Dow Jones received a payment from EQS/DGAP to publish this press release.
OJSC PhosAgro (PHOR)
PhosAgro 4Q18 EBITDA grows 51% YoY to RUB 18.6 bln
20-March-2019 / 10:45 CET/CEST
Dissemination of a Regulatory Announcement that contains inside information
according to REGULATION (EU) No 596/2014 (MAR), transmitted by EQS Group.
The issuer / publisher is solely responsible for the content of this
announcement.
For Immediate Release 20 March 2019
PhosAgro 4Q18 EBITDA grows 51% YoY to RUB 18.6 bln
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 three months (4Q) and 12 months (FY) ended 31 December 2018.
Revenue in 4Q 2018 rose by 30% year-on-year to RUB 59.4 billion (USD 893
million), while EBITDA grew by 51% year-on-year to RUB 18.6 billion (USD 279
million). PhosAgro's EBITDA margin increased to 31% in 4Q 2018 from 27% in
4Q 2017. Net income (adjusted for non-cash FX items) almost trippled
year-on-year to RUB 10.9 billion (USD 164 million) in 4Q 2018, bringing
PhosAgro's FY 2018 adjusted net income to RUB 41.7 billion (USD 666
million).
4Q 2018 financial and operational highlights
RUB million or % 4Q 2018 4Q 2017 Chng FY FY Chng,
, % 2018 2017 % YoY
YoY
Revenue 59,404 45,778 30% 233,43 181,35 29%
0 1
EBITDA** 18,556 12,285 51% 74,908 50,796 47%
EBITDA margin 31% 27% 4pp 32% 28% 4pp
Net income 4,504 4,256 6% 22,135 25,331 -13%
Net income adj* 10,899 3,700 195% 41,748 21,190 97%
31.12.2018 31.12.2017
Net debt 135,330 119,985
ND/LTM EBITDA 1.8 2.4
Sales, 000' mt 4Q 2018 4Q 2017 Chng FY FY Chng,
, % 2018 2017 % YoY
YoY
Phosphate-based 1,492 1,599 -7% 6,635 6,485 2%
& MCP
Nitrogen-based 470 411 15% 2,196 1,616 36%
Phosphate rock & 1,102 1,000 10% 3,947 3,734 6%
nepheline
RUB/USD rates: average 4Q 2018: 66.5; average 4Q 2017: 58.4; as of 31
December 2018: 69.5; as of 31 December 2017: 57.6
** EBITDA is calculated as operating profit adjusted for depreciation and
amortisation.
* adjusted for non-cash FX items (Net profit as reported minus FX gain or
loss)
Commenting on the results for 2018, PhosAgro CEO Andrey Guryev said:
"Despite disruption in various markets, PhosAgro finished 2018 in good
shape, achieving the ambitious milestones set out in our growth strategy for
the period through 2020. Thanks to the professionalism of our team, the
Company was able to respond quickly to new opportunities as well as to
challenges arising in key agricultural markets. PhosAgro's sales geography
has partially modified as a result of political turmoil in some countries of
the CIS, weather conditions affecting agricultural producers in Europe and
strong competition in Latin America. Despite these challenges, we were able
to increase EBITDA by more than 47% in 2018 while net profit almost doubled
year-on-year, pushing down the overall company's leverage.
"Our strategy of moving closer to our end customers has proved to be timely
and effective. We were swift in shipping products to our priority markets
and spot markets in North America and Asia. Even as the industry stockpiled
fertilizers in Europe at the end of 4Q 2018 as a result of the ongoing
anomalous weather conditions, we were redirecting our products to Russia,
the USA and Latin America in order to achieve the best netback prices.
"This would not have been possible without timely upgrades to our mid-stream
capacity. The modernisation of benefication plant #3 helped us achieve an
unprecedented 92% phosphorous recovery rate from our apatite-nepheline ore,
while the new ammonia plant enabled us to boost the self-sufficiency in the
crucial feedstock to 90%. As a result, in FY 2018 we increased production of
our fertilizers, which are naturally low in potentially harmful impurities,
by 8% year-on-year to 9.0 million tonnes. We expect to see further growth of
up to 5% year-on-year in 2019.
"PhosAgro's industry-leading EBITDA margin of 32% for FY 2018 and record
high free cash flow of RUB 21 billion are additional milestones. All
investment projects remain on track, which meant that we kept our capex to
EBITDA ratio for FY 2018 at close to 50%, in line with our guidance. All of
this meant that in 2018 PhosAgro was able to cut its net debt to LTM EBITDA
ratio to a comfortable level of 1.8x and deliver an attractive 50%+ dividend
payout ratio.
"In terms of the market environment, DAP prices peaked for a second straight
year in September at USD 439 per tonne (FOB Tampa), growing by 39% from the
beginning of 2017 and average at USD 419 per tonne as a result of tighter
than expected supply. In the medium term, we expect the market to balance at
around USD 390-400 per tonne, as new capacity from North Africa and the
Middle East ramps up. The closure of inefficient Chinese production lines,
which are on the upper end of the cash cost curve, should counterbalance
this supply growth.
"Looking ahead, we have approved a new strategy for the period to 2025. Our
main focus during the years ahead will be strengthening our commitment to
best ESG practices. We also plan to further strengthen our presence in key
markets and solidify our cash cost advantage. All of these initiatives will
further improve PhosAgro's financial and operational results and generate
optimal returns for all of our shareholders."
4Q 2018 market conditions
? The average price of DAP (FOB Tampa) in 4Q 2018 was USD 407 per tonne,
up by 17% year-on-year (or USD 61), driven by:
? The idling of Plant City by Mosaic, resulting in a deficit on the
North American market and higher import volumes;
? Slower than expected ramp-up of new units in Saudi Arabia and Morocco;
? Healthy import demand in India due to loss-making domestic production
of DAP, albeit partially offset by continuing Rupee depreciation;
? Solid growth of DAP imports in 2018 to Pakistan by 27% year-on-year to
1.27 mln tonnes, according to NFDC.
? In 4Q 2018 urea (FOB Baltic) averaged USD 289 per tonne vs. USD 241 per
tonne in 4Q 2017. The price increase was driven by:
? Further cuts in urea exports from China, due to environmental reforms,
and from Iran due to recent USA sanctions;
? Start of seasonal demand from India and Brazil driven by low urea
stock levels.
Financial performance
In 4Q 2018, revenue rose by 30% year-on-year to RUB 59.4 billion (USD 893
million) mainly driven
by 18% growth year-on-year in the average realised price (in USD terms) for
phosphate-based and nitrogen-based products and by 14% year-on-year RUB
depreciation against USD. However, a 2% decrease in fertilizer sales to
1,962 kt partially offset this growth. The decrease was due primarily to
persistent anomalous weather conditions in Europe, which hurt farmers and
water levels in river systems, leading to stockpiling of fertilizers at
European ports and holding back seaborne shipments to Europe.
Revenue by key products
RUB million or % 4Q 2018 4Q Chng, % FY 2018 FY 2017 Chng,
2017 YoY % YoY
DAP/MAP 19,335 14,955 29% 77,895 62,188 25%
NPK(S) 15,067 12,190 24% 60,865 47,119 29%
PhosRock 6,309 5,357 18% 22,098 21,158 4%
Nitrogen-based 9,594 6,846 40% 37,011 22,495 65%
products
In 4Q 2018, gross profit was RUB 29.9 billion (USD 450 million). The gross
profit margin expanded to 50% from 45% in 4Q 2017. Gross profit and margin
performance for the phosphate and nitrogen segments were as follows:
? The phosphate segment saw a 28% year-on-year increase in gross profit to
RUB 23.7 billion (USD 357 million), with a gross margin of 50%, compared
to 49% in 4Q 2017.
? Gross profit for the nitrogen segment more than doubled year-on-year to
RUB 5.9 billion (USD 89 million). Gross margin for the segment jumped to
61% from 36% in 4Q 2017.
EBITDA in 4Q 2018 amounted to RUB 18.6 billion (USD 279 million), up by 51%
year-on-year, while the EBITDA margin expanded by 4 p.p. year-on-year to
31%. Net profit adjusted for non-cash FX items amounted to RUB 10.9 billion
(USD 164 million) in 4Q 2018, tripling year-on-year.
The RUB depreciated by 14% year-on-year against the USD during the quarter
(the average RUB/USD exchange rates for 4Q 2018 and 4Q 2017 were RUB 66.5
and RUB 58.4, respectively), which had a net positive impact, as prices for
most of the Company's products are denominated in USD, while costs are
primarily RUB-based. The depreciation of the RUB as of 31 December 2018 (RUB
69.5 per USD) compared to 30 September 2018 (RUB 65.6 per USD) resulted in
an FX loss of RUB 6.4 billion (compared to a RUB 0.6 billion gain in 4Q
2017).
Net operating cash flow in 4Q 2018 almost trippled year-on-year to RUB 10.2
billion (USD 154 million) driven by improved profitability, but restrained
by a build-up of working capital. PhosAgro had to postpone export shipments
in November-December due to unfavourable weather conditions in Europe. The
Company also decided to accumulate stocks for the next application season in
priority markets.
(MORE TO FOLLOW) Dow Jones Newswires
March 20, 2019 05:46 ET (09:46 GMT)
© 2019 Dow Jones News
