OCI NV, Amsterdam, posted a 352% increase in adjusted net profit attributable to shareholders of the company to $257.1 million in the third quarter ended Sept. 30, 2022, up from $56.9 million the previous year.
Adjusted EBITDA rose 92% to $961.8 million, beating analysts’ average estimate of $896.2 million (Bloomberg Consensus). Year-ago adjusted EBITDA came in at $500.6 million.
Revenue was up 52% to $2.33 billion from $1.54 billion, also being the average analysts’ estimate of $2.17 billion (BloombergConsensus).
OCI CEO Ahmed El-Hoshy said the company is “very pleased” with the performance of its nitrogen operations in the US in particular. He noted the Iowa Fertilizer Co. (IFCo) is on a trajectory to demonstrate its potential with an LTM-adjusted EBITDA of about $700 million, and “one of the highest cash conversions in the group,” benefiting from its positioning in the US Midwest premium market with a state-of-the-art plant and logistics.
He noted that Diesel Exhaust Fuel (DEF) currently represents more than 40% of IFCo’s sales volumes and the OCI N-7 joint venture is now number two in the US DEF market.
IFCo achieved 56% growth in own-produced DEF sales to 662,800 mt and a total of 992,000 mt, including third-party sales through its N-7 joint venture, during the first nine months of 2022.
El-Hoshy said OCI’s European nitrogen operations continue to show “resilience in a difficult operating environment.” He noted that in the third quarter the ammonia facilities were operated at a utilization rate of around 40% and the company continued to import ammonia through OCI’s Rotterdam terminal “as a cost-effective alternative” to producing ammonia locally in Europe. As a result, he said, the company ran the downstream production profitably.
Own-product sales volumes increased 3% year-over-year in the third quarter to 2.585 million mt, up from 2.529 million mt the previous year. Own-produced nitrogen product sales volumes also increased 3% to 2.278 million mt, up from 2.22 million mt. Traded third party sales volumes increased by 30% to 1.141 million mt from the year-ago 879,800 mt.
For the nine months, own-product sales volumes were 6% lower year-over-year, falling to 8.245 million mt, down from 8.737 million mt, while total third party traded volumes were 30% up on the year, at 2.895 million mt versus the year-ago 2.223 million mt.
In regard to earnings in the nine months to Sept. 30, OCI posted an adjusted net profit attributable to shareholders of the company of $1.14 billion on revenue of $7.52 billion, up from the year earlier $284.4 million and $4.12 billion respectively. Adjusted EBITDA jumped 117%, to $3.22 billion from $1.49 billion. Revenues increased by 82%.
El-Hoshy said the outlook for the fundamentals of the company’s nitrogen end markets continues to be underpinned by tight supply, healthy farm economics, and decades-low grain stocks globally, “all of which incentivize the use of nitrogen fertilizers,” he said.
The CEO believes forward curves continue to imply that natural gas prices in Europe will remain at elevated levels through at least 2024, setting ammonia, urea, and nitrates breakeven pricing well above historical averages.
OCI plans to distribute a semi-annual cash return to shareholders of €3.5 per share (about $730 million, including a $200 million base) for the second-half of 2022, payable in April 2023.
OCI Product Sales Volumes
| ‘000 mt | 3Q-2022 | 3Q-2021 | % change | 9M-2022 | 9M-2021 | % change |
| Own product | ||||||
| Ammonia | 481.2 | 542.4 | (11) | 1,415.5 | 1,624.3 | (13) |
| Urea | 1,049.6 | 1,091.2 | (4) | 3,284.4 | 3,334.0 | (1) |
| CAN | 236.4 | 250.5 | (6) | 804.6 | 897.4 | (10) |
| UAN | 276.5 | 218.4 | +27 | 1,032.2 | 942.1 | +10 |
| Total fertilizer | 2,043.7 | 2,102.5 | (3) | 6,536.7 | 6,797.8 | (4) |
| Melamine | 15.4 | 29.7 | (48) | 76.5 | 96.7 | (21) |
| DEF | 218.9 | 88.0 | +149 | 662.8 | 424.7 | +56 |
| Total nitrogen products | 2.278.0 | 2,220.2 | +3 | 7,276.0 | 7,319.2 | (1) |
| Methanol1 | 317.1 | 308.6 | +3 | 969.1 | 1,418.2 | (32) |
| Total own products sold | 2,585.1 | 2,528.8 | +3 | 8,245.1 | 8,737.4 | (6) |
| Traded third party | ||||||
| Ammonia | 163.2 | 65.0 | +151 | 281.8 | 186.2 | +51 |
| Urea | 465.2 | 320.0 | +45 | 1,318.4 | 1,042.4 | +26 |
| UAN | 125.5 | 11.1 | +1,031 | 208.5 | 31.6 | +560 |
| Methanol | 64.0 | 216.0 | (70) | 282.3 | 323.0 | (13) |
| Ethanol and other | 13.6 | – | nm | 13.6 | – | nm |
| AS | 175.5 | 110.5 | +59 | 461.3 | 343.3 | +34 |
| DEF | 133.5 | 157.2 | (15) | 329.2 | 296.0 | +11 |
| Total traded third party | 1,140.5 | 879.8 | +30 | 2,895.1 | 2,222.5 | +30 |
| Total own product and traded third party | 3,735.6 | 3,408.6 | +10 | 11,140.2 | 19,959.9 | +2 |
1 Including OCI’s 50% share of Natgasoline volumes