OCI NV, Amsterdam, reported a fourth-quarter 2020 adjusted net loss of $44.8 million, compared to the year-ago $43.4 million. The net loss before adjustments for the quarter came in at $56.9 million, versus the year-ago $90.8 million.
Adjusted EBITDA increased 12 percent to $265.9 million, up from $236.8 million, while revenues rose 22 percent, to $1.04 billion from the year-ago $847.8 million.
Fourth-quarter OCI-produced sold volumes increased 15 percent to 3.4 million mt, up from 2.9 million mt the previous year. Traded third-party volume sales were up 80 percent to 696,600 mt in the quarter, and the company’s total sales volumes increased 23 percent year-on-year to 4.09 million mt.
OCI reported that the impact of recent extreme cold weather and the spike in gas prices in the U.S., which resulted in temporary downtime in its U.S. plants, has been “meaningfully more than offset by cash gains from physical and financial gas hedges.”
It said the COVID-19 pandemic has not had a direct impact on its operations, and all of the company’s products have been deemed essential to ensure uninterrupted supply of food and other essential products. It said supply chains and distribution channels continue to perform “resiliently.”
“We are pleased that we ended the year with a strong quarter of robust volume growth and healthy cash generation. As a result, we achieved a reduction in net debt of $332 million during 2020, despite selling prices for all our products nearing trough cycle levels during the year and on average at materially lower levels than in 2019,” said OCI NV CEO Ahmed El-Hoshy.
“We look forward to delivering another year of robust volume growth in 2021, against a backdrop of nitrogen markets that have not looked as positive since at least 2015,” he said.
Fourth-quarter own-produced nitrogen fertilizer sales rose 10 percent to 2.58 million mt, up from 2.35 million mt. The company cited strong growth in all regions and in most products – except ammonia volumes, which it said were lower, partly due to a turnaround in an ammonia line at Sorfert in Algeria.
However, the company said the significant increase in sales volumes across the nitrogen segment could not offset the lower selling prices in the fourth quarter of 2020, especially for ammonia and nitrates. This was the main driver of a decline in adjusted EBITDA for the Nitrogen U.S. and Nitrogen Europe segments.
However, the company reported Fertiglobe’s adjusted EBITDA improved compared to both the fourth quarter of 2019 and the third quarter of 2020, with the operation continuing to benefit from fixed gas agreements and the increase in higher spot gas pricing and its correlation with product pricing.
Overall, OCI’s nitrogen business saw an 8 percent decline in adjusted EBITDA in fourth quarter 2020, to $213.7 million from the year-ago $233.2 million.
OCI sees the outlook for its nitrogen fertilizer portfolio is now considerably more favorable on higher global pricing.
“Global nitrogen demand is supported by rising corn prices driven by higher corn imports from China, with demand in all our key markets forecast to remain robust in 2021 on improved farm economics and a recovery in industrial consumption,” the company said.
It expects a favorable spring application season in its core U.S. Midwest market, with attractive affordability levels for farmers on the back of rising crop prices. For Europe, it said its nitrates order book is healthy going into the second quarter of 2021.
OCI expects higher fertilizer demand in China on strong domestic crop prices, combined with a recovery in industrial urea consumption, to likely limit urea exports from that country in 2021 to a lower level than in 2020.
It noted industrial nitrogen markets remained relatively subdued in the fourth quarter of 2020 due to GDP/industrial activity slowdown, but sees continued recovery and resilience to ongoing lockdowns.
OCI reported its DEF sales in the U.S. reached record levels in the fourth quarter, which, combined with the higher urea sales prices in the U.S., it sees as supporting an improving trend going into 2021.
OCI Nitrogen Segment
| $ million | Nitrogen U.S. | Europe | Fertiglobe | Elim. | Total Nitrogen | |
| 4Q-2020 | ||||||
| Total Revenues | 149.4 | 190.5 | 498.4 | (30.1) | 808.2 | |
| EBITDA | 45.5 | 20.6 | 149.1 | (1.5) | 213.7 | |
| Adjusted EBITDA | 45.5 | 20.6 | 149.1 | (1.5) | 213.7 | |
| 4Q-2019 | ||||||
| Total Revenues | 134.0 | 194.2 | 357.8 | (13.6) | 672.4 | |
| EBITDA | 60.8 | 41.3 | 118.5 | 2.2 | 222.8 | |
| Adjusted EBITDA | 60.8 | 41.3 | 128.9 | 2.2 | 233.2 | |
Total own-produced methanol sales volumes increased 48 percent in the fourth quarter due to a significant step-up in production at OCI Beaumont in Texas and despite downtime at Natgasoline in Beaumont. Fourth-quarter adjusted EBITDA increased on the same prior-year quarter to $67.0 million, up from $8.0 million, due to the increase in volumes, higher methanol prices, and insurance proceeds for downtime at Natgasoline, more than offsetting slightly higher gas prices in The Netherlands and the U.S. compared to a year ago, the company said.
OCI received a final insurance settlement of $120 million as compensation for property damages and business interruption losses at Natgasoline, of which $55 million was received in prior reporting periods. For the remaining balance, $5 million was received in the fourth quarter of 2020 and $60 million in early 2021.
The company reported that it continues its strategic review to explore multiple value-enhancing opportunities for its methanol group, which, it said, is benefiting from a considerably stronger outlook, with methanol markets having strengthened significantly through the fourth quarter and into 2021.
OCI also highlighted it had made further progress in its effort to grow its green portfolio, and said it anticipated new growth opportunities in that respect for the company.
It believes the use of ammonia or methanol as a shipping fuel “is particularly promising,” as these products are among the best-placed alternatives to help this sector decarbonize in a cost-effective way, it said
“We have therefore made it a top priority to make ammonia an established fuel for shipping, and we are also working on accelerating the transition to producing blue and green ammonia at our plants,” the company said.
In the biofuels business, OCI said it has started supplying Essar Oil (U.K.) Ltd. with bio-methanol as part of a biofuel alcohol mix under a new agreement, strengthening its position in renewable methanol. It added it will continue to roll out bio-methanol as a fuel.
OCI intends to announce its 2030 scope 1 and 2 emission reduction targets at its upcoming ESG Investor Seminar, scheduled to take place March 8, 2021.
OCI posted a full-year 2020 net loss attributable to shareholders of $177.7 million, a narrowing from the FY2019 reported net loss of $334.7 million. The adjusted net loss for 2020 came in at $213.4 million, versus the year-ago $208.4 million. Diluted earnings per share were $0.847, compared with the year-ago $1.598 per share.
FY2020 adjusted EBITDA was 16 percent up on the year at $869.8 million, up from $748.4 million, while revenue increased 15 percent to $3.47 billion, up from $3.03 billion.
OCI Product Sales Volumes
| ‘000 mt | 4Q-2020 | 4Q-2019 | % change | FY2020 | FY2019 | % change |
| Own product | ||||||
| Ammonia | 380.0 | 490.3 | (22) | 1,656.8 | 1,907.1 | (13) |
| Urea | 1,472.4 | 1,187.2 | +24 | 4,763.2 | 3,110.8 | +53 |
| CAN | 290.7 | 258.7 | +12 | 1,371.8 | 1,140.8 | +20 |
| UAN | 434.2 | 411.2 | +6 | 1,749.9 | 1,489.6 | +17 |
| Total fertilizer | 2,577.3 | 2,347.4 | +10 | 9,541.7 | 7,648.3 | +25 |
| Melamine | 37.0 | 39.2 | (6) | 144.6 | 135.8 | +6 |
| DEF | 181.0 | 152.2 | +19 | 636.2 | 508.7 | +25 |
| Total nitrogen products | 2,795.3 | 2,538.8 | +10 | 10,322.5 | 8,292.8 | +24 |
| Methanol1 | 602.4 | 406.2 | +48 | 1,926.5 | 1,628.7 | +18 |
| Total own products sold | 3,397.7 | 2,945.0 | +15 | 12,249.0 | 9,921.5 | +23 |
| Traded third party | ||||||
| Ammonia | 108.1 | 18.4 | +488 | 284.3 | 160.6 | +77 |
| Urea | 275.1 | 65.2 | +322 | 910.5 | 329.5 | +176 |
| UAN | 22.6 | 3.7 | +511 | 41.3 | 24.1 | +71 |
| Methanol | 35.2 | 84.8 | (58) | 258.8 | 482.6 | (46) |
| AS | 200.7 | 195.5 | +3 | 712.8 | 713.6 | 0 |
| DEF | 54.9 | 19.0 | nm | 227.0 | 73.3 | nm |
| Total traded third party | 696.6 | 386.6 | +80 | 2,434.7 | 1,783.7 | +36 |
| TOTAL | 4,094.3 | 3,331.6 | +23 | 14,683.7 | 11,705.2 | +25 |
1 Including OCI’s 50 percent share of Natgasoline volumes