OCP Group SA reported a 60% drop in EBITDA to MAD 4.69 billion ($455 million) on revenue of MAD 18.28 billion ($1.78 billion) for the first quarter ended March 31, 2023, down from MAD11.60 billion ($1.23 billion) and MAD25.33 billion ($2.67 billion), respectively, the previous year, according to a May 29 press release by the group.
Gross profit for the quarter under review fell by 43% to MAD9.08 billion ($888 million), against the prior-year MAD15.89 billion ($1.68 billion).
The Moroccan phosphates group cited lower revenues and reduced absorption of fixed costs that more than offset decreased input costs as driving the decline.
Revenue dropped by 28% in dirhams, and by 33% in US dollar terms. The Moroccan phosphates group attributed the revenue downturn mainly to lower selling prices and volumes across all product categories.
“Global fertilizer prices continued to decline in the first quarter of 2023, tied to a significant decrease in raw material prices as well, namely sulfur and ammonia, and reflecting reduce market demand in most regions, apart from Brazil and India,” said OCP.
“Despite improved affordability and the declining price environment, several markets were prone to delay their purchases in hope of further price drops,” the group noted.
OCP did not comment on the performance of individual product categories in its results media statement, or disclose first-quarter sales volumes.
But the phosphates group is more optimistic for the second half of the year, reporting “improving demand trends support its expectations for a strong second half of 2023,” driven by “low inventories in certain regions, favorable farmer economics, and application season being only a few months ahead.”
OCP believes these positive elements should be able to mitigate the impact of lower volumes in the first quarter.
“Together with lower raw material costs, these positive elements are expected to benefit margins,” the group said.
OCP reiterated that its new TSP production capacities “will be deployed gradually” in the second half of 2023, “calibrated to demand recovery trends” (GM March 31, p. 22 ).
The phosphates group once again did not provide any numbers on its additional TSP capacity plans. However, as of December last year, it was understood that it was adding around 0.5 million mt/y of additional TSP capacity at its Jorf Lasfar site (GM Dec. 2, 2022). Existing TSP production capacity at Jorf Lasfar is understood to be some 400,000 mt/y, and at Safi some 900,000 mt/y.
OCP noted that no other material industry-wide capacity additions are planned.
The phosphates group reported its capital expenditures in the first quarter totaled MAD5.64 billion, some 89% more than in the same prior-year period, when they totaled MAD2.988 billion.