OCI Global NV swung to an adjusted net loss of $95.2 million for the third quarter ended Sept. 30, versus a profit of $257.1 million for the same prior-year quarter, the company reported in its Nov. 7 earnings statement.
Adjusted earnings per share for the quarter were a negative $0.452 versus a positive $1.223 the previous year. Third-quarter adjusted EBITDA declined 75%, to $242 million from the year-ago $961.8 million, which was a big miss on the average analyst estimate of $360.3 million (Bloomberg Consensus).
OCI cited much lower selling prices across both nitrogen and methanol segments, and a front-loaded order book, which offset an 8% year-over-year increase in own-produced volumes. Some 82% of the quarterly adjusted EBITDA was generated by Fertiglobe, OCI’s ammonia and urea joint venture with Abu Dhabi National Oil Co, noted Morgan Stanley analyst Lisa De Neve, as cited by a Bloomberg report.
Third-quarter revenue was off 54% from the prior year, at $1.07 billion from $2.33 billion, also missing the average analyst estimate of $1.39 billion (Bloomberg Consensus).
OCI’s own-produced sales volumes for the third quarter increased to 2.79 million mt, up from the year-ago 2.59 million mt, while own-produced fertilizer volumes were 6% higher year-over-year, at 2.16 million mt from 2.04 million mt.
The company’s third-party sales volumes declined 65% in the third quarter versus a year earlier, to 393,800 mt, while total sales volumes were off 15% year-over year, to 3.19 million mt.
For the first nine months, OCI posted a 72% decline in adjusted EBITDA, to $903.8 million on revenue of $3.81 billion, down from the year-ago $3.22 billion and $7.52 billion, respectively. Revenues were 49% lower year-over-year.
The company reported an adjusted net loss attributable to shareholders of $116.9 million for first nine months, versus a net profit of $1.14 billion for the same prior-year period. Adjusted earnings per share were $0.555 versus the previous year’s $5.417.
In terms of market outlook, OCI Global CEO Ahmed El-Hoshy said nitrogen prices have maintained their positive momentum into the fourth quarter, with recent significant price increases for ammonia, following the earlier recovery for urea.
“Nitrogen prices have now increased by 36% on average since the troughs in the second and third quarters,” he said. “We expect the benefits from these increases to materialize in the fourth quarter.
OCI also sees the nitrogen outlook in the medium-to-longer term as remaining favorable, “with limited incremental supply additions, healthy farm economics, and elevated energy prices raising marginal cost floors.”
Conversely, the company noted that methanol markets have remained challenged by macroeconomic drivers, and prices declined during the third quarter. “Encouragingly, recent weeks have seen some methanol price recovery due to a combination of supply outages and an improvement in MTO rates,” El-Hoshy said.
OCI reported that it has hired financial advisors to explore asset monetization opportunities. The company said it is engaged in “active discussions” with a focus on “attractive value propositions.” The aim of the process is to bridge the gap between the combined value of individual company assets and the holding company discount.
OCI said its strategic review, which has focused on the identification of value accretive monetization opportunities while prioritizing growth in its fast-growing clean fuels business, is nearing completion.
The strategic review follows a request in March by activist investor Jeff Ubben, whose firm, Inclusive Capital Partners, owns 5% of OCI. Ubben urged OCI to explore strategic options, including asset sales, amid shareholder concerns about the company’s stock prices.
Regarding projects, OCI said its 1.1 million mt/y Texas Blue Ammonia project under development at the company’s Beaumont, Texas, site remains on track to start production in early 2025, with active discussions underway for long-term product offtakes and potential equity participation (GM Feb. 10, p. 1; Dec. 9, 2022; Sept. 9, 2022).
The company said it was on target to increase its combined green and low carbon ammonia and methanol portfolio from the current 200,000 mt/y to around 1.7 million mt/y by 2025.
OCI paid an interim dividend of €0.85 per share last month, bringing the total cash distributions to around $1 billion during calendar year 2023.
OCI Product Sales Volumes
| ‘000 mt | 3Q-2023 | 3Q-2022 | % change | 9M 2023 | 9M 2022 | % change |
| Own Product |
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| Ammonia | 482.2 | 481.2 | 0 | 1,312.3 | 1,415.5 | (7) |
| Urea | 1,169.7 | 1,049.6 | +11 | 3,479.2 | 3,284.4 | +6 |
| CAN | 212.2 | 236.4 | (10) | 734.2 | 804.6 | (9) |
| UAN | 295.6 | 276.5 | +7 | 968.7 | 1,032.2 | (6) |
| Total Fertilizer | 2,159.7 | 2,043.7 | +6 | 6,494.4 | 6,536.7 | (1) |
| Melamine | 16.9 | 15.4 | +10 | 44.7 | 76.5 | (42) |
| DEF | 187.3 | 218.9 | (14) | 550.1 | 662.8 | (17) |
| Total Nitrogen Products | 2,363.9 | 2,278.0 | +4 | 7,089.2 | 7,276.0 | (3) |
| Methanol1 | 428.6 | 317.1 | +35 | 1,052.2 | 969.1 | +9 |
| Total Own Product Sold | 2,792.5 | 2,595.1 | +8 | 8,141.4 | 8,245.1 | (1) |
| Traded Third Party |
|
|
|
|
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| Ammonia | 31.3 | 163.2 | (81) | 195.6 | 281.8 | (31) |
| Urea | 37.7 | 465.2 | (92) | 613.8 | 1,318.4 | (53) |
| UAN | 15.2 | 125.5 | (88) | 98.9 | 208.5 | (53) |
| Methanol | 86.3 | 64.0 | +35 | 312.0 | 282.3 | +11 |
| Ethanol and Other | 29.7 | 13.6 | +118 | 66.7 | 13.6 | +390 |
| AS | 96.6 | 175.5 | (45) | 242.2 | 461.3 | (47) |
| DEF | 97.0 | 133.5 | (27) | 234.7 | 329.2 | (29) |
| Total Traded Third Party | 393.8 | 1,140.5 | (65) | 1,763.9 | 2,895.1 | (39) |
| Total Own Product and Traded Third Party | 3,186.3 | 3,735.6 | (15) | 9,905.3 | 11,140.2 | (11) |
1 Including OCI’s 50% share of Natgasoline volumes