EuroChem
Group AG, Zug, Switzerland, reported a 1 percent increase in first-half EBITDA
to $830 million on sales of $3.01 billion, versus the year-ago $819 million and
$3.05 billion, respectively.
The
group cited pressure on the pricing environment across all fertilizer segments
in the six-month period. However, it said it did not experience any major
disruption to its operations during the half year as a result of the COVID-19
pandemic.
“Fertilizers
turned out to be resilient to the COVID-19 outbreak, with the fertilizer sector
one of the businesses less affected by the global crisis, with farmer economics
proving to be more favorable,” said EuroChem.
“Our
half-year results reflect the strength and resilience of our business model
during this challenging period. The COVID-19 pandemic has tested all companies
like never before, and as a global business, we have had to adapt and respond
to a volatile environment,” said EuroChem CEO Petter Østbø.
The
group’s six-month total sales volumes (including third-party products) increased
6 percent over a year-ago, to 12.46 million mt, up from 11.77 million mt.
Furthermore, fertilizer sales volumes advanced 19 percent, to 9.24 million mt
from the year-ago 7.76 million mt.
EuroChem
cited new production from its Usolskiy potash operation, south of Berezniki,
Russia, and from the EuroChem Northwest ammonia plant in Kingisepp, as well as
third-party sales, as the main drivers behind the sales volume increase.
First-half sales of third-party products increased 32 percent, to 2.71 million
mt. The 1 million mt/y capacity Northwest ammonia plant, which started up in
early June 2019, produced 512,000 mt of ammonia in the first six months of
2020.
Potash
sales from Usolskiy rose to 1 million mt of potash in the six-month period, significantly
up on the 389,000 mt sold in the same year-ago period, and accounted for 11
percent of total fertilizer sales in the reporting period.
Nitrogen
volumes rose 4 percent, with urea sales, the key driver of the nitrogen volume
increase, up 8 percent. But six-month UAN sale volumes were down 2 percent, and
the group reported a shift in trade flows across different regions following the
imposition of final UAN antidumping duties by the European Commission in
October 2019. However, EuroChem said despite the imposition of the duties, the
group maintained “a good share” of European UAN sales, and actually increased
its stake in the UAN sales portfolio by 3 percentage points.
Complex
fertilizers sales volumes showed a 22 percent increase with revenues up 6 percent,
with EuroChem highlighting the product as one of the most resilient product
groups in the current volatile market conditions.
In
phosphates, the group said it took the decision to prioritize the production
and sale of MAP fertilizers due to more favorable market conditions.
EuroChem
highlighted its fertilizers sales to Latin America as one of the major drivers
in the group’s first-half performance. Latin America sales revenues increased
20 percent year-over-year to $645 million, and accounted for 21 percent of
total sales. Sales volumes to the region were up 39 percent year-over-year at
2.096 million mt.
Brazil
continues to be the group’s primary focus market in the region as it continued
to expand distribution through its subsidiary, fertilizer blender and
distributor Fertilizantes Tocantins (FTO).
EuroChem
confirmed last month that it will take full control of FTO, and the Brazilian
firm will be fully integrated into the EuroChem fertilizer group (GM July 17, p. 30). The group’s sales to
Brazil rose year-over-year, and contributed 18 percent of group revenues.
In
potash, output at Usolskiy reached 1.05 million mt in the first-half, of which
85 percent was granulated product, the group said. As noted above, potash sales
from Usolskiy reached 1 million mt of potash in the six-month period. Potash
sales from Usolskiy are made through EuroChem’s own distribution platform,
which mitigates potential pressure on the markets, the group said.
Of the
potash volumes sold in the first half, 40 percent of the total went to Latin
America and 25 percent to North America. A further 20 percent was shipped to
Europe, and 10 percent to Asia. The remaining volumes were delivered to Russia
and African destinations.
Design
capacity at Usolskiy is estimated to reach 2.3 million mt this year, with a
possible upgrade to 2.7-2.9 million mt/y under phase 1 of the project being
considered.
Mine development
at EuroChem’s VolgaKaliy potash project in Russia’s southern Volgograd region continues.
The group said it has now reached the sylvinite layer at the deposit, and will
reach the main potash production panels in the layer later this year.
It said
the beneficiation plant at the site is ready for operations in test mode to
assure proper grades and MOP quality, as well as to recover ore levels. The
group originally was targeting first production at VolgaKaliy for the first
half of 2019, but was forced to delay the start of commercial production due to
coming up against “geological problems” (GM
June 14, 2019)
EuroChem
said it had spent $116 million at VolgaKaliy in the first half of 2020, taking
the total capital expenditure at the project, as of June 30, 2020, to $2.8
billion.
EuroChem fertilizer& third
party product sales (‘000 mt)
|
|
1H-2020
|
1H-2019
|
% Change
|
|
Nitrogen products
|
4,898
|
4,693
|
+4
|
|
Including:
|
|
|
|
|
Nitrogen fertilizers
|
4,883
|
4,687
|
+4
|
|
Phosphate products & complex
fertilizers
|
3,338
|
2,679
|
+25
|
|
Including:
|
|
|
|
|
Phosphate
fertilizers
|
1,453
|
1,098
|
+32
|
|
Complex
fertilizers
|
1,694
|
1,390
|
+22
|
|
Potash fertilizers
|
1,002
|
389
|
+158
|
|
Total fertilizer sales
|
9,238
|
7,761
|
+19
|
|
Third party products1
|
2,711
|
2,048
|
+32
|
1Includes
all productsSales breakdown by region (‘000
mt)
|
|
1H-2020
|
1H-2019
|
% Change
|
|
Europe
|
2,951
|
2,745
|
+8
|
|
Latin
America
|
2,096
|
1,504
|
+39
|
|
North
America
|
1,970
|
1,769
|
+11
|
|
Russia
|
2,296
|
3,578
|
(36)
|
|
Asia
Pacific
|
2,408
|
1,441
|
+67
|
|
CIS1
|
393
|
561
|
(30)
|
|
Africa
|
343
|
177
|
+95
|
1
Excluding Russia
