Acron Group, Moscow, reported first-half net profit of RUB26,678 million, up from the year-ago loss of RUB986 million. In U.S. dollar equivalent, net profit was $400 million.
Revenue was up 52 percent year-over-year to RUB85,982 million from RUB56,432 million. The U.S. dollar equivalent was up 42 percent, to $1.16 billion from $813 million. The company said higher revenues included a 9 percent increase in the sales of key products to 4.2 million mt, as well as higher global dollar denominated prices for mineral fertilizers and a 7 percent increase in the average USD-RUN exchange rate. Output of key products was up 6 percent to 4.16 million mt (GM July 16, p. 33).
First-half EBITDA was at a record high. It increased by a factor of 2.6 year-over-year to RUB40,271 million from RUB15,308 million, or by a factor of 2.5 in U.S dollars to $542 million from $221 million.
“Given the Group’s strong financial position, we stepped up the Talitsky potash project and started preparing for deep upgrades at the Ammonia 2 unit and Urea 1-4 units at our Veliky Novgorod site,” said Alexander Popov, Chairman of the Board of Directors. “All of these projects align with the Group’s ESG principles: improving equipment efficiency, preserving natural resources, and developing our footprint regions.
“The revised increased capex budget will not affect our commitment to a stable dividend payout,” he added. “The benchmark of at least US$200 million per calendar year in dividends remains unchanged.”
First-half cost of sales was up 2 percent year-over-year to RUB32,465 million, mainly due to higher sales and prices for potash and electric and thermal energy, which were significantly offset by reduced depreciation and amortization and a decline in expenses for third-party services related to rock mined at Oleniy Ruchey.
Selling, general, and administrative expenses were up 16 percent to RUB5,390 million, mainly due to higher personnel costs, because salaries were adjusted and foreign-currency staff costs rose as the ruble fell.
Transportation expenses were up 34 percent to RUB13,890 million, driven by increased sales and a higher cost of logistics outside Russia due to a weaker ruble. Increased sales to Latin America, including transportation, also contributed to the change in this item.
As of June 30, 2021, total debt was RUB100,044 million, down 13 percent from RUB115,116 million on Dec. 31, 2020. In U.S. dollar equivalent, total debt was US$1.38 billion, down 11 percent from US$1.56 billion, respectively.
As for market trends, the company said global urea prices continued to grow in the second quarter, with Baltic FOB reaching $450/mt, a record high since 2012. It said the increase was driven by several factors, including continued strong seasonal demand in Europe and the U.S., India’s urea purchases, high grain prices, and increased production costs due to higher global prices for natural gas. Limited urea volume available for export from China also contributed. Acron said urea purchases from India and Brazil gave the market additional support in the third quarter against the seasonal drop in demand in Europe and the U.S.
Acron said second-quarter ammonium nitrate and UAN prices increased to their highest levels since 2014 due to strong seasonal demand in the Northern Hemisphere and growth in urea prices.
NPK prices also increased in the second quarter, mainly driven by higher prices for basic products (urea, DAP, and potassium chloride). The increase in basic product prices outstripped blends because of their higher liquidity, so the NPK 16-16-16 premium over the basic product basket decreased to 0-5 percent from the historical average of 20 percent.