ADX-listed Fertiglobe Plc, the strategic joint venture between OCI Global and UAE state-owned oil giant Abu Dhabi National Oil Co. (ADNOC), reported a 39% decline in fourth-quarter adjusted EBITDA, to $289.2 million from the prior-year $472.1 million. Revenue also fell 39% year-over-year, to $645.9 million from $1.05 billion.
Fourth-quarter net profit was $94.5 million, down 45% the prior year’s $171.9 million, while adjusted net profit after minorities was $102.5 million for the quarter, some 48% lower than the prior year’s $196.4 million.
Fourth-quarter own-produced sales volumes grew 15% year-over-year, to 1.46 million mt, driven mainly by higher sales volumes. Third-party traded volumes fell 51%, however, to 119,000 mt. Total product sales volumes in the quarter were 5% lower year-over-year at 1.58 million mt.
For the full-year 2023, own-produced sales volumes grew 5%, to 5.71 million mt, while third-party traded volumes fell 57%, to 472,000 mt. Total product sales volumes for the 12 months were 6.18 million mt, a 5% downturn on FY2022’s 6.52 million mt.
Fertiglobe posted a full-year 2023 net profit of $348.9 million, down 72% from the prior year’s 1.25 billion, although the result was essentially in line with the average analyst estimate of $347 million (BloombergConsensus). Adjusted net profit after minorities was $363 million in 2023 versus $1.29 billion the previous year.
FY2023 earnings per share were 4.20 cents versus 15.1 cents in 2022, missing the average estimate of 4.23 cents per share. Adjusted EBITDA for the 12 months was down 59% from the previous year, to $1.0 billion from $2.47 billion. Full-year revenue fell 52%, to $2.42 billion from $5.03 billion, and came in below the average analyst estimate of $2.45 billion.
Fertiglobe
attributed the fall in revenues to a decrease in nitrogen product prices, but
the company highlighted a 23% quarter-over-quarter growth in revenues and a 45%
increase in adjusted EBITDA in the fourth quarter versus the third quarter.
“This growth reflects a strong order book, higher sales volumes, and increased
ammonia prices driven by a higher gas prices and tight markets due to supply
disruptions,” the company said. “In the fourth quarter of 2023, ammonia prices
increased due to widespread supply disruptions, while urea prices were impacted
by demand deferrals into early 2024, resulting in reduced imports from key
regions.”
Fertiglobe expects demand to recover ahead of the spring application season in the Northern Hemisphere, with healthy demand in other regions, including Brazil and Australia, which will provide a platform for its own prices to move higher. The company said the medium- to long-term outlook for nitrogen markets continues to be supported by limited incremental capacity additions and healthy demand growth.
“Further price support in the coming months is expected to be driven by low inventories in key importing regions, ongoing restrictions on Chinese exports, and supply chain disruption in the Red Sea, to which Fertiglobe has limited exposure,” the company said.
The company said it will pay dividends of $200 million, equivalent to 9 fils per share, for second-half 2023, subject to shareholder approval at the AGM in April. This will take full-year dividends to $475 million, including $275 million already paid in the fourth quarter, and will be “one of the highest dividend yields in the company’s industry and market.”
Fertiglobe said it is also ready for its “next chapter” in light of the announced sale last December of OCI’s 50% + 1 share stake in Fertiglobe to ADNOC for a total consideration of $3.62 billion (GM Dec. 15, 2023).
The completion of the transaction will see OCI fully exiting the Fertiglobe jv and ADNOC becoming the majority shareholder in Fertiglobe with a total ownership of 86.2%. The free float traded on the Abu Dhabi Securities Exchange will remain at 13.8%.
The transaction remains subject to legal and regulatory conditions, including antitrust approvals, but is expected to close during 2024. OCI CEO Ahmed El-Hoshy told investors and analysts at a company earnings call on Feb. 14 that Fertiglobe doesn’t expect any regulatory challenges.
“ADNOC doesn’t have any urea or any material ammonia production outside of Fertiglobe, so it should be relatively straightforward,” he said. “The deal supports our future growth plans and makes us a key component of ADNOC’s ambitious roadmap and will enable Fertiglobe to further leverage ADNOC’s resources, expertise, and network to pursue new growth opportunities, especially in the emerging markets of clean ammonia and blue hydrogen.”
El-Hoshy said Fertiglobe’s priorities will be to continue to unlock potential in its core products of urea and ammonia, accelerate the pursuit of new market and product opportunities, and expand its focus on sustainable ammonia.
“The strategy will be to continue balancing dividend payments with selective investment in value accretive growth projects,” he said. “This will be supported by healthy free cash flow conversion and a robust balance sheet.”