OCI Global posted a 69% drop in adjusted EBITDA for full-year 2023, to $1.21 billion from $3.89 billion the previous year, but beat the average analyst estimate of $1.18 billion (BloombergConsensus). Revenue was down 48%, to $5.02 billion from the prior year’s $9.71 billion.
The company reported an adjusted net loss for the year of $162.9 million, missing the $116.6 million estimated loss by analysts (BloombergConsensus). OCI reported an adjusted net profit of $1.34 billion in FY2022.
The loss was “driven primarily by materially lower nitrogen pricing globally,” OCI said in its Feb. 14 earnings statement. The company also cited a “challenging year” for global methanol markets.
During the 12 months, there was an extended IFCO turnaround as well as other planned and unplanned outages in the US with an estimated financial impact of around $44 million.
For the fourth quarter of 2023, OCI reported an adjusted net loss attributable to shareholders of the company of $46 million compared to an adjusted net profit of $204.6 million the previous year. Fourth-quarter adjusted EBITDA was 54% lower year-over-year, to $310.4 million from $669.2 million, while revenue fell 45%, to $1.21 billion from $2.2 billion.
OCI noted that despite a reduction in global nitrogen prices in the fourth quarter, the company’s operations benefited from lower natural gas prices in Europe and the US, as well as a reduced negative impact from realized hedging losses. The company said realized gas hedging losses amounted to $38 million in the fourth quarter.
However, it said higher gas prices later in the quarter led to reduced sales volumes as customers delayed purchases for the spring application season.
The company’s own products sales volumes for the fourth quarter totaled 2.395 million mt, down 2% from the prior year’s 2.64 million mt. Own-produced fertilizer sales volumes were down 6%, to 1.98 million mt from 2.09 million mt
For the full year, own products sales volumes were down 3%, to 10.54 million mt from 10.89 million mt. Own-produced fertilizer sales volumes were 2% lower than in 2022, to 8.47 million mt from 8.63 million mt.
OCI believes the outlook for nitrogen markets remains supportive, underpinned by healthy agricultural demand fundamentals, emerging demand for low carbon ammonia, and tightening supply dynamics in the medium term.
“Nitrogen markets were relatively quiet during the fourth quarter of 2023, and urea prices were impacted by demand deferrals into 2024,” the company said. “However, urea prices have rebounded so far this year as the deferred demand ahead of the spring season application started to materialize in the Northern Hemisphere.”
OCI sees further support for nitrogen fertilizer prices during the coming months driven by low inventories in key importing regions, ongoing restrictions on Chinese exports, low operating rates in Iran due to gas shortages, and supply chain disruption in the Red Sea.
The company further believes medium-term fundamentals remain positive with limited major new supply and a significantly slower pace of capacity additions over the 2024-2027 period compared to the previous three years.
OCI’s shares dropped as much as 5.1% after the company’s forecast for shareholder returns of only $3 billion this year following the sale of the company’s stakes in Fertiglobe and Iowa Fertilizer Co. LLC, an amount in line with only some analysts’ expectations, including Jefferies analyst Charlie Bentley, as cited by Bloomberg.
The Amsterdam-listed company expects $6.2 billion of cash proceeds on a net basis – equating to approximately €27 a share – from the two sales, subject to closing adjustments.
OCI on Feb. 14 said it would use the proceeds from the two sales to “significantly” cut holding company debt to a net cash position by year-end 2024, alongside a “substantial” distribution of capital to shareholders of at least $3 billion. OCI also said it would fund the remaining capital expenditure required to complete its Texas Blue Ammonia project in Beaumont from the sale proceeds.
OCI said construction at the 1.1 million mt/y blue ammonia project is well underway with about $500 million spent to date of a total investment of over $1 billion. The plant remains on track for commissioning in early 2025.
OCI Product Sales Volumes
| ‘000 mt | 4Q-2023 | 4Q-2022 | % change | FY2023 | FY2022 | % change |
| Own Product | ||||||
| Ammonia | 585.9 | 571.2 | +3 | 1,898.2 | 1,986.7 | (4) |
| Urea | 1,141.8 | 957.0 | +19 | 4,621.0 | 4,241.4 | +9 |
| CAN | 143.4 | 213.9 | (33) | 877.6 | 1,018.5 | (14) |
| UA | 105.2 | 350.8 | (70) | 1,073.9 | 1,383.0 | (22) |
| Total Fertilizer | 1,976.3 | 2,092.9 | (6) | 8,470.7 | 8,629.6 | (2) |
| Melamine | 18.7 | 7.3 | +156 | 63.4 | 83.8 | (24) |
| DEF | 94.9 | 254.4 | (63) | 645.0 | 917.2 | (30 |
| Total Nitrogen Products | 2,089.9 | 2,354.6 | (11) | 9,179.1 | 9,630.6 | (5) |
| Methanol1 | 305.4 | 286.0 | +7 | 1,375.6 | 1,255.1 | +8 |
| Total Own Products Sold | 2,395.3 | 2,640.6 | (2) | 10,536.7 | 10,885.7 | (3) |
| Traded Third-Party | ||||||
| Ammonia | 96.7 | 76.7 | +26 | 292.3 | 358.5 | (18) |
| Urea | 110.6 | 223.3 | (50) | 724.4 | 1,541.7 | (53) |
| UAN | 9.5 | 121.2 | (92) | 108.4 | 329.7 | (67) |
| Methanol | 198.7 | 99.0 | +101 | 510.7 | 381.3 | +34 |
| Ethanol and Other | 27.6 | 9.7 | +185 | 94.3 | 23.3 | +305 |
| AS | 31.5 | 80.9 | (61) | 273.7 | 542.2 | (50) |
| DEF | 139.5 | 90.1 | +55 | 374.2 | 419.3 | (11) |
| Total Traded Third-Party | 614.1 | 700.9 | (12) | 2,378.0 | 3,596.0 | (34) |
| Total Own Product and Traded Third- Party | 3,009.4 | 3,341.5 | (10) | 12,914.7 | 14,481.7 | (11) |
1 Including OCI’s 50 percent share of Natgasoline volumes