OCI NV, Amsterdam, posted a 246% increase in adjusted net income attributable to shareholders of the company to $354.2 million for the first quarter ended March 31, 2022, up from the prior year $102.4 million. Diluted earnings per share were $1.688, versus $0.488 a year ago.
Adjusted EBITDA for the quarter rose 115%, to $970.1 million versus $451.8 million a year earlier. Revenue was up 108%, to $2.33 billion from $1.12 billion. Reported revenue beat analysts’ estimates (Bloomberg Consensus), with the average estimate at $2.16 billion, but the reported adjusted EBITDA missed estimates, with the average estimate at $1.01 billion.
OCI cited higher selling prices for all products, which more than offset lower volumes due to a shift in sales volumes to the second quarter.
Own-produced product sales volumes fell 13% to 2.59 million mt year-over-year, down from the previous year 2.99 million mt, while own-produced nitrogen product sales volumes declined 7% year-over-year, to 2.31 million mt versus 2.48 million mt. The company attributed this latter fall as largely due to a build-up of inventory at Fertiglobe and the Iowa Fertilizer Co. (IFCo) ahead of the spring application season.
Own-produced fertilizer sales volumes were down 11%, to 2.05 million mt in the quarter from the prior year’s 2.3 million mt.
Total own-produced methanol sales volumes declined 44% to 281,500 mt. OCI cited the shutdown of BioMCN in The Netherlands due to the high gas price environment in Europe and downtime at OCI Beaumont, Texas, the effect of which was partially offset by higher volumes at Natgasoline.
However, total traded third party sales volumes increased by 61% to 854,800 mt, up from 532,200 mt a year ago.
Based on current visibility for volumes and prices, OCI expects higher EBITDA and free cash flow in the second quarter compared to the first quarter of 2022.
“We look forward to an even better performance in the second quarter as we benefit from strong in-season demand, the phasing of volumes from the first quarter into the second quarter, and higher selling prices,” said OCI NV CEO Ahmed El-Hoshy in the company’s May 12 results statement.
“The majority of our volumes are already committed for the second quarter, which provides good visibility ahead and sets us up from a strong third and fourth quarter of 2022.”
Based on this outlook, OCI expects the semi-annual cash distribution with respect to the first half of 2022 to be significantly higher than the €1.45 per share to be paid with respect to second-half of 2021 period.
OCI’s Nitrogen business posted a 153% increase in its first-quarter adjusted EBITDA, to $854.1 million on revenues of $2.07 billion, up from $337.1 million and $849.6 million, respectively, the previous year, despite plant turnarounds and higher gas prices in Europe and the U.S.
Adjusted EBITDA of the Nitrogen U.S. segment increased by 91% to $152.6 million in the first quarter, boosted by higher year-over-year sales volumes and selling prices. Last year, production downtime during extreme cold-weather conditions resulted in lost volumes, whereas the first quarter of 2021 adjusted EBITDA included gains from physical and financial gas hedges.
The Iowa Fertilizer Co. (IFCo) plant in Wever, Iowa, experienced an unplanned interruption on production May 9. Iowa Fertilizer Co. had said it hoped to return to normal operations later this week (see Related Story).
OCI noted the DEF business continued to grow, with first-quarter volumes up by 50% from a year-ago, to an annualized more than 900,000 mt. The company said DEF now represents around 45% of its sales volumes from IFCo, with a growth in contract volumes in 2022. It said the higher netbacks for this product enable OCI to continue to enhance returns for its U.S. nitrogen operations going forward.
The company said the Nitrogen Europe segment continued to perform well “in a difficult market environment with volatile and record high natural gas input costs.” First-quarter adjusted EBITDA for the segment increased by 189% to $76.3 million versus the year-earlier $26.4 million.
Selling prices for all products were up, which offset a $134 million negative impact year-on-year from higher natural gas prices.
OCI said throughput capabilities at its ammonia import terminal in Rotterdam continued to increase in the quarter, enabling the company to maintain production of its downstream products (CAN, UAN, and melamine), after it temporarily closed one of two of OCI Nitrogen’s ammonia plants due to the high gas prices in Europe at the beginning of the fourth quarter of last year.
CAN volumes were down 11% year-over-year in the quarter, but the company pointed to a healthy order book for its nitrates business in the second quarter, and it expects to continue to benefit from its logistics “close to core demand centers.”
For its Methanol business, OCI reported an 11% increase in adjusted EBITDA for the first quarter, to $143.1 million on revenues of $353.6 million, versus the year-ago $128.4 million and $282.1 million, respectively. The company cited higher methanol prices and a higher contribution from Natgasoline, more than offsetting lower volumes and higher gas prices compared to a year ago.
Own-produced methanol sales volumes decreased by 44% to 281,500 mt in the quarter, down from the year-ago 507,100 mt.
The downturn in sales volumes was due to the aforementioned temporarily shutdown last June of the company’s BioMCN methanol facility in The Netherlands, which remains shut due to the high gas price environment, as well as downtime at OCI Beaumont.
OCI Methanol has methanol production capacity of around 3 million mt/y, with plants in The Netherlands and in Texas.
OCI said it has added green MTBE to its product offering of clean fuels, and is expanding its geographic footprint across Europe with sales into Germany
After a period with relatively low operating rates, Natgasoline had its inaugural planned turnaround starting during the third quarter of 2021. Following the resumption of production at the beginning of December, OCI reported the plant has achieved rates close to nameplate production capacity, “which bodes well for the future,” it said.
OCI reported in February that it had inked definitive legal agreements to create a strategic alliance with Abu Dhabi’s ADQ and Alpha Dhabi Holding, under which the Abu Dhabi firms will acquire a 15% stake in the OCI Methanol Group for $375 million (GM Feb. 11, p. 35; Nov. 24, 2021). OCI said the alliance is aimed at positioning the OCI Methanol Group to be able to pursue future growth opportunities in hydrogen-based applications, including fuel.
Under the terms of the agreements, OCI Methanol Group will be incorporated as an Abu Dhabi Global Market (ADGM) company in Abu Dhabi.
OCI Product Sales Volumes
| ‘000 mt | 1Q-2022 | 1Q-2021 | % change |
| Own product | |||
| Ammonia | 386.7 | 587.0 | (34) |
| Urea | 1,042.1 | 1,103.2 | (6) |
| CAN | 291.4 | 328.4 | (11) |
| UAN | 329.6 | 279.9 | +18 |
| Total fertilizer | 2,049.8 | 2,298.5 | (11) |
| Melamine | 31.0 | 34.2 | (9) |
| DEF | 226.2 | 150.8 | +50 |
| Total nitrogen products | 2,307.0 | 2,483.5 | (7) |
| Methanol1 | 281.5 | 507.1 | (44) |
| Total own products sold | 2,588.5 | 2,990.6 | (13) |
| Traded third party | |||
| Ammonia | 57.2 | 41.1 | +39 |
| Urea | 449.8 | 220.5 | +104 |
| UAN | 24.3 | 13.6 | +79 |
| Methanol | 144.1 | 78.7 | +83 |
| AS | 94.1 | 118.5 | (21) |
| DEF | 85.1 | 59.8 | +42 |
| Total traded third party | 854.8 | 532.2 | +61 |
| Total own product and traded third party | 3,443.3 | 3,522.8 | (2) |
1 Including OCI’s 50% share of Natgasoline volumes
The financial results of Fertiglobe, the Abu-Dhabi-based Middle Eastern joint venture partnership between OCI NV, Amsterdam, and Abu Dhabi’s state-energy company, Abu Dhabi National Oil Corp. (ADNOC), are reported separately (see Earnings Section).
OCI and ADNOC completed an initial public offering (IPO) of Fertiglobe last October, raising gross proceeds of over $795 million (GM Oct. 22, 2021). OCI’s stake in Fertiglobe is now 50%, down from the pre-IPO 58% holding.