OCI NV, Amsterdam, posted a 54% decline in fourth-quarter adjusted net profit attributable to shareholders of the company to $204.6 million, down from the year-ago $447.4 million.
Adjusted EBITDA came in 36% off, at $669.2 million, down from the year-earlier $1.04 billion, and missing analysts’ estimates (Bloomberg Consensus). Revenue for the quarter was flat versus a year-ago, at $2.2 billion.
The company cited a decline in nitrogen prices and volatile natural gas markets during the quarter, resulting in delayed purchasing from farmers, as driving the EBITDA decline. This was combined with a heavy turnaround quarter across the platform, resulting in a 3% fall in OCI’s total sales volumes to 3.34 million mt from the year-ago 3.43 million mt.
OCI also noted that its adjusted EBITDA in the quarter was also impacted by the absence of the sale of excess EUA’s (European Union Allowance), the tradable unit under the EU Emissions Trading Scheme (EU ETS) in Europe; realized natural gas hedging losses of $43 million, principally in Europe; and a negative impact of around $20 million in the US due to temporary shutdowns and logistical constraints caused by the winter freeze.
However, full-year adjusted net profit attributable to shareholders was up 84% over the previous year to $1.34 billion, up from $731.8 million. Nonetheless, it missed the average analyst estimate of $1.48 billion.
Adjusted EBITDA for the year increased 54%, to $3.89 billion, up from $2.53 billion, but also missed the average analyst estimate of $3.94 billion (Bloomberg Consensus).
Revenue, however, beat analysts’ estimates, coming in at $9.71 billion versus the average estimate of $9.54 billion, and some 54% up on FY2021’s $6.32 billion.
OCI’s own-produced nitrogen sales volumes were flat during the fourth quarter, at 2.35 million mt. Own-produced ammonia sales bucked the trend, increasing 29% year-over-year to 571,200 mt. For FY2022, own produced nitrogen sales volumes declined 1% to 9.63 million mt.
Fourth-quarter total traded third-party sales fell 5% year-over-year to 700,900 mt, but for the full-year increased 22% to just under 3.6 million mt, reflecting higher volumes sales across all product categories with the exception of methanol.
In terms of outlook, OCI noted that while nitrogen prices have declined recently, industry fundamentals are healthy with high farmer profitability, decades low grain stocks, and improved nitrogen affordability, driving a demand recovery ahead of the application season, including an expected material rebound in US corn acreage.
The company also sees the outlook for its methanol business as positive, as China re-opens, lower natural gas prices boost industrial demand, and demand for marine fuels is set to accelerate.
However, Berenberg analyst Adrien Tamagno, as cited by Bloomberg, expects consensus estimates for OCI’s FY2023 adjusted EBITDA to be cut by about 10% to reflect current nitrogen urea prices.
Citi analyst Mubasher Chaudhry sees further share price underperformance for the company, amid ongoing weakness in fertilizer and methanol markets, “with sustainable pricing levels being tested ahead of the spring application season,” Bloomberg reported.
OCI confirmed a semi-annual cash distribution with respect to the second-half of 2022 of €3.50 per share, or around $785 million at current exchange rates, scheduled for payment in April 2023.
OCI Product Sales Volumes
| ‘000 mt | 4Q-2022 | 4Q-2021 | % change | FY2022 | FY2021 | % change |
| Own product | ||||||
| Ammonia | 571.2 | 443.0 | +29 | 1,986.7 | 2,090.3 | (5) |
| Urea | 957.0 | 995.6 | (4) | 4,241.4 | 4,327.6 | (2) |
| CAN | 213.9 | 279.0 | (23) | 1,018.5 | 1,176.3 | (13) |
| UAN | 350.8 | 412.6 | (15) | 1,383.0 | 1,354.8 | +2 |
| Total fertilizer | 2,092.9 | 2,130.2 | (2) | 8,629.6 | 8,949.0 | (4) |
| Melamine | 7.3 | 35.2 | (79) | 83.8 | 131.9 | (36) |
| DEF | 254.4 | 187.2 | +36 | 917.2 | 612.0 | +50 |
| Total nitrogen products | 2,354.6 | 2,352.6 | 0 | 9,630.6 | 9,692.9 | (1) |
| Methanol1 | 286.0 | 336.8 | (15) | 1,255.1 | 1,747.2 | (28) |
| Total own products sold | 2,640.6 | 2,689.4 | (2) | 10,885.7 | 11,440.1 | (5) |
| Traded third party | ||||||
| Ammonia | 76.7 | 69.2 | +11 | 358.5 | 255.5 | +40 |
| Urea | 223.3 | 252.8 | (12) | 1,541.7 | 1,295.2 | +19 |
| UAN | 121.2 | 16.9 | +617 | 329.7 | 48.5 | +580 |
| Methanol | 99.0 | 209.0 | (53) | 381.3 | 524.4 | (27) |
| Ethanol and other | 9.7 | – | Nm | 23.3 | – | nm |
| AS | 80.9 | 124.6 | (35) | 542.2 | 467.8 | +16 |
| DEF | 90.1 | 66.2 | +36 | 419.3 | 362.2 | +16 |
| Total traded third party | 700.9 | 738.7 | (5) | 3,596.0 | 2,953.6 | +22 |
| Total own product and traded third party | 3,341.5 | 3,428.1 | (3) | 14,481.7 | 14,393.7 | +1 |
1 Including OCI’s 50% share of Natgasoline volumes