EuroChem Group AG, Zug, Switzerland, reported a 1 percent increase in first-half EBITDA to $830 million on sales of $3.01 billion, versus the year-ago $819 million and $3.05 billion, respectively.
The group cited pressure on the pricing environment across all fertilizer segments in the six-month period. However, it said it did not experience any major disruption to its operations during the half year as a result of the COVID-19 pandemic.
“Fertilizers turned out to be resilient to the COVID-19 outbreak, with the fertilizer sector one of the businesses less affected by the global crisis, with farmer economics proving to be more favorable,” said EuroChem.
“Our half-year results reflect the strength and resilience of our business model during this challenging period. The COVID-19 pandemic has tested all companies like never before, and as a global business, we have had to adapt and respond to a volatile environment,” said EuroChem CEO Petter Østbø.
The group’s six-month total sales volumes (including third-party products) increased 6 percent over a year-ago, to 12.46 million mt, up from 11.77 million mt. Furthermore, fertilizer sales volumes advanced 19 percent, to 9.24 million mt from the year-ago 7.76 million mt.
EuroChem cited new production from its Usolskiy potash operation, south of Berezniki, Russia, and from the EuroChem Northwest ammonia plant in Kingisepp, as well as third-party sales, as the main drivers behind the sales volume increase. First-half sales of third-party products increased 32 percent, to 2.71 million mt. The 1 million mt/y capacity Northwest ammonia plant, which started up in early June 2019, produced 512,000 mt of ammonia in the first six months of 2020.
Potash sales from Usolskiy rose to 1 million mt of potash in the six-month period, significantly up on the 389,000 mt sold in the same year-ago period, and accounted for 11 percent of total fertilizer sales in the reporting period.
Nitrogen volumes rose 4 percent, with urea sales, the key driver of the nitrogen volume increase, up 8 percent. But six-month UAN sale volumes were down 2 percent, and the group reported a shift in trade flows across different regions following the imposition of final UAN antidumping duties by the European Commission in October 2019. However, EuroChem said despite the imposition of the duties, the group maintained “a good share” of European UAN sales, and actually increased its stake in the UAN sales portfolio by 3 percentage points.
Complex fertilizers sales volumes showed a 22 percent increase with revenues up 6 percent, with EuroChem highlighting the product as one of the most resilient product groups in the current volatile market conditions.
In phosphates, the group said it took the decision to prioritize the production and sale of MAP fertilizers due to more favorable market conditions.
EuroChem highlighted its fertilizers sales to Latin America as one of the major drivers in the group’s first-half performance. Latin America sales revenues increased 20 percent year-over-year to $645 million, and accounted for 21 percent of total sales. Sales volumes to the region were up 39 percent year-over-year at 2.096 million mt.
Brazil continues to be the group’s primary focus market in the region as it continued to expand distribution through its subsidiary, fertilizer blender and distributor Fertilizantes Tocantins (FTO).
EuroChem confirmed last month that it will take full control of FTO, and the Brazilian firm will be fully integrated into the EuroChem fertilizer group (GM July 17, p. 30). The group’s sales to Brazil rose year-over-year, and contributed 18 percent of group revenues.
In potash, output at Usolskiy reached 1.05 million mt in the first-half, of which 85 percent was granulated product, the group said. As noted above, potash sales from Usolskiy reached 1 million mt of potash in the six-month period. Potash sales from Usolskiy are made through EuroChem’s own distribution platform, which mitigates potential pressure on the markets, the group said.
Of the potash volumes sold in the first half, 40 percent of the total went to Latin America and 25 percent to North America. A further 20 percent was shipped to Europe, and 10 percent to Asia. The remaining volumes were delivered to Russia and African destinations.
Design capacity at Usolskiy is estimated to reach 2.3 million mt this year, with a possible upgrade to 2.7-2.9 million mt/y under phase 1 of the project being considered.
Mine development at EuroChem’s VolgaKaliy potash project in Russia’s southern Volgograd region continues. The group said it has now reached the sylvinite layer at the deposit, and will reach the main potash production panels in the layer later this year.
It said the beneficiation plant at the site is ready for operations in test mode to assure proper grades and MOP quality, as well as to recover ore levels. The group originally was targeting first production at VolgaKaliy for the first half of 2019, but was forced to delay the start of commercial production due to coming up against “geological problems” (GM June 14, 2019)
EuroChem said it had spent $116 million at VolgaKaliy in the first half of 2020, taking the total capital expenditure at the project, as of June 30, 2020, to $2.8 billion.
EuroChem fertilizer& third party product sales (‘000 mt)
| 1H-2020 | 1H-2019 | % Change | |
| Nitrogen products | 4,898 | 4,693 | +4 |
| Including: | |||
| Nitrogen fertilizers | 4,883 | 4,687 | +4 |
| Phosphate products & complex fertilizers | 3,338 | 2,679 | +25 |
| Including: | |||
| Phosphate fertilizers | 1,453 | 1,098 | +32 |
| Complex fertilizers | 1,694 | 1,390 | +22 |
| Potash fertilizers | 1,002 | 389 | +158 |
| Total fertilizer sales | 9,238 | 7,761 | +19 |
| Third party products1 | 2,711 | 2,048 | +32 |
1Includes
all productsSales breakdown by region (‘000
mt)
| 1H-2020 | 1H-2019 | % Change | |
| Europe | 2,951 | 2,745 | +8 |
| Latin America | 2,096 | 1,504 | +39 |
| North America | 1,970 | 1,769 | +11 |
| Russia | 2,296 | 3,578 | (36) |
| Asia Pacific | 2,408 | 1,441 | +67 |
| CIS1 | 393 | 561 | (30) |
| Africa | 343 | 177 | +95 |
1 Excluding Russia