Earnings Release • Aug 2, 2022
Earnings Release
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Amsterdam, The Netherlands / 2 August 2022
• OCI has locked in c.50% of its US gas requirement for the 2023 – 2029 period at a WAP of \$4.3 / mmBtu, giving together with Fertiglobe's gas supply contracts - visibility on more than 90% of OCI's long-term gas requirement
"We are pleased with these financial results that have enabled us to accelerate our shareholder cash returns to almost \$1.1 billion this year, while also substantially reducing gross debt and further lowering leverage to well within our investment grade financial policy parameters. This also positions us favorably to selectively pursue value-creative growth opportunities including organic expansions below replacement cost.
The outlook for the fundamentals of our nitrogen end markets continues to be underpinned by tight supply, healthy farm economics and decades low grain stocks globally that incentivize the use of nitrogen fertilizers. Forward curves imply that natural gas prices in Europe will remain at elevated levels through at least 2023, setting ammonia, urea and nitrates breakeven pricing well above historical averages.
Many European producers cannot recover cash costs due to high gas prices, especially those that cannot import ammonia. We benefit from our leading position in global ammonia markets and our flexibility to replace locally produced ammonia with imported ammonia shipped from our operations in North Africa and the US through our Rotterdam terminal.
We are now running our ammonia production platform in Europe at c.40% of capacity because of the high gas prices, but are able to operate our downstream production profitably with support from our imported ammonia. As a result, we remain able to satisfy the demand of our agricultural and industrial customers in Europe.
With the reduced ammonia production in Europe and as our methanol facility in the Netherlands remains shut due to the high gas prices, our European operations accounted for only 9% of our global natural gas consumption, but the nitrogen business in Europe represented c.24% of our total revenues during H1 2022. Our overall European business also benefits from the sale of excess EUAs, including \$88 million recorded during the second quarter as part of adjusted EBITDA.
We continue to strengthen our competitive position in Europe: earlier this year we increased throughput capacity of our ammonia import terminal in Rotterdam to c.400,000 tons and are on track to expand to 1.2 million tons during 2023. We can leverage this unique supply chain in the future by importing low and no carbon hydrogen in the form of ammonia and methanol, which can help decarbonize the EU and reduce its reliance on imported natural gas.
In addition, with the prospect of increasing LNG exports from the US in coming years, we have hedged c.50% of our gas requirements in the US for the period 2023 – 2029 at a weighted average of \$4.3 / mmBtu. For the period August – December 2022 we are hedged c.60% at a weighted average price of c.\$5.3 / mmBtu, which compares to the Henry Hub US benchmark of on average \$8.1 / mmBtu in Q2 2022.
As a result, we now have price visibility on more than 90% of our global natural gas requirements as a result of favourable gas supply agreements at Fertiglobe and the hedge position in the United States. With less than 10% of our natural gas supply exposed to market fluctuations in Europe, we have further enhanced our cost resiliency.
Separately, we are pleased that OCI was included in the MSCI World Index and STOXX 600 Index, some of the world's leading global equity indices, in June 2022.
Finally, we aim to help address potential grain shortfalls and food security concerns by focusing on operational excellence and producing as much product as possible to fill supply gaps that may arise. I would like to thank the whole team for their efforts to make this happen and their focus on safety. We look forward to continuing to create value to all our stakeholders."
Nitrogen product prices are supported by several market factors which suggest a structural shift to a multi-year demand driven environment .
ii. Nitrogen supply is expected to be structurally tighter over 2022 2026, resulting in an estimated market deficit of c.7 million tons for urea. In addition:
o In Europe, c.7 million tons of ammonia capacity out of a total 19 million tons is currently shut due to the high gas prices. Given elevated gas price futures and risks related to Russian gas supply, more capacity may be shut down should selling prices remain below gas-based production costs.
Methanol market fundamentals remain supportive for the medium to longer term with expected continued demand growth and limited supply additions. Methanol is also supported by high oil prices: it is currently significantly cheaper than LNG and gasoline and can be used as a lower cost and cleaner alternative for multiple fuel applications worldwide including heating and transportation.
Over the period 2022 through 2026, we continue to expect tighter methanol market fundamentals with incremental demand expected to exceed new supply by c.8 million Mt, and no new major supply expected to come onstream in 2022. This does not consider the meaningful additional upside from hydrogen fuel demand, notably for road and marine fuel applications.
In July, OCI announced a semi-annual distribution for the period H1 2022 of €3.55 per share, or c.\$765 million at current exchange rates, consisting of a \$200 million base return of capital and a variable element. This will bring the total cash distribution during calendar 2022 to €5.00 per share, or c.\$1.1 billion.
OCI has scheduled an extraordinary shareholders meeting (EGM) on 19 August 2022 to request shareholder approval for the H1 2022 distribution through a repayment of capital. The convening notice and other materials can be found on our website at www.oci.nl.
The ex-dividend and record date for the distribution will be confirmed following the statutory two-month creditor opposition period, which lapses on 21 October 2022. In case of no objections, the ex-dividend date will be 26 October, the record date 27 October, and payment date 31 October.
Separately, Fertiglobe, which is 50% owned by OCI and fully consolidated, announced today, in line with its dividend policy of distributing excess free cash flows to its shareholders, a cash distribution of \$750 million for H1 2022 payable in October 2022. OCI's share of the dividend will be \$375 million.
| \$ million unless otherwise stated | Q2'22 | Q2 '21 | % Δ | H1'22 | H1 '21 | % Δ |
|---|---|---|---|---|---|---|
| Revenue | 2,857.7 | 1,462.9 | 95% | 5,185.5 | 2,582.5 | 101% |
| Gross Profit | 1,169.4 | 404.6 | 189% | 2,032.9 | 745.0 | 173% |
| Gross profit margin | 40.9% | 27.7% | 39.2% | 28.8% | ||
| Adjusted EBITDA2 | 1,289.9 | 535.4 | 141% | 2,260.0 | 987.2 | 129% |
| EBITDA | 1,229.2 | 502.7 | 145% | 2,164.9 | 933.5 | 132% |
| EBITDA margin | 43.0% | 34.4% | 41.7% | 36.1% | ||
| Adjusted net income attributable to shareholders2 | 527.5 | 125.1 | 322% | 881.7 | 227.5 | 288% |
| Reported net income attributable to shareholders | 476.7 | 146.3 | 226% | 886.4 | 244.9 | 262% |
| Earnings per share (\$) | ||||||
| Basic earnings per share | 2.269 | 0.697 | 226% | 4.218 | 1.167 | 261% |
| Diluted earnings per share | 2.256 | 0.693 | 226% | 4.194 | 1.160 | 262% |
| Adjusted earnings per share2) | 2.510 | 0.596 | 321% | 4.196 | 1.084 | 287% |
| Capital expenditure | ||||||
| Of which: Maintenance Capital Expenditure | 74.1 | 30.7 | 141% | 125.5 | 87.6 | 43% |
| 45.1 | 29.5 | 53% | 89.3 | 85.4 | 5% | |
| Free cash flow2, 3 | 928.4 | 397.7 | 133% | 1,537.7 | 723.3 | 113% |
| 30-Jun-22 | 31-Dec-21 | % Δ | ||||
| Total Assets | 10,283.4 | 9,811.6 | 5% | |||
| Gross Interest-Bearing Debt | 2,805.4 | 3,800.8 | (26%) | |||
| Net Debt | 708.0 | 2,220.5 | (68%) | |||
| Q2'22 | Q2 '21 | % Δ | H1'22 | H1 '21 | % Δ | |
| Sales volumes ('000 metric tons) | ||||||
| OCI Product Sold4 | 3,061.5 | 3,231.3 | (5%) | 5,650.0 | 6,221.9 | (9%) |
| Third Party Traded | 900.0 | 803.0 | 12% | 1,754.6 | 1,335.2 | 31% |
| Total Product Volumes | 3,961.5 | 4,034.3 | (2%) | 7,404.6 | 7,557.1 | (2%) |
2) OCI presents certain financial measures when discussing OCI's performance, that are not measures of financial performance under IFRS. These non-IFRS measures of financial performance (also known as non-GAAP or alternative performance measures) are presented because management considers them important supplemental measures of OCI's performance and believes that similar measures are widely used in the industry in which OCI operates.
3) Free cash flow is an APM that is calculated as cash from operations less maintenance capital expenditures less distributions to non-controlling interests plus dividends from equity accounted investees, and before growth capital expenditures and lease payments.
4) Fully consolidated, not adjusted for OCI's proportionate ownership stake in plants, except OCI's 50% share of Natgasoline volumes
| '000 metric tons | Q2'22 | Q2 '21 | % Δ | H1'22 | H1 '21 | % Δ |
|---|---|---|---|---|---|---|
| Own Product | ||||||
| Ammonia | 547.6 | 517.9 | 6% | 934.3 | 1,104.9 | (15%) |
| Urea | 1,192.7 | 1,137.6 | 5% | 2,234.8 | 2,240.8 | 0% |
| Calcium Ammonium Nitrate (CAN) | 276.8 | 318.4 | (13%) | 568.2 | 646.8 | (12%) |
| Urea Ammonium Nitrate (UAN) | 426.1 | 443.9 | (4%) | 755.7 | 723.8 | 4% |
| Total Fertilizer | 2,443.2 | 2,417.8 | 1% | 4,493.0 | 4,716.3 | (5%) |
| Melamine | 30.1 | 32.8 | (8%) | 61.1 | 67.0 | (9%) |
| DEF | 217.7 | 186.0 | 17% | 443.9 | 336.8 | 32% |
| Total Nitrogen Products | 2,691.0 | 2,636.6 | 2% | 4,998.0 | 5,120.1 | (2%) |
| Methanol1) | 370.5 | 594.7 | (38%) | 652.0 | 1,101.8 | (41%) |
| Total Own Product Sold | 3,061.5 | 3,231.3 | (5%) | 5,650.0 | 6,221.9 | (9%) |
| Traded Third Party | ||||||
| Ammonia | 61.4 | 80.2 | (23%) | 118.6 | 121.2 | (2%) |
| Urea | 403.4 | 501.9 | (20%) | 853.2 | 722.4 | 18% |
| UAN | 58.7 | 6.9 | 751% | 83.0 | 20.5 | 305% |
| Methanol | 74.2 | 20.7 | 258% | 218.3 | 99.4 | 120% |
| AS | 191.7 | 114.1 | 68% | 285.8 | 232.6 | 23% |
| DEF | 110.6 | 79.2 | 40% | 195.7 | 139.1 | 41% |
| Total Traded Third Party | 900.0 | 803.0 | 12% | 1,754.6 | 1,335.2 | 31% |
| Total Own Product and Traded Third Party | 3,961.5 | 4,034.3 | (2%) | 7,404.6 | 7,557.1 | (2%) |
1) Including OCI's 50% share of Natgasoline volumes
| Q2'22 | Q2 '21 | % Δ | Q1 '22 | % Δ | H1'22 | H1 '21 | % Δ | |||
|---|---|---|---|---|---|---|---|---|---|---|
| Ammonia | NW Europe, FOB | \$/mt | 1,240 | 527 | 135% | 1,335 | (7%) | 1,288 | 451 | 186% |
| Ammonia | US Gulf Tampa contract \$/mt | 1,272 | 545 | 133% | 1,168 | 9% | 1,220 | 453 | 169% | |
| Granular Urea | Egypt, FOB | \$/mt | 795 | 390 | 104% | 841 | (5%) | 818 | 378 | 116% |
| CAN | Germany, CIF | €/mt | 710 | 252 | 182% | 708 | 0% | 709 | 240 | 195% |
| UAN | France, FCA | €/mt | 679 | 239 | 184% | 708 | (4%) | 694 | 224 | 210% |
| UAN | US Midwest, FOB | \$/mt | 688 | 370 | 86% | 674 | 2% | 682 | 325 | 110% |
| Melamine | Europe contract | €m/t | 3,765 | 1,965 | 92% | 3,965 | (5%) | 3,865 | 1,780 | 117% |
| Methanol | USGC Contract, FOB | \$/mt | 634 | 533 | 19% | 616 | 3% | 625 | 512 | 22% |
| Methanol | Rotterdam FOB Contract€/mt | 550 | 418 | 32% | 495 | 11% | 523 | 407 | 29% | |
| Natural gas | TTF (Europe) | \$ / mmBtu | 30.8 | 9.2 | 235% | 32.2 | (4%) | 31.5 | 7.9 | 299% |
| Natural gas | Henry Hub (US) | \$ / mmBtu | 8.1 | 3.0 | 170% | 4.6 | 76% | 6.3 | 2.9 | 117% |
Source: CRU, MMSA, ICIS, Bloomberg
Total own-produced nitrogen volumes increased by 2% during the second quarter of 2022 compared to the same period last year. The adjusted EBITDA for the nitrogen business increased 151% from \$445 million in Q2 2021 to \$1,115 million in Q2 2022, despite the higher gas prices.
Own-produced methanol sales volumes decreased by 38% in Q2 2022 compared to the same period last year:
The adjusted EBITDA of the methanol business was higher in Q2 2022 due to higher methanol prices year-on-year, the sale of excess EUAs and the continued ramp-up of clean fuel sales into Europe, which together more than offset the impact of the shutdown of the methanol plants in Europe and higher gas prices compared to a year ago.
| \$ million | Nitrogen | Methanol | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| US | Europe | Fertiglobe | Elim. | Total Nitrogen |
US | Europe | Elim. | Total Methanol |
Other | Elim. | Total | |
| Total revenues | 506.1 | 708.8 | 1,471.3 | (91.9) | 2,594.3 | 251.7 | 143.7 | (73.7) | 321.7 | - | (58.3) | 2,857.7 |
| Gross profit | 172.3 | 123.7 | 747.8 | (4.9) | 1,038.9 | 38.2 | 74.9 | (3.7) | 109.4 | 3.3 | 17.8 | 1,169.4 |
| Operating profit | 167.7 | 115.9 | 707.2 | (4.3) | 986.5 | 30.1 | 72.3 | (3.3) | 99.1 | (20.7) | 17.8 | 1,082.7 |
| D,A&I | (42.6) | (18.1) | (62.8) | - | (123.5) | (37.1) | (3.7) | 19.1 | (21.7) | (1.3) | - | (146.5) |
| EBITDA | 210.3 | 134.0 | 770.0 | (4.3) | 1,110.0 | 67.2 | 76.0 | (22.4) | 120.8 | (19.4) | 17.8 | 1,229.2 |
| Adj. EBITDA | 215.6 | 133.9 | 770.0 | (4.3) | 1,115.2 | 104.8 | 76.0 | (1.1) | 179.7 | (22.8) | 17.8 | 1,289.9 |
| Nitrogen | Methanol | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| \$ million | US | Europe | Fertiglobe* | Elim. * | Total Nitrogen* |
US * | Europe | Elim.* | Total Methanol* |
Other* | Elim.* | Total |
| Total revenues | 237.6 | 263.8 | 716.6 | (25.4) | 1,192.6 | 201.7 | 104.3 | (0.2) | 305.8 | - | (35.5) | 1,462.9 |
| Gross profit | 54.2 | 42.6 | 252.8 | 0.4 | 350.0 | 88.7 | 8.6 | (38.9) | 58.4 | (3.8) | - | 404.6 |
| Operating profit | 49.5 | 32.4 | 230.0 | 0.4 | 312.3 | 80.6 | 5.9 | (37.2) | 49.3 | (19.3) | - | 342.3 |
| D,A&I | (37.0) | (24.4) | (72.5) | - | (133.9) | (39.3) | (7.5) | 21.4 | (25.4) | (1.1) | - | (160.4) |
| EBITDA | 86.5 | 56.8 | 302.5 | 0.4 | 446.2 | 119.9 | 13.4 | (58.6) | 74.7 | (18.2) | - | 502.7 |
| Adj. EBITDA | 86.5 | 56.8 | 301.4 | 0.4 | 445.1 | 94.4 | 13.4 | 0.7 | 108.5 | (18.2) | - | 535.4 |
| \$ million | Nitrogen | Methanol | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| US | Europe | Fertiglobe | Elim. | Total Nitrogen |
US | Europe | Elim. | Total Methanol |
Other | Elim. | Total | |
| Total revenues | 959.8 | 1,262.1 | 2,656.1 | (213.3) | 4,664.7 | 509.2 | 278.8 | (112.7) | 675.3 | - | (154.5) | 5,185.5 |
| Gross profit | 293.2 | 187.5 | 1,335.6 | (4.3) | 1,812.0 | 202.8 | 77.5 | (75.2) | 205.1 | (1.9) | 17.7 | 2,032.9 |
| Operating profit | 282.8 | 173.7 | 1,264.8 | (3.7) | 1,717.6 | 185.2 | 73.2 | (72.3) | 186.1 | (49.0) | 17.7 | 1,872.4 |
| D,A&I | (80.1) | (36.3) | (124.8) | - | (241.2) | (74.1) | (12.7) | 38.1 | (48.7) | (2.6) | - | (292.5) |
| EBITDA | 362.9 | 210.0 | 1,389.6 | (3.7) | 1,958.8 | 259.3 | 85.9 | (110.4) | 234.8 | (46.4) | 17.7 | 2,164.9 |
| Adj. EBITDA | 368.2 | 210.2 | 1,394.6 | (3.7) | 1,969.3 | 239.7 | 85.9 | (2.8) | 322.8 | (49.8) | 17.7 | 2,260.0 |
| Nitrogen | Methanol | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| \$ million | US | Europe | Fertiglobe* | Elim.* | Total Nitrogen* |
US* | Europe | Elim.* | Total Methanol* |
Other* | Elim.* | Total |
| Total revenues | 341.5 | 484.0 | 1,260.0 | (43.3) | 2,042.2 | 346.0 | 246.7 | (4.8) | 587.9 | - | (47.6) | 2,582.5 |
| Gross profit | 102.4 | 53.9 | 442.0 | 0.6 | 598.9 | 172.8 | 22.2 | (46.6) | 148.4 | (2.3) | - | 745.0 |
| Operating profit | 93.4 | 34.2 | 397.0 | 0.6 | 525.2 | 156.9 | 17.6 | (43.0) | 131.5 | (33.8) | - | 622.9 |
| D,A&I | (72.8) | (49.0) | (136.3) | - | (258.1) | (78.6) | (14.9) | 42.9 | (50.6) | (1.9) | - | (310.6) |
| EBITDA | 166.2 | 83.2 | 533.3 | 0.6 | 783.3 | 235.5 | 32.5 | (85.9) | 182.1 | (31.9) | - | 933.5 |
| Adj. EBITDA | 166.2 | 83.2 | 532.2 | 0.6 | 782.2 | 202.5 | 32.5 | 1.9 | 236.9 | (31.9) | - | 987.2 |
*As per Q4 2021 we have represented our segments Fertiglobe and Methanol for the year, and have included all non-production and holding entities, which were previously presented in the segment other. This change is also reflected in the comparative numbers per Q2 2021.
Consolidated revenue increased by 95% to \$2,858 million in the second quarter of 2022 compared to the same quarter in 2021, driven mainly by higher prices for all our products.
Adjusted EBITDA increased by 141% to \$1,290 million in Q2 2022 compared to \$535 million in Q2 2021. The nitrogen and methanol segments benefited from higher selling prices, offsetting higher gas prices compared to a year ago.
Reported net profit attributable to shareholders was \$477 million in Q2 2022 compared to \$146 million in Q2 2021. The adjusted net profit attributable to shareholders was \$528 million in Q2 2022 compared to \$125 million in Q2 2021.
| \$ million | Q2 '22 | Q2 '21 | H1 '22 | H1 '21 |
|---|---|---|---|---|
| Net revenue | 2,857.7 | 1,462.9 | 5,185.5 | 2,582.5 |
| Cost of sales | (1,688.3) | (1,058.3) | (3,152.6) | (1,837.5) |
| Gross profit | 1,169.4 | 404.6 | 2,032.9 | 745.0 |
| SG&A | (88.6) | (62.1) | (167.0) | (122.7) |
| Other income | 1.9 | 0.2 | 6.5 | 1.1 |
| Other expense | - | (0.4) | - | (0.5) |
| Adjusted EBITDA | 1,289.9 | 535.4 | 2,260.0 | 987.2 |
| EBITDA | 1,229.2 | 502.7 | 2,164.9 | 933.5 |
| Depreciation, amortization and impairment | (146.5) | (160.4) | (292.5) | (310.6) |
| Operating profit | 1,082.7 | 342.3 | 1,872.4 | 622.9 |
| Interest income | 8.4 | 0.7 | 11.1 | 1.5 |
| Interest expense | (113.6) | (63.6) | (157.5) | (129.6) |
| Other finance income / (cost) | 50.7 | (4.5) | 78.5 | (6.0) |
| Net finance costs | (54.5) | (67.4) | (67.9) | (134.1) |
| Income from equity-accounted investees | (1.8) | 31.1 | 61.1 | 31.8 |
| Net income before tax | 1,026.4 | 306.0 | 1,865.6 | 520.6 |
| Income tax expense | (138.6) | (42.6) | (278.6) | (72.7) |
| Net profit | 887.8 | 263.4 | 1,587.0 | 447.9 |
| Non-controlling interests | (411.1) | (117.1) | (700.6) | (203.0) |
| Net profit attributable to shareholders | 476.7 | 146.3 | 886.4 | 244.9 |
| Adjusted net profit attributable to shareholders | 527.5 | 125.1 | 881.7 | 227.5 |
* Unaudited
Adjusted EBITDA is an Alternative Performance Measure (APM) that intends to give a clear reflection of underlying performance of OCI's operations. The main APM adjustments in the second quarters of 2022 and 2021 relate to:
| \$ million | Q2 '22 | Q2 '21 | H1 '22 | H1 '21 | Comment / Adjustment in P&L |
|---|---|---|---|---|---|
| Operating profit as reported | 1,082.7 | 342.3 | 1,872.4 | 622.9 | |
| Depreciation, amortization and impairment | 146.5 | 160.4 | 292.5 | 310.6 | |
| EBITDA | 1,229.2 | 502.7 | 2,164.9 | 933.5 | |
| APM adjustments for: | |||||
| Natgasoline | 39.0 | 40.4 | 76.1 | 64.7 | OCI's share of Natgasoline EBITDA |
| Unrealized Result Natural Gas Hedging | 23.8 | (6.6) | 7.3 | (9.9) (gain) / loss at OCIB, IFCo and OCI NV | |
| Provisions & other | (2.1) | (1.1) | 11.7 | (1.1) | |
| Total APM adjustments at EBITDA level | 60.7 | 32.7 | 95.1 | 53.7 | |
| Adjusted EBITDA | 1,289.9 | 535.4 | 2,260.0 | 987.2 |
At the net income level, the main APM adjustments in Q2 2022 relate to unrealized gas hedging at Natgasoline and the FXgain on loans and borrowing on USD exposure at non-USD entities (mainly Sorfert and OCIN), as well as expenses related to refinancing activities.
| \$ million | Q2 '22 | Q2 '21 | H1 '22 | H1 '21 | Adjustment in P&L |
|---|---|---|---|---|---|
| Reported net profit attributable to shareholders | 476.7 | 146.3 | 886.4 | 244.9 | |
| Adjustments for: | |||||
| Adjustments at EBITDA level | 60.7 | 32.7 | 95.1 | 53.7 | |
| Add back: Natgasoline EBITDA adjustment | (39.0) | (40.4) | (76.1) | (64.7) | |
| Result from associate (unrealized gas hedging Natgasoline) | 17.9 | (18.9) | (31.4) | (23.1) | Finance income / expense |
| Forex (gain) / loss on USD exposure | (54.4) | (4.2) | (86.6) | (4.4) | Finance income / expense |
| Expenses related to refinancing | 65.2 | 4.1 | 66.1 | 12.1 | Finance expense |
| NCI adjustment | 12.0 | (1.3) | 27.2 | 2.0 | Minorities |
| Accelerated depreciation and impairments of PP&E | 6.0 | 9.2 | 12.5 | 9.2 | Depreciation & impairment |
| Other adjustments | (4.4) | - | (4.4) | - | Finance income / expense |
| Tax effect of adjustments | (13.2) | (2.4) | (7.1) | (2.2) | Income tax |
| Total APM adjustments at net profit level | 50.8 | (21.2) | (4.7) | (17.4) | |
| Adjusted net profit attributable to shareholders | 527.5 | 125.1 | 881.7 | 227.5 |
Free cash flow before growth capex and dividends to shareholders amounted to \$928 million during Q2 2022, bringing the total for H1 2022 to \$1.5 billion. The free cash flow reflects our operational performance for the quarter and net working capital inflows, offset by outflows for maintenance capex, tax, interest, and dividends to non-controlling interests.
The dividends to non-controlling interests include semi-annual dividends paid by Fertiglobe to shareholders (other than OCI) of \$170 million, as well as payments to minority shareholders at EBIC in Egypt and in the Methanol Group.
Capital expenditures:
During the quarter, OCI also incurred refinancing costs of c.\$65 million and paid a cash distribution to its shareholders of c.\$320 million.
The resulting net debt was \$708 million as of 30 June 2022 versus \$2,221 million as of 31 December 2021 or a decrease of \$1,513 million during the first half of 2022, and a decrease of \$553 million during the second quarter of 2022.
The trailing net debt / LTM adjusted EBITDA was 0.2x as of 30 June 2022 compared to 0.9x as of 31 December 2021. Proportionate leverage as of 30 June 2022, based on OCI's ownership, was 0.5x versus 0.8x as of 31 March 2022 and 1.3x as of 31 December 2021.
In May, OCI closed an \$837 million bond issuance to refinance in debt at Iowa Fertilizer Company at a weighted average cost of capital of 4.60% per annum and an average life of 22 years, significantly extending the group's debt maturity profile and de-risking the balance sheet.
| \$ million | Q2 '22 | Q2 '21 | H1 '22 | H1 '21 |
|---|---|---|---|---|
| EBITDA | 1,229.2 | 502.7 | 2,164.9 | 933.5 |
| Working capital | 46.5 | 57.3 | (149.9) | 37.0 |
| Maintenance capital expenditure | (45.1) | (29.5) | (89.3) | (85.4) |
| Tax paid | (82.1) | (20.9) | (139.5) | (36.8) |
| Interest paid | (53.0) | (90.9) | (67.7) | (109.7) |
| Lease payments | (14.1) | (12.6) | (23.8) | (21.9) |
| Dividends from equity accounted investees | 1.4 | 2.6 | 1.4 | 2.6 |
| Dividends paid to non-controlling interest and withholding tax | (250.1) | (33.7) | (316.8) | (33.7) |
| Other | 95.7 | 22.7 | 158.4 | 37.7 |
| Free Cash Flow | 928.4 | 397.7 | 1,537.7 | 723.3 |
| Reconciliation to change in net debt: | ||||
| Growth capital expenditure | (29.0) | (1.2) | (36.2) | (2.2) |
| Methanol Group 15% sale (net) | - | - | 373.7 | - |
| Other non-operating items | 15.0 | (2.2) | 12.7 | (18.4) |
| Net effect of movement in exchange rates on net debt | 26.9 | 3.7 | 19.0 | 15.0 |
| Debt redemption cost | (65.2) | (4.1) | (66.1) | (12.1) |
| Other non-cash items | (3.2) | (3.6) | (7.9) | (8.9) |
| OCI dividend paid to shareholders | (320.4) | - | (320.4) | - |
| Net Cash Flow / Decrease (Increase) in Net Debt | 552.5 | 390.3 | 1,512.5 | 696.7 |
This report contains unaudited second quarter consolidated financial highlights of OCI N.V. ('OCI', 'the Group' or 'the Company'), a public limited liability company incorporated under Dutch law, with its head office located at Honthorststraat 19, 1071 DC Amsterdam, the Netherlands.
OCI N.V. is registered in the Dutch commercial register under No. 56821166 dated 2 January 2013. The Group is primarily involved in the production of nitrogen-based fertilizers and industrial chemicals.
The financial highlights and the reported data in this report have not been audited by an external auditor.
On 2 August 2022 at 17:00 CET, OCI N.V. will host a conference call for investors and analysts. Investors can find the details of the call on the Company's website at www.oci.nl.
On 2 August at 13:30 CET, Fertiglobe will host a conference call for investors and analysts. Investors can find the details of the call on the Company's website at www.fertiglobe.com.
This press release contains inside information as meant in clause 7(1) of the Market Abuse Regulation.
OCI N.V. (Euronext: OCI) is a leading global producer and distributor of hydrogen products providing low carbon fertilizers, fuels, and feedstock to agricultural, transportation, and industrial customers around the world. OCI's production capacity spans four continents and comprises approximately 16.3 million metric tons per year of hydrogen products including nitrogen fertilizers, methanol, biofuels, diesel exhaust fluid, melamine, and other products. OCI has more than 3,850 employees, is headquartered in the Netherlands and listed on Euronext in Amsterdam. Learn more about OCI at www.oci.nl. You can also follow OCI on Twitter and LinkedIn.
Fertiglobe is the world's largest seaborne exporter of urea and ammonia combined, and an early mover in clean ammonia. Fertiglobe's production capacity comprises of 6.7 million tons of urea and merchant ammonia, produced at four subsidiaries in the UAE, Egypt and Algeria, making it the largest producer of nitrogen fertilizers in the Middle East and North Africa (MENA), and benefits from direct access to six key ports and distribution hubs on the Mediterranean Sea, Red Sea, and the Arab Gulf. Headquartered in Abu Dhabi and incorporated in Abu Dhabi Global Market (ADGM), Fertiglobe employs more than 2,600 employees and was formed as a strategic partnership between OCI N.V. ("OCI") and the Abu Dhabi National Oil Company ("ADNOC"). Fertiglobe is listed on the Abu Dhabi Securities Exchange ("ADX") under the symbol "FERTIGLB" and ISIN "AEF000901015. To find out more, visit: www.fertiglobe.com
Hans Zayed Director Email: [email protected] Tel: +31 (0) 6 18 251 367
Honthorststraat 19 1071 DC Amsterdam The Netherlands
OCI stock symbols: OCI / OCI.NA / OCI.AS Fertiglobe stock symbol: FERTIGLB
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