PhosAgro, Moscow, posted an 88% jump in IFRS net profit of RUB165.5 billion (approximately $2.7 billion at current exchange rates) on revenue of RUB459.4 billion for the nine months to Sept. 30, 2022, up from the year-ago RUB87.8 billion and RUB292.6 billion, respectively.
Net profit adjusted for foreign exchange gains and losses came in 75% higher year-over-year at RUB150.2 billion versus RUB85.7 billion the previous year.
Nine-month adjusted EBITDA increased 70% to RUB222.5 billion, up from the prior year RUB131 billion.
Revenue rose by 57%, with the Russian fertilizer group attributing the growth to an increase in sales of end products, which it said was driven by higher mineral fertilizer output.
PhosAgro said “an extensive program” for the modernization and construction of new production facilities enabled the group to “considerably improve” the performance of its equipment.
The group also cited higher average sales prices in world markets and a change in sales structure that favors high-margin fertilizers – which, it said, were in high demand among farmers – as also driving the nine-months revenue increase.
Mineral fertilizer production for the nine months to Sept. 30 increased 7% year-over-year to 8.06 million mt, up from the previous year 7.55 million mt.
Nine-months mineral fertilizer sales volumes increased by 7% on the year, reaching 8.31 million mt, compared with 7.79 million mt.
PhosAgro said the sales volumes growth was driven by the strong demand for fertilizers in Russian and global markets, in addition to the aforementioned increase in production volumes.
Sales of phosphate-based fertilizers and MCP increased by 9% to 6.39 million mt versus the year-ago 5.86 million mt, but nitrogen-based fertilizer sales dipped a tad (by 0.3%) year-over-year to 1.92 million mt from 1.93 million mt.
For the third quarter, PhosAgro reported a 5% increase year-over-year in adjusted net profit to RUB41.65 billion, beating the RUB36.7 billion that analysts forecast in a consensus forecast for Interfax, the Russian news agency reported.
Looking ahead, PhosAgro noted nitrogen-based fertilizer markets continue to demonstrate a high degree of volatility, partly due, it said, to the persistence of high natural gas prices amid an expected increase in seasonal demand from key markets – India, South America, and Europe.
It further noted the market for phosphate-based fertilizers in the fourth quarter traditionally has been the off-season period in the group’s main sales regions, which, it said, may result in additional pressure on prices.
However, PhosAgro sees the lack of large export volumes from China, due to ongoing export restrictions in favor of deliveries to the domestic market, as supporting global markets for phosphate-based fertilizers in general.
But Russia’s BCS Global Markets analysts, as cited by a bne Intelinews report, warn that phosphate and urea prices are expected to decelerate in the fourth quarter, while the cost dynamics for PhosAgro are mixed – the cost of sulfur and sulfuric acid increased, while the cost of logistics and ammonia declined.
“We expect results to start deteriorating following the fertilizer prices in the future, should the downward trend continue,” BCS Global Markets analysts commented, maintaining a negative outlook on PhosAgro’s shares, according to the report.
The Russian fertilizer group has upped its production forecasts for 2022 to 10.9 million mt, according to an Interfax report, citing a group statement.
“The accumulated dynamics for the output of fertilizers allow us to improve the forecast for production volumes for the year,” said PhosAgro Chairman Viktor Cherepov, as cited by the report.
“We expect to exceed 10.9 million mt in 2022, growth of nearly 5% year-over-year.”
In August, the group had published a production forecast of 10.8 million mt for 2022. In 2021, it boosted fertilizers output by 3% to 10.31 million mt, up from 2020’s 9.98 million mt (GM Feb. 11, p. 30).
PhosAgro Production and Sales Volumes
| ‘000 mt | 9M-2022 | 9M-2021 | % Change |
| Production | |||
| Phosphate-based fertilizers and MCP | 6,184.2 | 5,779.8 | +7 |
| Nitrogen-based fertilizers | 1,875.4 | 1,770.6 | +6 |
| Total fertilizers | 8,059.6 | 7,550.4 | +7 |
| Sales volumes | |||
| Phosphate-based fertilizers and MCP | 6,390.0 | 5,858.7 | +9 |
| Nitrogen-based fertilizers | 1,922.0 | 1,927.8 | (0.3) |
| Total fertilizers | 8,312.1 | 7,786.5 | +7 |