Earnings Release • May 27, 2024
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PhosAgro Reports Operating and Financial Results for 1Q 2024
Moscow – 27th May 2024 – PhosAgro (“PhosAgro” or “the Company”) (Moscow Exchange, LSE: PHOR), one of the world’s leading vertically integrated phosphate-based fertilizer producers, today announces its consolidated interim condensed financial results for the three months ended 31st March 2024.
1Q 2024 highlights
Production of agrochemicals in 1Q 2024 increased by 6.9% year-on-year to 3.01 million tonnes. This growth was driven mainly by a 9.2% increase in the production of phosphate-based fertilizers and feed phosphates, to 2.26 million tonnes.
Total fertilizer sales in 1Q 2024 increased by 11.4% year-on-year to over 3 million tonnes. At the same time, sales of phosphate-based fertilizers and feed phosphates rose 16%.
Revenue for 1Q 2024 amounted to RUB 119.3 billion (USD 1.31 billion), an increase of 2.7% year-on-year amid increased production and sales.
The Company’s EBITDA was RUB 39.1 billion (USD 0.43 billion) in 1Q 2024, down 29.5% year-on-year.
In 1Q 2024, the Company’s free cash flow amounted to RUB 1.8 billion (USD 18 million), having entered positive territory in comparison with the previous quarter.
Net debt as of 31 March 2024 amounted to RUB 263.8 billion (USD 2.86 billion), and the net debt/EBITDA ratio at the end of the quarter was a comfortable 1.58x.
Financial and operating highlights:
| Financial highlights | |||
| RUB mln | 1Q 2024 | 1Q 2023 | Change, % |
| Revenue | 119,272 | 116,178 | 2.7% |
| EBITDA* | 39,060 | 55,395 | -29.5% |
| EBITDA margin | 32.7% | 47.7% | |
| Adj. EBITDA** | 37,876 | 48,978 | -22.7% |
| Net profit | 18,754 | 28,059 | -33.2% |
| Adj. net profit*** | 21,486 | 33,897 | -36.6% |
| Free cash flow | 1,801 | 43,419 | -95.9% |
| 31.03.2024 | 31.12.2023 | ||
| Net debt | 263,839 | 223,207 | |
| ND/LTM EBITDA | 1.58x | 1.22x |
| Operating highlights | |||
| Production volumes by category | |||
| kt | 1Q 2024 | 1Q 2023 | Change, % |
| Phosphate-based fertilizers and feed phosphates | 2,260.3 | 2,070.3 | 9.2% |
| Nitrogen-based fertilizers | 672.7 | 675.6 | -0.4% |
| Other products | 71.5 | 65.9 | 8.5% |
| TOTAL agrochemicals | 3,004.5 | 2,811.8 | 6.9% |
| Sales volumes by category | |||
| kt | 1Q 2024 | 1Q 2023 | Change, % |
| Phosphate-based fertilizers and feed phosphates | 2,338.5 | 2,016.7 | 16.0% |
| Nitrogen-based fertilizers | 676.8 | 686.6 | -1.4% |
| Other products | 72.5 | 69.2 | 4.8% |
| TOTAL agrochemicals | 3,087.8 | 2,772.5 | 11.4% |
RUB/USD exchange rates: average for 1Q 2024: 90.7471; average for 1Q 2023: 72.7738; as of 31 March 2024: 92.3660; as of 31 December 2023: 89.6883.
* EBITDA is calculated as operating profit adjusted for depreciation and amortisation.
** Adj. EBITDA is calculated as EBITDA adjusted for FX differences from operating activities.
*** Adj. net profit is net profit as reported minus FX gain or loss.
The Company’s 1Q 2024 revenue increased year-on-year despite lower average sales prices. Revenue growth was mainly associated with increased production and sales of phosphate-based fertilizers, made possible thanks to the completion of investment projects as part of the Company’s long-term development strategy.
The Company’s EBITDA for the quarter exceeded RUB 39 billion. The year-on-year decrease in EBITDA was the result of lower fertilizer prices in global markets and the payment of export duties introduced in 2023.
At the same time, EBITDA margin in 1Q 2024 was 32.7%. This level of profitability was driven by increased production of high-margin fertilizers and basic feedstocks as well as the Company’s flexible sales policy.
In 1Q 2024, free cash flow entered positive territory, amounting to around RUB 2 billion. Nevertheless, free cash flow faced pressure during the quarter from factors such as a higher level of capital investments compared with 2023, the payment of customs duties on exports and the use of cash for working capital linked to the replenishment of fertilizer stocks in the trader’s warehouses before the start of the spring season and increased sales to Latin America.
Thanks to its strong financial position, the Company was able to service all its debt obligations, including those denominated in foreign currency, on time and in full. As of the end of 1Q 2024, the Company’s debt position remained at a comfortable level. As of 31 March 2024, net debt amounted to RUB 263.8 billion, and the net debt/EBITDA ratio was 1.58x.
Two of the major factors that increased net debt for the period were cash payments in January 2024 and the use of RUB 10.3 billion in cash for working capital.
Fertilizer market in 1Q 2024
As is typically the case, the beginning of the year in the global fertilizer market saw increased seasonal demand in the domestic markets of China, Russia, Europe and North America. Residual demand in India also provided strong support in fertilizer markets.
The market for phosphate-based fertilizers remained largely balanced. The off-season in Latin America and in most Asian markets was offset by China’s ongoing export restrictions in favour of supplying the domestic market. As a result, prices for the main types of phosphate-based fertilizers in 1Q 2024 remained stable, above USD 500 per tonne (FOB Baltic). The average price for MAP was USD 514 per tonne (FOB Baltic); for DAP, USD 535 per tonne (FOB Baltic).
The market for nitrogen-based fertilizers enjoyed stable seasonal demand from Western markets, including Europe as well as Central and North America. A major tender in India at the beginning of the quarter resulted in stable supplies from producers in Russia and the Middle East. There were no supplies from China, as the country focused on its domestic market. The average price for urea (prilled) in 1Q 2024 was USD 293 per tonne (FOB Baltic); for ammonium nitrate, USD 224 per tonne (FOB Baltic).
Outlook for 2Q 2024
Historically, the start of the second quarter has seen the end of seasonal demand in markets in the Northern Hemisphere alongside price corrections. The easing of export restrictions in China is another factor putting pressure on prices. In late May and early June, however, demand from markets in Latin America and South Asia (India, Pakistan, Bangladesh) is expected to intensify, which should stabilize prices in the global market as a whole. Low carryover stocks in key markets, including Brazil and India (for phosphate-based fertilizers), are an additional factor that will drive increased fertilizer demand and higher prices.
For further information, please contact:
PJSC PhosAgro
Andrey Serov, Head of the Investor Relations Department
+7 495 231 2747 ext. 2183
Timur Belov, Press Officer
+7 495 231 2747 ext. 2652
About the Company
PhosAgro (www.phosagro.com) is a vertically integrated Russian company and one of the world’s leading producers of phosphate-based fertilizers and high-grade phosphate rock with P2O5 content of 39% or higher. PhosAgro’s high-performance fertilizers produce crops with advanced features.
PhosAgro Group is the largest producer of phosphate-based fertilizers in Europe (by total combined capacity for the production of DAP, MAP, NP, NPK and NPS fertilizers), the largest producer of high-grade phosphate rock with P2O5 content of 39%, one of the leading producers of MAP and DAP fertilizers globally, one of the leading producers of monocalcium feed phosphates (MCP) in Europe – and the only such producer in Russia – and Russia’s only producer of nepheline concentrate.
PhosAgro’s main products, including phosphate rock, 58 grades of fertilizers, feed phosphates, ammonia and sodium tripolyphosphate, are used by customers in 100 countries spanning all the world’s inhabited continents. The Company’s priority markets beyond Russia and the CIS are Latin America, Europe and Asia.
The Company’s shares are listed on the Moscow Exchange and its global depositary receipts (GDRs) are listed on the London Stock Exchange (MOEX and LSE ticker: PHOR).
More information about PhosAgro can be found on our website: www.phosagro.com.
| Three months ended 31 March | ||
| RUB million | 2024 | 2023 |
| Revenues | 119,272 | 116,178 |
| Cost of Group products sold | (73,137) | (56,678) |
| Cost of products for resale | (2,361) | (7,643) |
| Gross profit | 43,774 | 51,857 |
| Administrative and selling expenses | (9,597) | (6,932) |
| Taxes, other than income tax | (3,457) | (3,064) |
| Other expenses, net | (2,099) | (709) |
| Foreign exchange gain from operating activities, net | 1,184 | 6,417 |
| Operating profit | 29,805 | 47,569 |
| Finance income | 1,035 | 568 |
| Finance costs | (3,001) | (1,670) |
| Foreign exchange loss from financing activities, net | (3,916) | (12,255) |
| Profit before tax | 23,923 | 34,212 |
| Income tax expense | (5,169) | (6,153) |
| Profit for the period | 18,754 | 28,059 |
| Attributable to: | ||
| Shareholders of the Company | 18,762 | 28,055 |
| Non-controlling interests* | (8) | 4 |
| Basic and diluted earnings per share (in RUB) | 145 | 217 |
| Total comprehensive income for the period | 18,754 | 28,059 |
| Attributable to: | ||
| Shareholders of the Company | 18,762 | 28,055 |
| Non-controlling interests* | (8) | 4 |
*Non-controlling interests are the minority shareholders of the subsidiaries of PJSC “PhosAgro”
| RUB million | 31 March 2024 | 31 December 2023 |
| Assets | ||
| Property, plant and equipment | 316,375 | 308,663 |
| Advances issued for property, plant and equipment | 10,286 | 10,337 |
| Deferred tax assets | 10,102 | 9,751 |
| Other non-current assets | 8,948 | 8,262 |
| Non-current spare parts | 8,583 | 8,059 |
| Right-of-use assets | 7,244 | 7,240 |
| Catalysts | 2,917 | 2,667 |
| Intangible assets | 2,486 | 2,773 |
| Investments in associates and joint ventures | 693 | 636 |
| Non-current assets | 367,634 | 358,388 |
| Trade and other receivables | 76,309 | 66,362 |
| Inventories | 49,911 | 48,468 |
| Cash and cash equivalents | 21,638 | 29,163 |
| VAT and other taxes receivable | 10,236 | 10,119 |
| Other financial assets | 7,599 | 5,083 |
| Income tax receivable | 1,728 | 1,703 |
| Security payment for windfall tax | - | 6,355 |
| Current assets | 167,421 | 167,253 |
| Total assets | 535,055 | 525,641 |
| Equity | ||
| Share capital | 372 | 372 |
| Share premium | 7,494 | 7,494 |
| Retained earnings | 163,477 | 144,658 |
| Actuarial losses | (1,003) | (1,003) |
| Equity attributable to shareholders of the Company | 170,340 | 151,521 |
| Equity attributable to non-controlling interests | 19 | 84 |
| Total equity | 170,359 | 151,605 |
| Liabilities | ||
| Loans and borrowings | 125,238 | 161,710 |
| Deferred tax liabilities | 12,776 | 13,603 |
| Lease liabilities | 2,906 | 2,818 |
| Defined benefit obligations | 1,134 | 1,129 |
| Non-current liabilities | 142,054 | 179,260 |
| Loans and borrowings | 156,053 | 86,429 |
| Trade and other payables | 44,864 | 42,653 |
| Dividends payable | 17,141 | 54,919 |
| VAT and other taxes payable | 3,045 | 2,799 |
| Lease liabilities | 1,280 | 1,413 |
| Income tax payable | 259 | 208 |
| Windfall tax payable | - | 6,355 |
| Current liabilities | 222,642 | 194,776 |
| Total equity and liabilities | 535,055 | 525,641 |
| Three months ended 31 March | ||
| RUB million | 2024 | 2023 |
| Cash flows from operating activities | ||
| Operating profit | 29,805 | 47,569 |
| Adjustments for: | ||
| Depreciation and amortisation | 9,255 | 7,826 |
| Loss on disposal of property, plant and equipment and intangible assets | 36 | 94 |
| Operating profit before changes in working capital | 39,096 | 55,489 |
| Increase/ (decrease) in trade and other payables1 | 2,252 | (9,235) |
| (Increase)/ decrease in trade and other receivables1 | (10,416) | 12,060 |
| (Increase)/ decrease in inventories, catalysts and non-current spare parts | (2,132) | 428 |
| Cash flows from operations before income tax and interest paid | 28,800 | 58,742 |
| Income tax paid | (6,321) | (3,234) |
| Finance costs paid | (2,773) | (1,605) |
| Cash flows from operating activities | 19,706 | 53,903 |
| Cash flows from investing activities | ||
| Finance income | 529 | 252 |
| Acquisition of property, plant and equipment and intangible assets | (15,191) | (10,433) |
| Loans issued | (2,463) | 1 |
| Borrowing cost capitalised paid | (774) | (248) |
| Advances issued for right-of-use assets | - | (63) |
| Other | (6) | 7 |
| Cash flows used in investing activities | (17,905) | (10,484) |
| Cash flows from financing activities | ||
| Proceeds from borrowings, net of transaction costs | 57,894 | 14,773 |
| Repayment of borrowings | (29,231) | (8,131) |
| Refund of dividends paid2 | 2 | 7,143 |
| Dividends paid to shareholders of the Company | (37,780) | |
| Lease payments | (493) | (332) |
| Cash flows (used in)/ from financing activities | (9,608) | 13,453 |
| Net (decrease)/ increase in cash and cash equivalents | (7,807) | 56,872 |
| Cash and cash equivalents at 1 January | 29,163 | 13,356 |
| Effect of exchange rates fluctuations | 282 | 2,130 |
| Cash and cash equivalents at 31 March | 21,638 | 72,358 |
1 Changes in trade and other receivables and changes in trade and other payables include effect of foreign exchange differences from operating activities.
2 The Group received cash refund from depositories paid as dividends to parties who were entitled to receive them, but didn’t receive dividends due to reasons beyond the depositories’ control.
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