PhosAgro Reports Operating and Financial Results for 1H 2022
PhosAgro PJSC (PHOR)
PhosAgro Reports Operating and Financial Results for 1H 2022
18-Aug-2022 / 20:30 MSK
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For Immediate Release
18 August 2022
PhosAgro Reports Operating and Financial Results for 1H 2022
Moscow - 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 IFRS financial results for the first half (1H) of 2022.
1H 2022 highlights
In 1H 2022, mineral fertilizer production increased by 5.2% year-on-year to over 5.3 million tonnes. This increase was made possible thanks to the fact that new production units launched as part of the Company’s comprehensive long-term development programme reached full capacity.
Sales of mineral fertilizers in 1H 2022 increased by 10.2% year-on-year to almost 5.7 million tonnes. This growth was driven by an increase in production volumes, a decrease in stocks (accumulated during the low season) and strong demand for fertilizers in Russian and global markets.
Revenue for 1H 2022 increased by 90.9% year-on-year to RUB 336.5 billion (USD 4.4 billion). This increase was a result of the implementation of an ambitious programme for the modernisation and construction of new production facilities, which enabled the Company to expand the production of mineral fertilizers and considerably improve the performance of equipment.
The increase in revenue was also driven by an improved sales structure that favours high-margin fertilizers, which are in high demand in Russia and in global markets.
In 1H 2022, adjusted EBITDA increased by 123.8% year-on-year to RUB 165.3 billion (USD 2.2 billion). EBITDA margin for the period rose to 49.1%.
In 1H 2022, adjusted free cash flow amounted to RUB 77.6 billion (USD 1.0 billion), up 126.8% year-on-year.
As of 30 June 2022, net debt had decreased by RUB 91.6 billion since the end of 2021, amounting to RUB 62.1 billion (USD 1.2 billion). The net debt / adjusted EBITDA ratio had decreased to 0.22x as of the end of 2Q 2022.
Financial and operating highlights Financial highlights RUB mln 1H
2022 1H
2021 Chng
% Revenue 336,509 176,261 90.9% EBITDA* 135,548 73,094 85.4% Adj. EBITDA** 165,322 73,860 123.8% Adj. EBITDA margin 49.1% 41.9% Net profit 129,048 48,652 165.2% Adj. net profit*** 108,553 46,094 135.5% Free cash flow 40,870 34,217 19.4% Adj. free cash flow**** 77,599 34,217 126.8% 30.06.2022 31.12.2021 Net debt 62,083 153,718 ND / adj. LTM EBITDA 0.22x 0.80x Operating highlights Production volumes by category kt 1H
2022 1H
2021 Chng
% Phosphate-based & MCP 4,054.0 3,825.5 6.0% Nitrogen-based fertilizers 1,265.6 1,231.6 2.8% TOTAL fertilizers 5,319.6 5,057.1 5.2% Sales volumes by category kt 1H
2022 1H
2021 Chng
% Phosphate-based & MCP 4,335.3 3,743.6 15.8% Nitrogen-based fertilizers 1,346.4 1,412.4 -4.7% TOTAL fertilizers 5,681.7 5,156.0 10.2%
RUB/USD exchange rates: average 1H 2022 rate: 76.30; average 1H 2021 rate: 74.28; as of 30 June 2022: 51.16; as of 31 December 2021: 74.29.
* EBITDA is calculated as operating profit adjusted for depreciation and amortisation.
** Adj. EBITDA is EBITDA as reported minus FX differences from operating activities.
*** Adj. net profit is net profit as reported minus FX gain or loss.
**** Free cash flow adjusted for the amount of cash and cash equivalents written off as a result of the loss of ownership of foreign companies.
Concerning the Company’s financial stability, it should be noted that, despite the withdrawal of credit ratings from all Russian companies by international rating agencies, PhosAgro continues to service its debt obligations, taking all the necessary steps to ensure that they are paid on time.
Among recent developments, the Company’s coupon payment for Eurobonds maturing in 2025 is worth highlighting. On 22 July 2022, PhosAgro made another coupon payment in accordance with Decree of the President of the Russian Federation No. 430 of 5 July 2022, with the division of payment flows between bondholders under Russia jurisdiction and those elsewhere.
Market highlights in 1H 2022
The situation in global mineral fertilizer markets in 1H 2022 showed a high degree of price volatility, especially in markets for nitrogen-based fertilizers. At the same time, the cost of mineral fertilizers for Russian farmers, through 30 May 2022, was fixed at price levels from the middle of last year.
The global price of urea in 1H 2022 fluctuated by as much as USD 500 per tonne, from a low of USD 390 per tonne to a high of USD 890 per tonne (FOB Baltic). Prices for MAP fluctuated between USD 800 and USD 1,245 per tonne (FOB Baltic).
The current situation in fertilizer markets is being driven by the following factors: A rapid increase in global energy prices, which have remained high, especially in Europe; that has led to a reduction in domestic production capacity and an increase in import demand and higher prices for both feedstocks and fertilizers (especially nitrogen-based); A reduction in the export supply of Russian fertilizers and a disruption of existing trade flows; A reduction in fertilizer exports from China in favour of supplying the domestic market; The high degree of global price volatility for the main types of agricultural products. The average export price for MAP in 1H 2022 amounted to USD 1,009 per tonne (FOB Baltic), compared with USD 569 per tonne in 1H 2021. The average price for urea in 1H 2022 was USD 644 per tonne (FOB Baltic), up from USD 339 per tonne in the period from January to June 2021;
Prices for the main types of feedstock commodities also rose steadily during the first half of the year, surpassing previous record highs. The most notable price increase was for ammonia, which was due to high prices for natural gas in Europe and the suspension of exports of commercial ammonia from Russia (as a result of the imposition of sanctions and the shutdown of the Tolyatti–Odessa ammonia pipeline). Ammonia prices in March and April reached the equivalent of USD 1,500–1550 per tonne (FOB Baltic). Phosphate feedstock and sulphur prices rose in line with changes in the market for phosphate-based fertilizers. The average price for sulphur in 1H 2022 was USD 308 per tonne (FOB Baltic), compared with USD 155 per tonne in the period from January to June 2021. Prices for phosphate feedstocks increased steadily, reaching USD 300 per tonne (FOB Morocco) (for feedstocks with P2O5 content of 31%–33%) as of the end of 1H 2022, up from USD 126 per tonne a year earlier.
Market outlook
Nitrogen-based fertilizer markets continue to demonstrate a high degree of price volatility, being driven by record-high natural gas prices in Europe, new production cuts in Europe and seasonal demand in key markets in Asia (India), Latin America (Brazil) and, closer to autumn, in Europe and North America.
The market for phosphate-based fertilizers is also starting to see seasonal demand in South Asia and Latin America.
About us
PhosAgro (www.phosagro.ru) is one of the world’s leading vertically integrated phosphate-based fertilizer producers in terms of production volumes of phosphate-based fertilizers and high-grade phosphate rock with a P2O5 content of 39% and higher. PhosAgro’s environmentally friendly fertilizers stand out for their high efficiency, and they do not lead to the contamination of soils with heavy metals.
The Company is the largest phosphate-based fertilizer producer in Europe (by total combined capacity for DAP/MAP/NP/NPK/NPS), the largest producer of high-grade phosphate rock with a P2O5 content of 39%, a top-three producer of MAP/DAP globally, one of the leading producers of feed phosphates (MCP) in Europe, and the only producer in Russia, and Russia’s only producer of nepheline concentrate (according to the RAFP).
PhosAgro’s main products include phosphate rock, more than 50 grades of fertilizers, feed phosphates, ammonia, and sodium tripolyphosphate, which are used by customers in 100 countries spanning all of the world’s inhabited continents. The Company’s priority markets outside of Russia and the CIS are Latin America, Europe and Asia.
PhosAgro’s shares are traded on the Moscow Exchange (under the ticker PHOR), and global depositary receipts (GDRs) for shares trade on the London Stock Exchange (under the ticker PHOR).
More information about PhosAgro can be found on the Company's website: www.phosagro.ru.
PhosAgro Reports Operating and Financial Results for 1H 2022
Moscow - 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 IFRS financial results for the first half (1H) of 2022.
1H 2022 highlights
In 1H 2022, mineral fertilizer production increased by 5.2% year-on-year to over 5.3 million tonnes. This increase was made possible thanks to the fact that new production units launched as part of the Company’s comprehensive long-term development programme reached full capacity.
Sales of mineral fertilizers in 1H 2022 increased by 10.2% year-on-year to almost 5.7 million tonnes. This growth was driven by an increase in production volumes, a decrease in stocks (accumulated during the low season) and strong demand for fertilizers in Russian and global markets.
Revenue for 1H 2022 increased by 90.9% year-on-year to RUB 336.5 billion (USD 4.4 billion). This increase was a result of the implementation of an ambitious programme for the modernisation and construction of new production facilities, which enabled the Company to expand the production of mineral fertilizers and considerably improve the performance of equipment.
The increase in revenue was also driven by an improved sales structure that favours high-margin fertilizers, which are in high demand in Russia and in global markets.
In 1H 2022, adjusted EBITDA increased by 123.8% year-on-year to RUB 165.3 billion (USD 2.2 billion). EBITDA margin for the period rose to 49.1%.
In 1H 2022, adjusted free cash flow amounted to RUB 77.6 billion (USD 1.0 billion), up 126.8% year-on-year.
As of 30 June 2022, net debt had decreased by RUB 91.6 billion since the end of 2021, amounting to RUB 62.1 billion (USD 1.2 billion). The net debt / adjusted EBITDA ratio had decreased to 0.22x as of the end of 2Q 2022.
Financial and operating highlights Financial highlights RUB mln 1H
2022 1H
2021 Chng
% Revenue 336,509 176,261 90.9% EBITDA* 135,548 73,094 85.4% Adj. EBITDA** 165,322 73,860 123.8% Adj. EBITDA margin 49.1% 41.9% Net profit 129,048 48,652 165.2% Adj. net profit*** 108,553 46,094 135.5% Free cash flow 40,870 34,217 19.4% Adj. free cash flow**** 77,599 34,217 126.8% 30.06.2022 31.12.2021 Net debt 62,083 153,718 ND / adj. LTM EBITDA 0.22x 0.80x Operating highlights Production volumes by category kt 1H
2022 1H
2021 Chng
% Phosphate-based & MCP 4,054.0 3,825.5 6.0% Nitrogen-based fertilizers 1,265.6 1,231.6 2.8% TOTAL fertilizers 5,319.6 5,057.1 5.2% Sales volumes by category kt 1H
2022 1H
2021 Chng
% Phosphate-based & MCP 4,335.3 3,743.6 15.8% Nitrogen-based fertilizers 1,346.4 1,412.4 -4.7% TOTAL fertilizers 5,681.7 5,156.0 10.2%
RUB/USD exchange rates: average 1H 2022 rate: 76.30; average 1H 2021 rate: 74.28; as of 30 June 2022: 51.16; as of 31 December 2021: 74.29.
* EBITDA is calculated as operating profit adjusted for depreciation and amortisation.
** Adj. EBITDA is EBITDA as reported minus FX differences from operating activities.
*** Adj. net profit is net profit as reported minus FX gain or loss.
**** Free cash flow adjusted for the amount of cash and cash equivalents written off as a result of the loss of ownership of foreign companies.
Concerning the Company’s financial stability, it should be noted that, despite the withdrawal of credit ratings from all Russian companies by international rating agencies, PhosAgro continues to service its debt obligations, taking all the necessary steps to ensure that they are paid on time.
Among recent developments, the Company’s coupon payment for Eurobonds maturing in 2025 is worth highlighting. On 22 July 2022, PhosAgro made another coupon payment in accordance with Decree of the President of the Russian Federation No. 430 of 5 July 2022, with the division of payment flows between bondholders under Russia jurisdiction and those elsewhere.
Market highlights in 1H 2022
The situation in global mineral fertilizer markets in 1H 2022 showed a high degree of price volatility, especially in markets for nitrogen-based fertilizers. At the same time, the cost of mineral fertilizers for Russian farmers, through 30 May 2022, was fixed at price levels from the middle of last year.
The global price of urea in 1H 2022 fluctuated by as much as USD 500 per tonne, from a low of USD 390 per tonne to a high of USD 890 per tonne (FOB Baltic). Prices for MAP fluctuated between USD 800 and USD 1,245 per tonne (FOB Baltic).
The current situation in fertilizer markets is being driven by the following factors: A rapid increase in global energy prices, which have remained high, especially in Europe; that has led to a reduction in domestic production capacity and an increase in import demand and higher prices for both feedstocks and fertilizers (especially nitrogen-based); A reduction in the export supply of Russian fertilizers and a disruption of existing trade flows; A reduction in fertilizer exports from China in favour of supplying the domestic market; The high degree of global price volatility for the main types of agricultural products. The average export price for MAP in 1H 2022 amounted to USD 1,009 per tonne (FOB Baltic), compared with USD 569 per tonne in 1H 2021. The average price for urea in 1H 2022 was USD 644 per tonne (FOB Baltic), up from USD 339 per tonne in the period from January to June 2021;
Prices for the main types of feedstock commodities also rose steadily during the first half of the year, surpassing previous record highs. The most notable price increase was for ammonia, which was due to high prices for natural gas in Europe and the suspension of exports of commercial ammonia from Russia (as a result of the imposition of sanctions and the shutdown of the Tolyatti–Odessa ammonia pipeline). Ammonia prices in March and April reached the equivalent of USD 1,500–1550 per tonne (FOB Baltic). Phosphate feedstock and sulphur prices rose in line with changes in the market for phosphate-based fertilizers. The average price for sulphur in 1H 2022 was USD 308 per tonne (FOB Baltic), compared with USD 155 per tonne in the period from January to June 2021. Prices for phosphate feedstocks increased steadily, reaching USD 300 per tonne (FOB Morocco) (for feedstocks with P2O5 content of 31%–33%) as of the end of 1H 2022, up from USD 126 per tonne a year earlier.
Market outlook
Nitrogen-based fertilizer markets continue to demonstrate a high degree of price volatility, being driven by record-high natural gas prices in Europe, new production cuts in Europe and seasonal demand in key markets in Asia (India), Latin America (Brazil) and, closer to autumn, in Europe and North America.
The market for phosphate-based fertilizers is also starting to see seasonal demand in South Asia and Latin America.
About us
PhosAgro (www.phosagro.ru) is one of the world’s leading vertically integrated phosphate-based fertilizer producers in terms of production volumes of phosphate-based fertilizers and high-grade phosphate rock with a P2O5 content of 39% and higher. PhosAgro’s environmentally friendly fertilizers stand out for their high efficiency, and they do not lead to the contamination of soils with heavy metals.
The Company is the largest phosphate-based fertilizer producer in Europe (by total combined capacity for DAP/MAP/NP/NPK/NPS), the largest producer of high-grade phosphate rock with a P2O5 content of 39%, a top-three producer of MAP/DAP globally, one of the leading producers of feed phosphates (MCP) in Europe, and the only producer in Russia, and Russia’s only producer of nepheline concentrate (according to the RAFP).
PhosAgro’s main products include phosphate rock, more than 50 grades of fertilizers, feed phosphates, ammonia, and sodium tripolyphosphate, which are used by customers in 100 countries spanning all of the world’s inhabited continents. The Company’s priority markets outside of Russia and the CIS are Latin America, Europe and Asia.
PhosAgro’s shares are traded on the Moscow Exchange (under the ticker PHOR), and global depositary receipts (GDRs) for shares trade on the London Stock Exchange (under the ticker PHOR).
More information about PhosAgro can be found on the Company's website: www.phosagro.ru.
Six months ended 30 June
RUB million
Note
2022
2021
Revenues
5
336,509
176,261
Cost of Group products sold
6
(143,739)
(93,233)
Cost of products for resale
(7,394)
(5,293)
Gross profit
185,376
77,735
Administrative and selling overhead expenses
7
(28,430)
(13,173)
Taxes, other than income tax, net
8
(5,236)
(2,997)
Other expenses, net
9
(1,762)
(1,521)
Foreign exchange loss from operating activities, net
25
(29,774)
(766)
Operating profit
120,174
59,278
Finance income
10
1,909
194
Finance costs
10
(9,510)
(2,477)
Foreign exchange gain from financing activities, net
25
50,269
3,324
COVID-19 related expenses
-
(218)
Profit before tax
162,842
60,101
Income tax expense
11
(33,794)
(11,449)
Profit for the period
129,048
48,652
Attributable to:
Non-controlling interests*
4
(15)
Shareholders of the Parent
129,044
48,667
Basic and diluted earnings per share (in RUB)
19
996
376
Other comprehensive (loss)/income
Items that may be reclassified subsequently to profit or loss
Foreign currency translation difference
(2,929)
(504)
Foreign currency translation difference reclassified to profit or loss upon loss of control over subsidiaries
26
(6,302)
-
Actuarial losses reclassified to profit or loss upon loss of control over subsidiaries
61
-
Other comprehensive loss for the period
(9,170)
(504)
Total comprehensive income for the period
119,878
48,148
Attributable to:
Non-controlling interests*
4
(15)
Shareholders of the Parent
119,874
48,163
*Non-controlling interests are the minority shareholders of the subsidiaries of PJSC “PhosAgro”
RUB million
Note
30 June
2022 31 December
2021 Assets Property, plant and equipment 12 250,503 237,444 Advances issued for property, plant and equipment and other non-current assets 13,684 13,237 Other non-current assets 14 6,064 2,058 Deferred tax assets 5,859 9,499 Non-current spare parts 4,786 4,698 Right-of-use assets 13 3,841 6,955 Catalysts 1,822 2,049 Intangible assets 1,767 1,756 Investments in associates 598 569 Non-current assets 288,924 278,265 Cash and cash equivalents 18 71,927 21,710 Trade and other receivables 17 63,356 48,526 Inventories 16 33,945 41,177 VAT and other taxes receivable 15,397 15,013 Income tax receivable 539 540 Other financial assets 15 200 216 Current assets 185,364 127,182 Total assets 474,288 405,447 Equity Share capital 372 372 Share premium 7,494 7,494 Retained earnings 277,237 148,193 Actuarial losses (692) (753) Foreign currency translation reserve - 9,231 Equity attributable to shareholders of the Parent 284,411 164,537 Equity attributable to non-controlling interests 110 106 Total equity 284,521 164,643 Liabilities Loans and borrowings 20 84,665 157,081 Deferred tax liabilities 18,478 12,937 Lease liabilities 21 1,609 3,459 Defined benefit obligations 765 952 Non-current liabilities 105,517 174,429 Loans and borrowings 20 46,667 12,710 Trade and other payables 22 30,175 41,756 VAT and other taxes payable 4,967 6,397 Income tax payable 1,372 3,334 Lease liabilities 21 1,069 2,178 Current liabilities 84,250 66,375 Total equity and liabilities 474,288 405,447
2022 31 December
2021 Assets Property, plant and equipment 12 250,503 237,444 Advances issued for property, plant and equipment and other non-current assets 13,684 13,237 Other non-current assets 14 6,064 2,058 Deferred tax assets 5,859 9,499 Non-current spare parts 4,786 4,698 Right-of-use assets 13 3,841 6,955 Catalysts 1,822 2,049 Intangible assets 1,767 1,756 Investments in associates 598 569 Non-current assets 288,924 278,265 Cash and cash equivalents 18 71,927 21,710 Trade and other receivables 17 63,356 48,526 Inventories 16 33,945 41,177 VAT and other taxes receivable 15,397 15,013 Income tax receivable 539 540 Other financial assets 15 200 216 Current assets 185,364 127,182 Total assets 474,288 405,447 Equity Share capital 372 372 Share premium 7,494 7,494 Retained earnings 277,237 148,193 Actuarial losses (692) (753) Foreign currency translation reserve - 9,231 Equity attributable to shareholders of the Parent 284,411 164,537 Equity attributable to non-controlling interests 110 106 Total equity 284,521 164,643 Liabilities Loans and borrowings 20 84,665 157,081 Deferred tax liabilities 18,478 12,937 Lease liabilities 21 1,609 3,459 Defined benefit obligations 765 952 Non-current liabilities 105,517 174,429 Loans and borrowings 20 46,667 12,710 Trade and other payables 22 30,175 41,756 VAT and other taxes payable 4,967 6,397 Income tax payable 1,372 3,334 Lease liabilities 21 1,069 2,178 Current liabilities 84,250 66,375 Total equity and liabilities 474,288 405,447
ISIN: US71922G2093 Category Code: IR TIDM: PHOR LEI Code: 25340053KRUNNYUWF472 OAM Categories: 2.2. Inside information Sequence No.: 182308 EQS News ID: 1423641
End of Announcement EQS News Service