Abu Dhabi-based Fertiglobe, the nitrogen joint venture between OCI Global and ADNOC, reported a 72% drop in adjusted EBITDA for the second quarter ended June 30, to $218.2 million from $770.0 million in last year’s second quarter.
Adjusted net profit attributable to shareholders of the company plummeted 81%, to $83.9 million from the year-ago $438.2 million. Adjusted earnings per share were $0.010 against the prior year’s $0.053. Revenues fell by 63%, to $551.5 million from $1.47 billion in last year’s second quarter.
“The second-quarter results were impacted by lower selling prices, as volatility in European gas prices continued while markets saw increased supply from capacities commissioned in 2022, coinciding with the end of the demand season in the northern hemisphere,” Fertiglobe said in its Aug. 2 earnings release.
However, the company noted that nitrogen markets bottomed during the second quarter and are tightening rapidly, with a strong price trajectory in recent weeks despite the traditional summer lull for fertilizers.
“Looking ahead, we believe that limited incremental supply additions over the next several years, coupled with healthy farm economics, which incentivize nitrogen fertilizer application, and elevated marginal production costs in Europe, continue to support a favorable nitrogen outlook in the medium- to longer-term,” said Fertiglobe CEO Ahmed El-Hoshy.
Fertiglobe’s overall sales volumes in the second quarter were 12% lower than last year, falling to 1.562 million mt from 1.776 million mt. Own-produced product sales volumes were 8% lower, at 1.414 million mt from 1.54 million mt, while third-party traded volumes fell 37% year-over-year, to 148,000 mt from 236,000 mt.
El-Hoshy expects to see more permanent closures of European marginal production if ammonia pricing continues to track below marginal production costs.
“Despite a recent drop in gas prices, 2023-2025 forward European gas prices are about $15/mmBtu (or about three times higher than 2025-2019), with higher prices anticipated for next winter,” he said. “The gas forwards imply marginal cost support levels for ammonia of about $750/mt (including full impact CO2) and around $590/mt (excluding CO2) for next winter and 2024, which could result in temporary or permanent closure of European marginal production if pricing remains below cost for an extended period.”
Fertiglobe continues to progress its sustainability-focused projects, including the 1 million mt/y Ta’ziz low carbon ammonia project in the UAE and the low-carbon ammonia pilot at Fertil, UAE. It expects the Final Investment Decision (FID) on the Ta’ziz low-carbon ammonia project in the coming months.
The company also expects to start the Front-End Engineering Design (FEED) process for green hydrogen-to-ammonia projects in both Egypt and the UAE during the second half of this year.
Fertiglobe posted a 63% decline in adjusted EBITDA for the first half of 2023, to $515.5million on revenue of $1.245 billion, down from the year-ago $1.39 billion and $2.66 billion, respectively. Six-month revenues were down 53% year-over-year. The company’s overall sales volumes for the first half were 7% lower, at 3.09 million mt from 3.31 million mt.
Adjusted net profit attributable to shareholders of the company was reported $219.3 million for the first six months, some 73% lower than last year’s $799.2 million. Adjusted earnings per share were $0.026 versus the previous year’s $0.096.
Fertiglobe proposes to pay first-half dividends of at least $250 million, subject to Board approval in September 2023.
Fertiglobe Sales Volumes (‘000 mt)
| 2Q-2023 | 2Q-2022 | % change | 1H-2023 | IH-2022 | % change | |
| Fertiglobe Product Sold | 1,414 | 1,540 | (8) | 2,777 | 2,794 | (1) |
| Ammonia | 290 | 357 | (19) | 526 | 580 | (9) |
| Urea | 1.117 | 1,183 | (6) | 2,244 | 2,214 | +1 |
| DEF | 7 | – | – | 7 | – | – |
| Third Party Traded | 148 | 236 | (37) | 313 | 512 | (39) |
| Ammonia | 78 | 27 | +189 | 109 | 79 | +38 |
| Urea | 70 | 209 | (66) | 204 | 433 | (53) |
| Total Product Volumes | 1,562 | 1,776 | (12) | 3,090 | 3,306 | (7) |