Earnings Release • Aug 7, 2024
Preview not available for this file type.
Download Source Filetitle: CONFIDENTIAL DRAFT NOT FOR RELEASE
author: Sam Vanderlip
date: 2024-08-07 11:12:00+00:00
PhosAgro Reports Operating and Financial Results for 1H 2024
Moscow, 7 August 2024 – PhosAgro Group (“PhosAgro” or “the Company”) (Moscow Exchange, LSE: PHOR), one of the world’s leading vertically integrated phosphate-based fertilizer producers, today announces its operating results and its consolidated interim condensed financial results for the six months ended 30 June 2024.
1H 2024 highlights
Production of agrochemical products in 1H 2024 increased by 3.6% year-on-year to 5.9 million tonnes, driven mainly by a 4.7% rise in the production of phosphate-based fertilizers and feed phosphates, to 4.4 million tonnes.
The production of basic feedstocks in 1H 2024 rose 1.9% year-on-year, thanks primarily to a 3.9% increase in the production of phosphoric acid and a 3.2% increase in sulphuric acid output.
Total fertilizer sales in 1H 2024 increased by 9.3% year-on-year to nearly 6.1 million tonnes; sales of phosphate-based fertilizers and feed phosphates rose 11.7%.
Revenue in 1H 2024 amounted to RUB 241.6 billion, up 13.5% year-on-year on the back of higher production and sales.
The Company’s adjusted EBITDA amounted to RUB 76.9 billion in 1H 2024, down 7.2% year-on-year.
In 1H 2024, the Company’s free cash flow increased considerably from the previous quarter, rising to RUB 26.6 billion.
Net debt amounted to RUB 217.1 billion as of 30 June 2024, and the net debt/adjusted EBITDA ratio at the end of the first half of the year was a comfortable 1.34x.
Financial and operating highlights:
** 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.
Despite lower average sales prices, revenue in 1H 2024 increased by 13.5% year-on-year primarily as a result of increased production and sales of phosphate-based fertilizers (mainly NPK fertilizers) following the completion of investment projects as part of the Company’s long-term development strategy.
The Company’s adjusted EBITDA for the first half of the year amounted to RUB 76.9 billion, a 7.2% year-on-year decrease due to lower fertilizer prices in global markets and higher production costs owing to the payment of export duties introduced in 2023.
At the same time, the adjusted EBITDA margin in 1H 2024 was 31.8%, driven by increased production of high-margin fertilizers and basic feedstocks as well as the Company’s flexible sales policy.
Free cash flow (FCF) in 1H 2024 amounted to RUB 26.6 billion, mainly due to an increase in FCF in the second quarter to RUB 24.8 billion (despite an increase in capital investments in the quarter to RUB 20.6 billion as part of the Company’s annual investment plan).
The FCF increase was mainly attributed to the release of over RUB 17 billion from working capital thanks to the collection of accounts receivable for products shipped earlier to trader warehouses before the start of the spring season and 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 1H 2024, the Company’s debt position remained at a comfortable level. As of 30 June 2024, the Company’s net debt amounted to RUB 217.1 billion, and its net debt/adjusted EBITDA ratio was 1.34x.
The successful execution of the Company’s long-term development programme and large-scale capital investments drove a 3.6% increase in agrochemical production, reaching 5.9 million tonnes. At this rate, the Company expects to surpass 11.5 million tonnes by the end of the year.
Phosphate-based fertilizers (with a focus on three-element – NPK – fertilizers) and feed phosphates (MCP) accounted for the bulk of production increases in 1H 2024, with output rising 4.7% year-on-year to over 4.4 million tonnes. This growth was attributed to two factors: increased processing of phosphate rock at the Group’s production sites and the fact that the Company’s Volkhov production plant reached its design capacity.
The increased production of three-element fertilizers reflected an uptick in sales to the Company’s priority domestic market amid high seasonal demand and was made possible thanks to the flexibility of the Company’s production facilities, which are able to switch between the production of two- and three-element fertilizers.
The high level of output was enabled by an increase in the production of basic feedstocks – phosphoric acid and sulphuric acid.
Production of phosphoric acid, the main feedstock for the production of phosphate-based fertilizers, increased by 3.9% year-on-year in 1H 2024 to nearly 1.8 million tonnes. This increase was driven by earlier upgrades to production units and more efficient equipment operation.
Production of sulphuric acid in 1H 2024 rose 3.2% to over 4.3 million tonnes, owing to efficiency improvements in the operation of the sulphuric acid production unit in Cherepovets and the development of targeted capacities for the production of sulphuric acid in Balakovo following a major overhaul.
The over 9% increase in sales in 1H 2024 was driven by increased production as well as the excellent performance of the Group’s sales network in the Russian market.
Sales rose mainly due to an 11.7% year-on-year increase in sales of phosphate-based fertilizers. The markets that showed the highest growth rates in terms of shipments in 2024 were Russia, Latin America and Africa.
Fertilizer market in 2Q 2024
Global fertilizer markets saw a seasonal decline in demand in the Northern Hemisphere (North America, Europe, Russia, China), leading to a price correction. However, prices for most types of fertilizers have remained stable this year and even increased in some markets. Global markets have remained strong thanks mainly to the continuation of restrictions on fertilizer exports from China and the low volumes of carryover stocks in key markets.
The market for phosphate-based fertilizers found support in Brazil, where seasonal demand resumed at an earlier date in the face of low stocks and decreased imports in 1Q 2024. Continued residual demand in Europe also supported the DAP and NPK markets. As a result, prices for the main types of phosphate-based fertilizers gradually increased during 2Q 2024. Notably, the average price for MAP in 2Q 2024 was USD 532 per tonne (FOB Baltic), up from USD 514 per tonne (FOB Baltic) the previous quarter.
The market for nitrogen-based fertilizers found support in Central and South America, and another tender was conducted in India at higher prices. In addition, some producers faced unscheduled maintenance shutdowns (in Central America and North Africa) due to disruptions in natural gas supplies. The average price for urea (prilled) in 2Q 2024 was USD 278 per tonne (FOB Baltic); for ammonium nitrate, USD 205 per tonne (FOB Baltic).
Outlook for 3Q 2024
In the third quarter of the year, the global fertilizer market has typically been propped up by Latin America and South Asia, where the peak of seasonal demand for phosphate-based fertilizers occurs during this period, followed by increased demand for nitrogen-based fertilizers in the second half of the quarter. However, changes in crop prices in global markets could have an impact on the balance of supply and demand.
For more information, please contact:
PhosAgro
Andrey Serov, Head of Investor Relations
+7 495 231 2747 ext. 2183
Timur Belov, Press Secretary
+7 495 231 2747 ext. 2652
About the Company
PhosAgro (www.phosagro.ru) 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.
*Non-controlling interests are the minority shareholders of the subsidiaries of PJSC “PhosAgro”
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.
| Financial highlights | Financial highlights | Financial highlights | Financial highlights |
|---|---|---|---|
| RUB mln | 1H 2024 | 1H 2023 | Change % |
| Revenue | 241,563 | 212,752 | 13.5% |
| EBITDA* | 74,594 | 96,518 | -22.7% |
| Adj. EBITDA** | 76,874 | 82,816 | -7.2% |
| Adjusted EBITDA margin | 31.8% | 38.9% | |
| Net profit | 53,469 | 41,497 | 28.9% |
| Adj. net profit*** | 40,635 | 55,772 | -27.1% |
| Free cash flow | 26,627 | 60,116 | -55.7% |
| 30.06.2024 | 31.12.2023 | ||
| Net debt | 217,123 | 223,207 | |
| ND/LTM Adj. EBITDA | 1.34x | 1.33x |
| Production volumes by category | Production volumes by category | Production volumes by category | Production volumes by category |
|---|---|---|---|
| kt | 1H 2024 | 1H 2023 | Change % |
| Mineral fertilizers and feed phosphates | Mineral fertilizers and feed phosphates | Mineral fertilizers and feed phosphates | Mineral fertilizers and feed phosphates |
| Phosphate-based fertilizers and feed phosphates | 4,423.8 | 4,226.9 | 4.7% |
| Nitrogen-based fertilizers | 1,321.1 | 1,318.9 | 0.2% |
| TOTAL fertilizers | 5,744.9 | 5,545.8 | 3.6% |
| Other products | Other products | Other products | Other products |
| STPP | 30.2 | 22.3 | 35.4% |
| Other | 114.2 | 116.5 | -2.0% |
| TOTAL other products | 144.4 | 138.8 | 4.0% |
| TOTAL agrochemicals | 5,889.3 | 5,684.6 | 3.6% |
| Feedstocks | Feedstocks | Feedstocks | Feedstocks |
| Ammonia | 993.2 | 1,005.6 | -1.2% |
| Phosphoric acid | 1,772.2 | 1,704.9 | 3.9% |
| Sulphuric acid | 4,311.5 | 4,176.0 | 3.2% |
| Ammonium sulphate | 92.8 | 152.5 | -39.1% |
| TOTAL feedstocks | 7,169.7 | 7,039.0 | 1.9% |
| Sales volumes by category | Sales volumes by category | Sales volumes by category | Sales volumes by category |
|---|---|---|---|
| kt | 1H 2024 | 1H 2023 | Change % |
| Phosphate-based fertilizers and feed phosphates | 4,600.9 | 4,117.9 | 11.7% |
| Nitrogen-based fertilizers | 1,353.7 | 1,316.2 | 2.8% |
| TOTAL fertilizers | 5,954.6 | 5,434.1 | 9.6% |
| Other products | 142.9 | 146.2 | -2.3% |
| TOTAL agrochemicals | 6,097.5 | 5,580.3 | 9.3% |
| | | | | | Six months ended
30 June | Six months ended
30 June |
| --- | --- | --- | --- | --- | --- | --- |
| RUB million | | | | 2024 | 2024 | 2023 | 2023 |
| | | | | | | | |
| Revenues | | | | 241,563 | 241,563 | 212,752 | 212,752 |
| Cost of Group products sold | | | | (146,293) | (146,293) | (111,814) | (111,814) |
| Cost of products for resale | | | | (4,454) | (4,454) | (10,608) | (10,608) |
| | | | | | | | |
| | | | | | | | |
| Gross profit | | | | 90,816 | 90,816 | 90,330 | 90,330 |
| | | | | | | | |
| Administrative and selling expenses | | | | (19,972) | (19,972) | (15,152) | (15,152) |
| Taxes, other than income tax | | | | (7,585) | (7,585) | (6,010) | (6,010) |
| Other expenses, net | | | | (4,944) | (4,944) | (2,070) | (2,070) |
| Foreign exchange (loss)/gain from operating activities, net | | | | (2,280) | (2,280) | 13,702 | 13,702 |
| | | | | | | | |
| | | | | | | | |
| Operating profit | | | | 56,035 | 56,035 | 80,800 | 80,800 |
| | | | | | | | |
| Finance income | | | | 3,315 | 3,315 | 1,255 | 1,255 |
| Finance costs | | | | (6,235) | (6,235) | (3,586) | (3,586) |
| Foreign exchange gain/(loss) from financing activities, net | | | | 15,114 | 15,114 | (27,977) | (27,977) |
| | | | | | | | |
| | | | | | | | |
| Profit before tax | | | | 68,229 | 68,229 | 50,492 | 50,492 |
| | | | | | | | |
| Income tax expense | | | | (14,760) | (14,760) | (8,995) | (8,995) |
| | | | | | | | |
| | | | | | | | |
| Profit for the period | | | | 53,469 | 53,469 | 41,497 | 41,497 |
| | | | | | | | |
| Attributable to: | | | | | | | |
| Shareholders of the Company | | | | 53,473 | 53,473 | 41,494 | 41,494 |
| Non-controlling interests | | | | (4) | (4) | 3 | 3 |
| | | | | | | | |
| Basic and diluted earnings per share (in RUB) | | | | 413 | 413 | 320 | 320 |
| | | | | | | | |
| | | | | | | | |
| Total comprehensive income for the period | | | | 53,469 | 53,469 | 41,497 | 41,497 |
| | | | | | | | |
| | | | | | | | |
| Attributable to: | | | | | | | |
| Shareholders of the Company | | | | 53,473 | 53,473 | 41,494 | 41,494 |
| Non-controlling interests | | | | (4) | (4) | 3 | 3 |
| | | | | | | | |
| RUB million | 30 June
2024 | 30 June
2024 | 31 December
2023 | 31 December
2023 |
| --- | --- | --- | --- | --- |
| | | | | |
| Assets | | | | |
| Property, plant and equipment | 327,669 | 327,669 | 308,663 | 308,663 |
| Advances issued for property, plant and equipment | 10,701 | 10,701 | 10,337 | 10,337 |
| Deferred tax assets | 9,696 | 9,696 | 9,751 | 9,751 |
| Non-current spare parts | 9,585 | 9,585 | 8,059 | 8,059 |
| Other non-current assets | 8,295 | 8,295 | 8,262 | 8,262 |
| Right-of-use assets | 6,917 | 6,917 | 7,240 | 7,240 |
| Catalysts | 3,015 | 3,015 | 2,667 | 2,667 |
| Intangible assets | 2,534 | 2,534 | 2,773 | 2,773 |
| Investments in associates and joint ventures | 699 | 699 | 636 | 636 |
| | | | | |
| | | | | |
| Non-current assets | 379,111 | 379,111 | 358,388 | 358,388 |
| | | | | |
| | | | | |
| Cash and cash equivalents | 74,000 | 74,000 | 29,163 | 29,163 |
| Trade and other receivables | 65,308 | 65,308 | 66,362 | 66,362 |
| Inventories | 51,041 | 51,041 | 48,468 | 48,468 |
| VAT and other taxes receivable | 10,370 | 10,370 | 10,119 | 10,119 |
| Other financial assets | 7,448 | 7,448 | 5,083 | 5,083 |
| Income tax receivable | 1,381 | 1,381 | 1,703 | 1,703 |
| Security payment for windfall tax | - | - | 6,355 | 6,355 |
| | | | | |
| | | | | |
| Current assets | 209,548 | 209,548 | 167,253 | 167,253 |
| | | | | |
| | | | | |
| Total assets | 588,659 | 588,659 | 525,641 | 525,641 |
| | | | | |
| | | | | |
| Equity | | | | |
| Share capital | 372 | 372 | 372 | 372 |
| Share premium | 7,494 | 7,494 | 7,494 | 7,494 |
| Retained earnings | 158,169 | 158,169 | 144,658 | 144,658 |
| Actuarial losses | (1,003) | (1,003) | (1,003) | (1,003) |
| | | | | |
| | | | | |
| Equity attributable to shareholders of the Company | 165,032 | 165,032 | 151,521 | 151,521 |
| Equity attributable to non-controlling interests | 26 | 26 | 84 | 84 |
| | | | | |
| | | | | |
| Total equity | 165,058 | 165,058 | 151,605 | 151,605 |
| | | | | |
| | | | | |
| Liabilities | | | | |
| Loans and borrowings | 137,682 | 137,682 | 161,710 | 161,710 |
| Deferred tax liabilities | 17,048 | 17,048 | 13,603 | 13,603 |
| Lease liabilities | 2,672 | 2,672 | 2,818 | 2,818 |
| Defined benefit obligations | 1,143 | 1,143 | 1,129 | 1,129 |
| | | | | |
| | | | | |
| Non-current liabilities | 158,545 | 158,545 | 179,260 | 179,260 |
| | | | | |
| | | | | |
| Loans and borrowings | 149,674 | 149,674 | 86,429 | 86,429 |
| Dividends payable | 59,565 | 59,565 | 54,919 | 54,919 |
| Trade and other payables | 50,868 | 50,868 | 42,653 | 42,653 |
| VAT and other taxes payable | 3,677 | 3,677 | 2,799 | 2,799 |
| Lease liabilities | 1,095 | 1,095 | 1,413 | 1,413 |
| Income tax payable | 177 | 177 | 208 | 208 |
| Windfall tax payable | - | - | 6,355 | 6,355 |
| | | | | |
| | | | | |
| Current liabilities | 265,056 | 265,056 | 194,776 | 194,776 |
| | | | | |
| | | | | |
| Total equity and liabilities | 588,659 | 588,659 | 525,641 | 525,641 |
| | | | | | |
| | Six months ended
30 June | Six months ended
30 June | Six months ended
30 June | Six months ended
30 June |
| --- | --- | --- | --- | --- |
| RUB million | 2024 | 2024 | 2023 | 2023 |
| | | | | |
| Cash flows from operating activities | | | | |
| Operating profit | 56,035 | 56,035 | 80,800 | 80,800 |
| Adjustments for: | | | | |
| Depreciation and amortisation | 18,559 | 18,559 | 15,718 | 15,718 |
| Loss on disposal of property, plant and equipment and intangible assets | 71 | 71 | 165 | 165 |
| | | | | |
| | | | | |
| Operating profit before changes in working capital | 74,665 | 74,665 | 96,683 | 96,683 |
| Increase/(decrease) in trade and other payables1 | 10,442 | 10,442 | (4,166) | (4,166) |
| Decrease in trade and other receivables1 | 815 | 815 | 21,174 | 21,174 |
| Increase in inventories, catalysts and non-current spare parts | (4,515) | (4,515) | (3,839) | (3,839) |
| | | | | |
| | | | | |
| Cash flows from operations before income tax and interest paid | 81,407 | 81,407 | 109,852 | 109,852 |
| Income tax paid | (10,969) | (10,969) | (20,691) | (20,691) |
| Finance costs paid | (5,983) | (5,983) | (3,230) | (3,230) |
| | | | | |
| | | | | |
| Cash flows from operating activities | 64,455 | 64,455 | 85,931 | 85,931 |
| | | | | |
| | | | | |
| Cash flows from investing activities | | | | |
| Finance income | 2,076 | 2,076 | 737 | 737 |
| Acquisition of property, plant and equipment and intangible assets | (35,747) | (35,747) | (25,976) | (25,976) |
| Loans issued | (2,480) | (2,480) | (18) | (18) |
| Borrowing cost capitalised paid | (1,674) | (1,674) | (555) | (555) |
| Advances issued for right-of-use assets | - | - | (94) | (94) |
| Other | (3) | (3) | 91 | 91 |
| | | | | |
| | | | | |
| Cash flows used in investing activities | (37,828) | (37,828) | (25,815) | (25,815) |
| | | | | |
| | | | | |
| Cash flows from financing activities | | | | |
| Proceeds from borrowings, net of transaction costs | 119,178 | 119,178 | 79,562 | 79,562 |
| Repayment of borrowings | (63,196) | (63,196) | (75,854) | (75,854) |
| Dividends paid to shareholders of the Company | (37,685) | (37,685) | (60,299) | (60,299) |
| Repayment of dividends previously refunded to shareholders of the Company | (148) | (148) | (71) | (71) |
| Refund of dividends paid2 | 2,463 | 2,463 | 10,212 | 10,212 |
| Dividends paid to non-controlling interests | - | - | (131) | (131) |
| Lease payments | (847) | (847) | (692) | (692) |
| | | | | |
| | | | | |
| Cash flows from/(used in) financing activities | 19,765 | 19,765 | (47,273) | (47,273) |
| | | | | |
| | | | | |
| Net increase in cash and cash equivalents | 46,392 | 46,392 | 12,843 | 12,843 |
| Cash and cash equivalents at 1 January | 29,163 | 29,163 | 13,356 | 13,356 |
| Effect of exchange rates fluctuations | (1,555) | (1,555) | 5,474 | 5,474 |
| | | | | |
| | | | | |
| Cash and cash equivalents at 30 June | 74,000 | 74,000 | 31,673 | 31,673 |
| | | | | |
Building tools?
Free accounts include 100 API calls/year for testing.
Have a question? We'll get back to you promptly.