Acron

Earnings Release • Jul 13, 2021

National Storage Mechanism | Additional information

13 July 2021

Acron Group’s Commercial Output Up 6% in H1 2021

Group’s Consolidated Output (including operating results for Acron, Dorogobuzh and North-Western Phosphorous Company)

Product, ‘000 t	6M 2021	6M 2020	YOY, %
MINERAL FERTILISERS
Ammonia	1,415	1,374	3.0
Incl. in-house consumption	1,377	1,306
Nitrogen fertilisers, including	2,424	2,442	-0.7
Incl. in-house consumption	427	403
AN	1,118	1,227	-8.8
Incl. in-house consumption	142	135
Urea	651	568	14.7
Incl. in-house consumption	284	269
Including prilled urea	163	276	-40.9
Incl. in-house consumption	11	8
Including granulated urea	231	34	up by factor 6.8
Incl. in-house consumption	16	3
UAN	655	648	1.1
Complex fertilisers, including	1,296	1,140	13.6
Incl. in-house consumption	25	16
NPK	1,201	1,080	11.2
Incl. in-house consumption	25	16
Bulk blends	95	60	57.4
Total commercial output for Mineral Fertilisers	3,307	3,231	2.4
INDUSTRIAL PRODUCTS
Organic compounds, including	241	187	28.9
Incl. in-house consumption	125	94
Methanol	53	44	21.1
Incl. in-house consumption	46	35
Formalin	86	67	28.1
Incl. in-house consumption	77	58
Urea-formaldehyde resins	101	75	34.2
Incl. in-house consumption	2	1	72.4
Non-organic compounds, including:	590	493	19.8
Low-density and technical-grade AN	244	156	56.1
Industrial urea	79	66	20.5
Calcium carbonate	237	243	-2.7
Liquid carbon dioxide	28	24	13.5
Argon	3	3	-8.3
Total commercial output for Industrial Products	706	585	20.7
PHOSPHATE INPUTS
Apatite concentrate	621	538	15.4
Incl. in-house consumption	478	433
Total commercial output for Apatite Concentrate	143	105	36.2
TOTAL COMMERCIAL OUTPUT	4,157	3,921	6.0

Note: Commercial output is output less in-house consumption

Comments from Alexander Popov, Chairman of Acron’s Board of Directors:

‘In H1 2021, Acron Group posted a new output record. In the reporting period, the Group produced 4,157,000 tonnes of commercial products, up 6% year-on-year. Mineral fertiliser output was up 2% to 3,307,000 tonnes.

‘Output of ammonia, which we use as a basic feedstock for finished products, increased 3% to 1,415,000 tonnes, and the share of ammonia processed into finished products rose to 97%. In the reporting period, our flexible production chain allowed us to increase our output of the highest-margin products, primarily urea and complex fertilisers. Agricultural-grade urea output was up 15% to 651,000 tonnes, and complex fertiliser output increased 14% to 1,296,000 tonnes. In response to recovering demand for industrial products, the Group increased its output 21% to 706,000 tonnes. We also benefited from a favourable UAN price environment in Q2 2021 and expanded our UAN output.

‘The additional output always reaches its consumer since the demand for our products is very strong both in Russian and global markets. Higher profit margin of agribusiness and farmers’ purchasing power supported by high prices for the basic crops contribute to the spike in sales. Notably, the Russian agricultural industry is one of the record holders, as Acron Group’s fertiliser supplies to the domestic market for the spring sowing season in 2021 boosted 27%.

‘Acron Group has continued to invest heavily in capacity expansion to meet the growing market demand. Over the next several weeks, we will launch the Urea-6+ unit at Acron (Veliky Novgorod) to increase the facility’s urea capacity by 520,000 tonnes per annum. Additionally, the Group embarked on upgrades to the Urea-1, Urea-2, Urea-3, and Urea-4 units to increase their consolidated capacity by 390,000 tonnes per annum, and also commenced constructing a new 700,000-tpa urea granulation unit. Upon completing this project, Acron’s Novgorod-based facility will become the largest urea production facility both in Russia and in Europe.

‘Acron Group increases the output in line with the ESG strategy focused on preserving natural resources, increasing the equipment efficiency and improving its footprint regions. Implementation of the Group’s two urea projects will help reduce direct CO2 emissions by 630,000 tonnes per annum, the equivalent of 130,000 cars.’

Market Trends

In Q2 2021, global urea prices continued to grow. By the end of the quarter, the FOB Baltic price was USD 450, reaching its post-2012 high. This price growth was driven by various factors including continued strong seasonal demand in Europe and the United States, extensive urea purchases by India, high grain prices, and higher global gas prices driving up production costs. China’s threat of a 30% export duty on urea, which resulted in limited supplies from this country, also contributed to stronger prices. In Q3 2021, purchases by India and Brazil have supported the market amid a seasonal decline in demand in Europe and the United States.

AN and UAN prices increased to their highest level since 2014 in Q2 2021 due to strong demand in the Northern Hemisphere and rising urea prices, which serve as a benchmark for other nitrogen fertilisers prices.

NPK prices were up as well in Q2 2021, supported by a similar pricing trend for the basic product basket (urea, DAP, and potassium chloride). However, the increase in basic product prices outstripped blends because of their higher liquidity, so the NPK 16-16-16 premium over the basic product basket decreased to 0-5% from the historical average of 20%.

Average Indicative Prices, USD/t, FOB Baltic/Black Sea

	Q2 2021	Q1 2021	Q2 2020	Q2 2021 / Q1 2021 change	Q2 2021 / Q2 2020 change
NPK 16-16-16	353	312	258	13%	37%
AN	245	234	153	5%	61%
UAN	250	213	144	17%	73%
Urea	359	326	207	10%	73%
Ammonia	462	329	197	40%	135%

Media Contacts:

Sergey Dorofeev

Anastasia Gromova

Tatiana Smirnova

Public Relations

Phone: +7 (495) 777-08-65 (ext. 5196)

Investor Contacts:

Ilya Popov

Sergey Smirnov

Investor Relations

Phone: +7 (495) 745-77-45 (ext. 5252)

Background Information

Acron Group is a leading vertically integrated mineral fertiliser producer in Russia and globally, with chemical production facilities in Veliky Novgorod (Acron) and Smolensk region (Dorogobuzh). The Group owns and operates a phosphate mine in Murmansk region (North-Western Phosphorous Company, NWPC) and is implementing a potash development project in Perm Krai (Verkhnekamsk Potash Company, VPC). It owns transportation and logistics infrastructure, including three Baltic seaport terminals and distribution networks in Russia and China. Acron subsidiary North Atlantic Potash Inc. (NAP) holds mining leases and an exploration permit for ten parcels of the potassium salt deposit at Prairie Evaporite, Saskatchewan, Canada. Acron also holds a minority stake (19.8%) in Polish Grupa Azoty S.A., one of the largest chemical producers in Europe.

In 2020, the Group sold 7.8 million tonnes of main products to 74 countries, with Russia, Brazil, Europe, and the United States as key markets.

In 2020, the Group posted consolidated IFRS revenue of RUB 119,864 million (USD 1,661 million), with EBITDA of RUB 35,311 million (USD 489 million). Acron’s shares are traded on the Moscow Exchange, and its global depositary receipts are traded at the London Stock Exchange (ticker AKRN). Acron employs over 11,000 people.

For more information about Acron Group, please visit www.acron.ru/en.