OCI Global NV posted a 65% drop in first-quarter adjusted EBITDA to $336.2 million, down from $970.1 million the previous year, and missed the average analyst estimate of $467.2 million (Bloomberg Consensus).
For the quarter, the company reported an adjusted net loss attributable to shareholders of $15.2 million versus an adjusted net profit of $354.2 million a year ago. Adjusted earnings per share were $0.072 against the prior-year $1.688.
Revenues were down 41% year-over-year, to $1.37 billion from $2.33 billion, and also missed the consensus estimate of $1.54 billion (Bloomberg).
OCI cited “significantly lower” selling prices and volumes, and $98 million realized natural gas hedging losses, partly offset by lower gas prices. The company additionally pointed to the estimated $77 million impact on adjusted EBITDA from unplanned methanol outages in Texas, of which around $30 million was due to the winter freeze in the US.
The company noted that in particular own-produced volumes in Europe were 46% lower year-over-year. It said margins in the European nitrogen segment were also impacted by high-cost inventories produced in the fourth quarter of last year and sold in the first quarter of 2023 following a sharp drop in gas prices, and restart delays post fourth-quarter 2022 turnarounds. The combined impact was $74 million during the quarter, the company said.
OCI’s total first-quarter sales volumes were 17% lower year-over-year, at 2.85 million mt, down from the year-ago 3.44 million mt.
Own-produced sales volumes were 12% lower year-over-year, amounting to 2.27 million mt, down from 2.59 million mt. The quarter’s own-produced fertilizer sales volumes fell 9% to 1.87 million mt, down from the same prior-year period’s 2.05 million.
Traded third-party sales volumes were down 33% year-over-year at 573.6 million mt, compared with 854.8 million mt a year ago.
Total own-produced volumes of Fertiglobe, OCI’s nitrogen joint venture with ADNOC, increased 9% to 1.36 million mt during the first quarter of 2023 versus the year-ago 1.25 million mt. The higher own-produced sales volumes were driven by a 6% increase in ammonia own-produced sales volumes to 236,000 mt and a 9% increase in urea own-produced sales volumes to 1.13 million mt.
“Our first-quarter results were affected by challenging market conditions, but underlying fundamentals remain healthy for our existing nitrogen and methanol businesses,” said OCI Global CEO Ahmed El-Hoshy.
“European gas futures over the next winter and 2024 are pricing in expectations of a tighter market than current levels, implying ammonia cost support of ~$815/mt including CO2 and $650/mt excluding CO2,” he said.
This, El-Hoshy said, should result in closures of European marginal production if pricing remains below cost for a sustained period.
OCI Product Sales Volumes
| ‘000 mt | 1Q-2023 | 1Q-2022 | % change |
| Own product | |||
| Ammonia | 321.8 | 386.7 | (17) |
| Urea | 1,168.7 | 1,042.1 | +12 |
| CAN | 176.6 | 291.4 | (39) |
| UAN | 200.1 | 329.4 | (39) |
| Total fertilizer | 1,867.2 | 2,049.8 | (9) |
| Melamine | 10.1 | 31.0 | (67) |
| DEF | 174.8 | 226.2 | (23) |
| Total nitrogen products | 2,052.1 | 2,307.6 | (11) |
| Methanol1 | 221.6 | 281.5 | (21) |
| Total own products sold | 2,273.7 | 2,588.5 | (12) |
| Traded third party | |||
| Ammonia | 42.8 | 57.2 | (25) |
| Urea | 231.7 | 449.8 | (48) |
| UAN | 52.4 | 24.3 | (116) |
| Methanol | 129.5 | 144.1 | (10) |
| Ethanol and other | 14.0 | – | nm |
| AS | 50.9 | 94.1 | (46) |
| DEF | 52.3 | 85.1 | (39) |
| Total traded third-party | 573.6 | 854.8 | (33) |
| Total own product and traded third-party | 2,847.3 | 3,443.3 | (17) |
1 Including OCI’s 50% share of Natgasoline volumes
OCI said it will assess its Amsterdam stock market listing as part of a comprehensive review of all the company’s business lines to unlock value.
The review follows a request in March by activist investor Jeff Ubben, whose firm, Inclusive Capital Partners, owns 5% of OCI, for OCI to explore strategic options, including asset sales, amid shareholder concerns about the company’s stock prices.
According to a Bloomberg report on May 9, citing an interview with El-Hoshy after the statement, OCI is considering the Middle East and US as possible alternative listing venues. “A lot of our new investments are in the Middle East and the US,” the report cited El-Hoshy as saying.