All posts by mickeybarb@charter.net

Acron Swings to Black in 1H; EBITDA Hits Record High

Ammonia, Ammonium Nitrate, Earnings, News, NPK 16-16-16, Russia, Urea

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.

Nutrien Receives CADE Approval for Terra Nova Agrícola Acquisition

Brazil, News, News Briefs, Saskatchewan

Nutrien Ltd., Saskatoon, said on Aug. 25 it has received approval from Brazil’s Administrative Council for Economic Defense (CADE) to acquire Terra Nova Agrícola (GM July 9, p. 1), which operates in the state of Minas Gerais. The purchase allows Nutrien to expand its retail network in Brazil by nine, to a total of 33.

Total revenue from Terra Nova’s crop inputs business is estimated at 250 million Brazilian reals (US$47.6 million), with average EBITDA margins of approximately 10 percent, which Nutrien said is in line with similar transaction metrics of ag retail businesses acquired by Nutrien in the U.S.

Since making the Terra Nova announcement, Nutrien has also announced that it plans to buy Brazil’s Bio Rural, Mato Gross do Sul (GM Aug. 13, p. 35), which would add another nine outlets. CADE approval for this deal is still awaited. In total, Nutrien has made five acquisitions in Brazil in the last 18 months.

Hydrite to Expand Production Capacity in Indiana

Amthio, Eastern Cornbelt, Featured, News, Specialty

Hydrite Chemical Co. is expanding ATS=™ (ammonium thiosulfate) and Thio 25-17™ (potassium thiosulfate) production capacity at its plant in Terre Haute, Ind. The company announced that its Board of Directors has approved the capex to install an additional sulfur burner and thiosulfate production line, which is expected to be online for the 2023 spring season.

“With all of our recent announcements, we continue to demonstrate how committed Hydrite is to the agricultural market and thiosulfates,” said Kevin Honkamp, Hydrite President. “This expansion will give Hydrite’s customers even greater assurance of our ability to supply, along with improved flexibility across products.”

Hydrite recently completed the construction of a 1.8 million gallon Thio 25-17™ storage tank at Terre Haute, which brings total potassium thiosulfate storage capacity to 2.5 million gallons at the site (GM May 28, p. 1). A new three million gallon ATS=™ is expected to be completed before year-end, which will bring total ammonium thiosulfate storage capacity at the site to 6.8 million gallons.

Hydrite also announced on July 14 that it has formed a new joint venture with Thatcher Company of California Inc., called Sacramento Ag Products LLC, which will produce thiosulfate products for the West Coast agricultural market and bisulfites for industrial market applications (GM July 16, p. 1).

Headquartered in Brookfield, Wisc., Hydrite is an integrated manufacturer and supplier of chemicals and sulfur derivatives, with a network of production facilities, warehouses, and laboratories in Illinois, Wisconsin, Iowa, Indiana, California, and Texas. The company employs nearly 1,000, with services in food and dairy sanitation, organic processing, liquid sulfites, foam control, water treatment, and compliance management. Hydrite also owns and operates a private fleet of more than 255 units, including tractors, van trailers, tankers, and railcars.

Tessenderlo Agro 1H EBITDA Off on Higher Costs; Revs Up on Increased SOP Volumes

Earnings, Europe, News, Specialty

Tessenderlo Group, Brussels, reported first-half Agro adjusted EBITDA of €75.2 million on revenues of €373.5 million, versus the year-ago €84.5 million and €362.2 million, respectively. The company said the adjusted EBITDA, when excluding the foreign exchange effect, was in line with last year, though off 3.5 percent. It said the segment was significantly impacted by the increase in raw materials, such as sulfur, and also by increased transportation costs.

The company said Tessenderlo Kerley Inc.’s (TKI) adjusted EBITDA remained stable, while that of NovaSource increased thanks to higher volumes. Crop Vitality adjusted EBITDA decreased, as higher sales volumes were more than offset by lower margins.

Agro revenue was up 9.6 percent. The company attributed the uptick to increased volumes from TKI’s partnership agreement with Kemira Oyj, announced in 2020, in which Kemira produces premium sulfate of potash (SOP), both standard and water-soluble grade, at Helsingborg, Sweden, and TKI partially markets these products.

Company-wide, adjusted EBITDA was up 6.9 percent to €184.7 million from the year-ago €182 million, excluding the effect of foreign exchange. Revenue was up 12.9 percent, to €1.02 billion from €935 million.

The company expects that the 2021 adjusted EBITDA will be in line with the 2020 adjusted EBITDA. It said this guidance already takes into account the expected negative foreign exchange effect in 2021, following the weakening of the U.S. dollar.

CN Back on Track After Potash Derailment

Canada, Featured, News, Potash

Canadian National Railway Co. told Green Markets on Aug. 26 that on Wednesday evening, Aug. 25, the company had safely removed some 30 potash railcars that derailed Saturday, Aug. 21, in a rural area some 30 miles west of Moncton, New Brunswick, and that the tracks had reopened. Some of the potash spilled, and some 20 railcars were reported to have landed on their side. There was a total of 133 railcars.

Nutrien Ltd., Saskatoon, confirmed that the train was hauling potash for Canpotex Ltd., the company that exports Canadian potash for Nutrien and The Mosaic Co.

CN said there were no injuries, leaks, fires, or dangerous goods involved. After the derailment, CN traffic had been rerouted through the Newcastle line, which runs north through Miramichi.

The Canadian Transportation Safety Board (TSB) is investigating the incident. As of Aug. 26, TSB told Green Markets it was still assessing the occurrence and gathering information.

While the derailment was essentially just a five-day delay of potash to the export market, it was to an already tight market. Canpotex reported that it is sold out into November.

“One of the realities of the current environment with things being so tight is that major producers are effectively sold out through much of the balance of the year,” Mark Thompson, Nutrien Executive Vice President, Chief Strategy and Sustainability Officer, told attendees of the Raymond James Diversified Industrials Conference on Aug. 25.

Tessenderlo Kerley México’s New Liquid Fertilizer Storage Terminal in Full Operation

Amthio, Featured, Mexico, News, Potassium Thiosulfate, Specialty

Tessenderlo Kerley México reported that its new La Barca liquid fertilizer storage terminal in Western Mexico is now in full operation, ensuring greater availability for the states of Jalisco, Michoacán, Nayarit, and Colima.

The company said the terminal features equipment with high-precision calibration and operates under the strictest safety standards. It supplies the liquid fertilizers potassium thiosulfate (KTS), calcium thiosulfate (CaTs), ammonium thiosulfate (Thio-Sul), magnesium thiosulfate (MagThio), and ammonium polysulfide (Nitro-Sul).

The company said more and more Mexican farmers have adopted the use of liquid fertilizers that have proven to be the ideal tool for new precision farming and improving soil that has salinization problems. The La Barca terminal supplies thiosulfates for corn, berries, vegetables, avocados, agave, pineapples, papayas, and other tropical crops.

The company said the increase in installed capacity guarantees an improved service to farmers, as well as enabling more flexible orders and better delivery times. It said it also ensures better planning of supply logistics between the production plants in the U.S. and the storage centers in Mexico. It added that this will prove to be especially valuable in the busiest months, when the respective sales seasons of both countries coincide.

Egypt Sets Up New $1.6 B Company to Produce Methanol and Ammonia

Ammonia, Egypt, Featured, Methanol, News

Egypt’s Petroleum and Mineral Resources Ministry has announced the creation of Misr Methanol and Petrochemical, a new $1.6 billion company that will produce 1 million mt/y of methanol and 400,000 mt/y of ammonia during its first phase, according to Bloomberg. It will be based in the Suez Canal Economic Zone’s Ain Sokhna Region.

The company will be jointly owned by Abu Qir Fertilizers, Helwan Fertilizers, and Al Ahly Capital Holding. The first two companies will hold 35 percent stakes each, while Al Ahly retains 30 percent.

Mosaic Board Approves Share Repurchase, Note Redemption, Credit Line Upgrade

News, News Briefs, Tampa

The Mosaic Co., Tampa, on Aug. 23 announced measures to strengthen and optimize its capital base.

The Board of Directors approved a new $1 billion share repurchase authorization, which replaces the previous authorization that had $700 million of the original $1.5 billion remaining. The company said this new expanded authorization reflects Mosaic’s unchanged commitment to a balanced deployment of excess capital that includes returning capital to shareholders.

In addition, last week the company also completed the previously announced early redemption of $450 million in notes that were due November 2021. The company said this represents the first step toward reaching the company’s goal of retiring $1 billion of debt over time. The company expects to meet the debt retirement goal and execute share repurchases using strong cash flow generated in 2021 and beyond.

Mosaic also increased and extended its committed line of credit. The 5-year, $2.5 billion facility matures in August 2026 and replaces the $2.2 billion line of credit maturing in November of 2022. The company said this increase in size provides additional security and flexibility and reflects the growth in the business.

On Aug. 19, the Board declared a quarterly dividend of $0.075 per share on the company’s common stock. The dividend will be paid on Sept. 16, 2021, to stockholders of record as of the close of business on Sept. 2, 2021.

LSB Sets Date for Stock Exchange Vote

News, News Briefs

LSB Industries Inc., Oklahoma City, said on Aug. 26 that it has set Sept. 22 as the date for a special meeting of stockholders to approve its proposed stock exchange agreement announced in July (GM July 23, p. 29). Those holding shares as of Aug. 2 will be eligible to vote. The meeting will be held virtually via live webcast at 8:30 am Central Daylight Time.

A definitive proxy statement was also filed with the U.S. Securities and Exchange Commission.

Under the terms of the agreement, and assuming a closing date of Sept. 27, 2021, LSB would exchange, at the expected closing, approximately $310 million of preferred stock held by Eldridge Industries LLC, Greenwich, Conn., into an equivalent value of LSB common stock based on an exchange price of $6.16, which is equal to the 30-day volume weighted average price as of the date of the exchange agreement. In connection with the transaction, stockholders will receive a special dividend in the form of 0.30 shares of LSB common stock for every share owned as of the record date, with any such dividend received by Eldridge reducing the consideration payable to them in the exchange transaction.

The LSB Board of Directors unanimously recommends that stockholders vote for the transactions contemplated by the exchange agreement with Eldridge, as well as the other proposals set forth in the proxy statement.

“We expect this transformative transaction to simplify our capital structure, lower our cost of capital, and provide us with greater financial flexibility to pursue growth initiatives,” said LSB President and CEO Mark Behrman. “Given the favorable nitrogen industry dynamics we are currently experiencing, we believe that now is an opportune time to execute this transaction, particularly given our intention to refinance our senior secured notes and opportunities we believe exist to drive organic growth, including our entry into the rapidly emerging blue/green ammonia and clean energy markets.

“Additionally, we regularly evaluate M&A prospects that we believe could be accretive to earnings as a result of the increased scale and expanded production capabilities that they would provide us,” he continued. “We believe that the exchange of this preferred stock into common stock and the overall simplification of our capital structure, including the potential refinancing of our senior secured notes, will enhance our ability to generate profitable growth and greater long-term value for our shareholders.”

The proposed exchange agreement is expected to be consummated after receipt of the required approvals by the stockholders and the satisfaction or waiver of certain other conditions as specified in the agreement. Assuming a transaction closing date of Sept. 27, 2021, and issuance of the special dividend, LSB will have approximately 88.8 million shares outstanding, approximately 61 percent of which will be held by Eldridge.

Calcium Products Builds New Facility

News, News Briefs, Western Cornbelt

Calcium Products Inc., Ames, Iowa, plans to invest $17.1 million to build a new 70,000 square foot production facility and warehouse in Fort Dodge, Iowa, which will replace an existing facility. The existing plant, which is across the road from the new facility, is expected to be converted into a warehouse, according to the Fort Dodge Messenger.

The Iowa Economic Development Authority is providing tax benefits to the company via its High Quality Jobs program. These include a full refund of sales, service, and use taxes paid during the construction of the new facility, valued at $225,000 according to the Messenger, which also reported that the Webster County Board of Supervisors is allowing the company a ten-year annual appropriation rebate equal to 70 percent of the incremental tax produced by the new project.

The new plant is expected to create two new jobs, and the company will retain 11 existing positions.