Casablanca-based OCP Group SA reported a 73% increase in net income for the year ending Dec. 31, 2022, to MAD28.2 billion ($2.76 billion), the highest since its establishment over a century ago. The earnings were boosted by higher global fertilizer prices following Russia’s invasion of Ukraine.
Full-year EBITDA increased 38%, to MAD50.08 billion ($4.93 billion) on revenues of MAD114.57 billion ($11.28 billion), up from MAD36.27 billion ($4.04 billion) and MAD84.3 billion, respectively, for the previous year, and in line with preliminary results released by the group at the beginning of March (GM March 3, p. 24).
Gross profit in local currency was up by 27%, reaching MAD70.38 billion ($6.93 billion) from MAD55.22 billion ($6.12 billion) last year. Revenue in local currency grew 36% year-over-year, with the group citing higher prices across all product categories, which more than offset lower sales volumes compared to FY2021.
“OCP was able to fully leverage the benefits of higher prices, while calibrating production to match the attendant lower volumes, and effectively managing through the anticipated sequential easing of prices in the second half of the year,” the company said in its March 28 earnings statement.
“The strong double-digit revenue growth in 2022 was led by a 44% increase in fertilizer revenues, which accounted for a record 64% of total revenues for the year, up from 61% a year ago,” the group noted.
Higher global prices for fertilizer products helped mitigate the impact of lower export volumes in most regions due to reduced demand amid lower farmer affordability. The group’s fertilizer sales volumes fell 11% year-over-year, to 9.3 million mt from 10.4 million mt.
OCP fertilizer exports by product
| FY2022 | FY2021 | |
| Total (million mt) | 9.3 | 10.4 |
| Percentage of total | ||
| DAP/MAP | 66% | 66% |
| TSP/NPS | 27% | 23% |
| NPK | 7% | 11% |
Phosphate rock revenues were up 51% year-over-year in local currency, mainly reflecting improved prices. Phosphoric acid revenues in local currency increased by a modest 1%, OCP said, with lower export volumes offset by higher phos acid prices.
Fourth-quarter EBITDA declined by 40%, to MAD7.11 billion ($615 million) from the prior-year MAD11.79 billion ($1.30 billion). Gross profit for the quarter dropped by 18%, to MAD14.14 billion ($1.32 billion) from the year-ago MAD17.34 billion ($1.89 billion), while revenue fell by 6%, to MAD25.04 billion ($2.33 billion) from MAD26.65 billion ($2.91 billion).
The group attributed the fourth-quarter downturn to less favorable market conditions compared with the same period in 2021, which resulted in lower prices and a contraction in demand.
For the months ahead, OCP sees “a seemingly balanced market in 2023, with a partial recovery of demand and relatively constrained supply.” The group highlighted an expected recovery in the Americas “due to crop prices that remain at high levels relative to fertilizer prices,” and a moderate recovery in demand in Europe, albeit with “hand-to-mouth” purchasing.
Additionally, OCP anticipates an increase in demand in Africa due to the group’s initiative “to prioritize this market and avoid demand destruction due to price.” The group also expects imports into India to remain stable amid government elections in 2024 and relatively low starting stocks.
On the supply side, OCP expects Chinese exports to reach higher levels this year than in 2022, but below the record set in 2021. The group said its new TSP capacities in Morocco will be deployed “gradually and coordinated with market recovery.”
For full year 2022, OCP plans to pay a dividend of MAD98.5 (approximately $9.74 at current exchange rates) per share, some 60% higher than the prior year. With the Moroccan state holding some 94% of OCP’s capital, Morocco’s government is set to receive a windfall of about $750 million from OCP dividends this year, according to Bloomberg.