OCI NV, Amsterdam, reported second-quarter adjusted net income attributable to shareholders of $527.5 million ($2.510 per share) on revenues of $2.86 billion, up 322% from the year-ago $125.1 million ($0.596 per share) and $1.46 billion, respectively. Gross profit was $1.17 billion, up from $404.6 million, while adjusted EBITDA was $1.29 billion, up from $535.4 million.
“We are pleased with these financial results that have enabled us to accelerate our shareholder cash returns to almost $1.1 billion this year, while also substantially reducing gross debt and further lowering leverage to well within our investment grade financial policy parameters,” said Ahmed El-Hoshy, OCI CEO. “This also positions us favorably to selectively pursue value-creative growth opportunities including organic expansions below replacement cost.
“The outlook for the fundamentals of our nitrogen end markets continues to be underpinned by tight supply, healthy farm economics, and decades of low grain stocks globally that incentivize the use of nitrogen fertilizers,” he added. “Forward curves imply that natural gas prices in Europe will remain at elevated levels through at least 2023, setting ammonia, urea, and nitrates breakeven pricing well above historical averages.
“Many European producers cannot recover cash costs due to high gas prices, especially those that cannot import ammonia,” said El-Hoshy. “We benefit from our leading position in global ammonia markets and our flexibility to replace locally produced ammonia with imported ammonia shipped from our operations in North Africa and the U.S. through our Rotterdam terminal.
“We are now running our ammonia production platform in Europe at 40% of capacity because of the high gas prices, but are able to operate our downstream production profitably with support from our imported ammonia,” he continued. “As a result, we remain able to satisfy the demand of our agricultural and industrial customers in Europe.” He added that the company’s methanol plant in The Netherlands remains shut due to high gas prices.
El-Hoshy said OCI has hedged 50% of its gas requirements in the U.S. for the period 2023 – 2029 at a weighted average of $4.3/mmBtu, and for August-December 2022 it is hedged 60% at a weighted average price of $5.3/mmBtu, which compares to the Henry Hub benchmark of on average $8.1/mmBtu in second-quarter 2022. Company-wide, he said the company has price visibility on more than 90% of its global natural gas requirements as a result of favorable gas supply agreements at Fertiglobe and the hedge position in the U.S. He noted that less than 10% of its natural gas supply is exposed to market fluctuations in Europe.
Second-quarter Nitrogen segment operating profit was $986.5 million on revenues of $2.59 billion, up from the year-ago $312.3 million and $1.19 billion, respectively. Adjusted EBITDA was $1.12 billion, up from $445.1 billion.
U.S. nitrogen operating profit was $167.7 million on revenues of $506.1 million, up from $49.5 million and $237.6 million, respectively. Adjusted EBITDA was $215.6 million, up from $86.5 million.
OCI six-month adjusted net income was $881.7 million ($4.196 per share) on revenue of $5.19 billion, up from the year-ago $227.5 million ($1.084 per share) and $2.58 billion, respectively. Gross profit was $2.03 billion, up from $745 million, while adjusted EBITDA was $2.26 billion, up from $987.2 million.
Six-month Nitrogen segment operating profit was $1.72 billion on revenue of $4.66 billion, up from the year-ago $525.2 million and $2.04 billion, respectively. Adjusted EBITDA was $1.97 billion, up from $782.2 billion.
U.S. nitrogen operating profit was $282.8 million on revenue of $959.8 million, up from the year-ago $93.4 million and $341.5 million, respectively. Adjusted EBITDA was $368.2 million, up from $166.2 million.
Product Sales Volumes (000 mt)
| Own Product | 2Q-22 | 2Q-21 | YTD-22 | YTD-21 |
| Ammonia | 547.6 | 517.9 | 934.3 | 1,104.9 |
| Urea | 1,192.7 | 1,137.6 | 2,234.8 | 2,240.8 |
| CAN | 276.8 | 318.4 | 568.2 | 646.8 |
| UAN | 426.1 | 443.9 | 755.7 | 723.8 |
| Total Fertilizer | 2,443.2 | 2,417.8 | 4,493.0 | 4,716.3 |
| Melamine | 30.1 | 32.8 | 61.1 | 67.0 |
| DEF | 217.7 | 186.0 | 443.9 | 336.8 |
| Total Nitrogen | 2,691.0 | 2.636.6 | 4,998.0 | 5,120.1 |
| Methanol | 370.5 | 594.7 | 652.0 | 1,101.8 |
| Total Own Prod. | 3,061.5 | 3,231.3 | 5,650.0 | 6,221.9 |
| Traded Third Party | ||||
| Ammonia | 61.4 | 80.2 | 118.6 | 121.2 |
| Urea | 403.4 | 501.9 | 853.2 | 722.4 |
| UAN | 58.7 | 6.9 | 83.0 | 20.5 |
| Methanol | 74.2 | 20.7 | 218.3 | 99.4 |
| AS | 191.7 | 114.1 | 285.8 | 232.6 |
| DEF | 110.6 | 79.2 | 195.7 | 139.1 |
| Total Third Party | 900.0 | 803.0 | 1,754.6 | 1,335.2 |
| Total | 3,961.5 | 4,034.3 | 7,404.6 | 7,557.1 |