates), versus the year-ago net loss of RUB1.33 billion. Adjusted for non-cash foreign exchange gains/losses, adjusted net profit for the quarter more than doubled, to RUB39.74 billion, up from RUB18.97 billion a year earlier.
Third-quarter EBITDA also doubled, reaching RUB57.2 billion, up from the year-ago RUB27.93 billion, while revenue increased by 64 percent, to RUB116.3 billion compared to RUB70.99 billion a year ago.
PhosAgro cited the main revenue growth driver as the rise in global prices for phosphate and nitrogen fertilizers against the backdrop of high demand and low inventory levels in its main sales markets. It said EBITDA was “greatly supported” by the increase in sales prices, but was negatively affected by lower sales volumes.
As previously reported, third-quarter fertilizer sales volumes fell 3 percent to 2.63 million mt, and by 2 percent in the nine-months period, to 7.79 million mt compared with a year-ago (GM Oct. 29, p. 27).
The group highlighted the improving efficiency at its key production facilities following upgrades, and growing self-sufficiency in key feedstocks for lifting the EBITDA margin for the third quarter to 49.2 percent, up from 39.3 percent in the same-year earlier period.
PhosAgro’s Phosphate fertilizer business segment posted a third-quarter EBITDA of RUB47.5 billion ($646 million), a nearly two-fold increase year-over-year. The group said higher profits were recorded for all products, mainly due to farmers’ record-high purchasing power on the back of high prices for agricultural products.
Third-quarter EBITDA for the Nitrogen fertilizer business segment came in at RUB9.4 billion ($128 million), which the group said was almost 2.5 times the result for 3Q 2020.
PhosAgro recorded a big jump in nine-month net profit to RUB87.84 billion, up from the year-ago $3.96 billion. Adjusted for foreign exchange gain/loss, adjusted net profit for the period more than doubled, to RUB85.07 billion versus the year-earlier RUB41.21 billion.
Nine-month EBITDA came in 92 percent higher on the year, reaching RUB130.29 billion, up from RUB67.79 billion, while revenue increased by 50 percent to RUB292.56 billion, compared with RUB194.99 billion a year ago.
PhosAgro’s net debt as of Sept. 30, 2021, stood at RUB123.3 billion ($1.7 billion), down RUB33.6 billion on the net debt of RUB156.9 billion ($2.1 billion) as of Dec. 31, 2020. The group’s net debt/EBITDA ratio decreased to 0.83x as of the end of third quarter of 2021, versus 1.86x at the end of 2020.
PhosAgro Chairman and CEO Andrey Guryev told participants at an earnings call on Nov. 8 that the Russian government’s decision to impose export quotas on nitrogen and complex fertilizers will not have a negative impact on the group’s operational and financial results.
Last week, the Russian government moved to limit the volume of nitrogen fertilizers and DAP, MAP, and complex fertilizers for a period of six months, starting from Dec. 1, 2021, through to May 31, 2022, in a bid to safeguard local supplies and stabilize pricing for the country’s farmers (GM Nov. 5, p. 1).
Guryev believes that a temporary restriction on the export of fertilizers from Russia could act as a factor supporting prices in global markets, and ensure higher profitability of supplies of Russian fertilizers to foreign markets.
“The level of the quotas is comfortable; it is based on the level of consumption on the domestic market,” said Guryev.
PhosAgro Senior Marketing Expert Andrey Ryabinin confirmed the non-tariff quotas are half of Russian producers’ export volumes last year. For the six-month period specified by the government – Dec. 1, 2021- May 31, 2022 – the export quotas for nitrogen fertilizers will be 5.9 million mt, and 5.35 million mt for phosphate fertilizers such as MAP/DAP and NPKs.
Commenting on the domestic fertilizer market, which is a priority market for PhosAgro, Guryev noted the season of phosphate-based fertilizer application for field work has ended, and that there currently is increased demand for ammonium nitrate.
He added that Russian producers have voluntarily extended the price freeze on mineral fertilizers to domestic users, and said “as a priority, Russian producers are meeting increased domestic demand for nitrogen fertilizers.”