DJ Board of Directors Approves PhosAgro Development Strategy to 2025
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OJSC PhosAgro (PHOR)
Board of Directors Approves PhosAgro Development Strategy to 2025
20-March-2019 / 13:45 CET/CEST
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according to REGULATION (EU) No 596/2014 (MAR), transmitted by EQS Group.
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For Immediate Release 20 March 2019
Board of Directors Approves PhosAgro Development Strategy to 2025
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The strategy to 2025 aims to further expand PhosAgro's presence in its
priority domestic and premium export markets and strengthen its position as
a producer of pure phosphate-based fertilizers with low levels of
potentially-harmful heavy metals with one of the lowest cash costs of
production. The strategy covers the following key areas:
? Further develop efficient, flexible and high-tech production facilities
at existing production sites using BATs, digital and innovative solutions,
as well as cutting-edge technologies from one of the world's leading R&D
institutes for the fertilizer sector: the Y. V. Samoilov Scientific
Research Institute for Fertilizers and Insectofungicides.
? Expand presence in the strategically-important domestic market (through
PhosAgro-Region, Russia's largest distribution network) and in premium
export markets
? Upgrad e and expand the capacity of the Company's logistics and port
infrastructure
? Adhere to the UN Sustainability Goals
? Meet demand for phosphate-based fertilizers that stand out for their low
levels of elements like cadmium and arsenic, which are potentially harmful
for human and soil health
Moscow - The Board of Directors of PhosAgro (Moscow Exchange, LSE: PHOR),
one of the world's leading producers of phosphate-based fertilizers, has
approved the Company's strategy to 2025.
Production
As part of its strategy to 2025, the Company will focus on work in three
priority areas: expanding capacity, improving operational efficiency and
increasing self-sufficiency in key inputs.
As part of a programme to modernise existing and build new production
capacities using BATs, as well as innovative and digital solutions, PhosAgro
plans to increase the production of high-quality fertilizers and feed
phosphates that stand out for their naturally low levels of
potentially-harmful heavy metals, from 9 million tonnes in 2018 to 11.5
million tonnes by 2025.
The number of fertilizer grades produced by PhosAgro is due to increase from
39 in 2018 to 50, including new high-performance grades with bio-additives.
PhosAgro has already passed the peak of its investment cycle following
completion of its key capital-intensive project under the strategy to 2020,
which was the construction of high-tech ammonia and granulated urea
facilities. Total investments into these facilities is RUB 65 billion. These
projects now generate stable cash flow, allowing for balanced payment of
decent dividends, as well as implementation of investment, social and
charitable programmes.
Sales
The company will continue to develop its own distribution network, both in
Russia and in export markets.
The Russian market, where PhosAgro is the leading supplier of fertilizers
for domestic farmers, will always be a strategic priority for the Company.
PhosAgro sells more fertilizers in Russia than to any other country in the
world, and the Company will continue to invest in the development of
regional infrastructure for the storage and handling of fertilizers, as well
as the acquisition of new assets and the digitalisation of its business. The
storage capacity of PhosAgro facilities located in the main agricultural
regions of Russia currently exceeds 530 thousand tons, ensuring reliable
supplies for seasonal demand for mineral fertilizers.
Starting from 2020, the Company plans to implement end-to-end digitalisation
of logistics, as well the introduction of elements of precision farming
technology, which will enable Russian farmers to achieve even greater impact
from the use of plant mineral nutrition systems.
Over the past five years, PhosAgro has nearly doubled its fertilizer and
feed phosphate sales in Russia to 2.4 million tonnes. By 2025 the Company
plans to increase domestic sales volumes to more than 3 million tonnes.
PhosAgro will continue to expand its presence in the premium markets of
Europe and Latin America, as well as other markets where the Company can
achieve the best netback prices, while also increasing customer awareness
about the safety of the phosphate-based fertilizers produced by PhosAgro.
The share of direct export sales will be maintained at a level of at least
90% with the help of PhosAgro's existing 10 foreign trading offices located
in the Company's key sales regions of Europe, Latin America and Asia.
Logistics
Having a logistics system and sales infrastructure in place in priority
markets will enable the Company to continue creating value through the
entire supply chain all the way to end customers. To achieve this, the
Company will focus on expanding the capacity of its own railway and port
infrastructure, as well as increasing and upgrading its fleet of railcars,
including through the use of new rolling stock management tools to reduce
transport costs.
Commitment to sustainability
PhosAgro continually seeks to improve and introduce best practices in
sustainability.
In addition to actively engaging in business in its regions of presence,
PhosAgro is implementing a corporate housing programme and is also involved
in major social programmes across areas like education, healthcare, youth
policy and support for active lifestyles. Annual expenditure for these
purposes exceeds RUB 2.5 billion.
The Company is one of the largest taxpayers in the regions where it
operates. In the past five years, PhosAgro allocated more than RUB 18
billion to fund environmental programmes.
Together with UNESCO and the UN Food and Agriculture Organization a
programme is being implemented to improve health and environmental outcomes
by promoting green technologies to support food security and combat soil
degradation.
Compliance with the UN's Sustainable Development Goals has been identified
as a key priority in the Company's strategy to 2025. The next meeting of the
Board of Directors will consider CEO Andrey Guryev's proposal to create a
Board of Directors Committee for Sustainable Development.
Environmental safety
PhosAgro welcomes and is participating in initiatives in the EU to limit the
sale of phosphate-based fertilizers containing impurities such as cadmium,
arsenic, lead and other heavy metals; human exposure to such elements
through food products has been linked with medical conditions including
cancer, renal diseases, osteoporosis and cardiovascular disease.
Fertilizers produced by PhosAgro meet the strictest standards of purity, as
well as health and environmental safety. The Company plans to use both
mandatory and voluntary green labelling. Limiting levels of harmful
impurities will help to improve agricultural safety and benefit food
consumers around the world.
PhosAgro Board of Directors Chairman Sven Ombudstvedt said: "PhosAgro has
already created significant value for shareholders and other stakeholders
through successful investments in sustainable increases in efficiency and
production capacity, while also maintaining a solid financial position,
paying out dividends and undertaking a wide range of social and
environmental projects.
"We have also achieved significant progress in governance and transparency,
thanks in large part to an optimal corporate structure and an expanded Board
of Directors with a majority of independent directors.
"Looking ahead, the strategy to 2025 that the Board of Directors approved
today aims to further strengthen PhosAgro's position as a producer of
environmentally safe phosphate fertilizers with among the lowest costs in
the industry, while continuing to expand production capacities and ensure
the long-term sustainability of our operations globally. The Board of
Directors and I have full confidence that this is a strategy that will
prepare PhosAgro for the future, and that it will create significant,
sustainable value for the Company's shareholders as well as other
stakeholders, from employees to the farmers that use our crop nutrients on
their fields."
Irina Bokova, a member of PhosAgro's Board of Directors and the former
Director-General of UNESCO, said: "The Board carefully considered the
interests of all stakeholders in its review of PhosAgro's strategy to 2025,
and I am pleased to see that the Company has now included sustainability
(MORE TO FOLLOW) Dow Jones Newswires
March 20, 2019 08:45 ET (12:45 GMT)
goals as one of its strategic priorities.
"In fact, PhosAgro has already achieved impressive performance in building
value for a wide range of stakeholders at the local and global levels. The
Company makes meaningful investments into protecting the environment as well
as the health, education and general well-being of its employees and
residents of local communities where it operates.
"At a global level, PhosAgro has an established track record of cooperation
with UNESCO and the FAO on addressing important issues affecting all of
humanity, and the Company recently joined the UN Global Compact, the largest
UN international business initiative in the field of corporate social
responsibility and sustainable development.
"Looking ahead, PhosAgro's aim will be to integrate 10 of the UN's
Sustainable Development Goals into its activities worldwide, with a focus on
human rights, labour rights, environmental protection and fighting
corruption, among others."
Member of the Board of Directors and PhosAgro CEO Andrey Guryev said: "We
have already completed our strategy to 2020 and the Company exceeded all of
its production targets. Fertilizer and feed output have increased by 1.5x
over the past five years to a record 9.0 million tonnes per year. The number
of fertilizer grades produced by PhosAgro, which stand out for their high
quality and purity, increased from 19 in 2013 to 39.
"The Company's products are used in 100 countries around the world,
including in our priority Russian market and key markets in Europe and Latin
America. Implementing key investment projects will enable us to support
stable cash flows while pursuing new investment programmes, paying
appropriate dividends and implementing social and charitable projects.
"PhosAgro is a significantly different company today than it was just over
five years ago when I took over as CEO in 2013, shortly before the strategy
to 2020 was approved by the Board of Directors. We have now completed all of
the key goals of our strategy to 2020 a full two years ahead of schedule and
have achieved significant sustainable advances in terms of efficiency,
production capacities, cash flow generation and direct access to customers
in priority domestic and export markets.
"Looking ahead, the strategy to 2025 that was developed by PhosAgro
management and approved by the Board of Directors aims to further strengthen
our competitive advantages by increasing efficiency and production output.
Successful implementation of this new strategy will enable us to make
sustainable gains in our capacity to provide PhosAgro's unique, high-quality
fertilizers, which are unique for their high quality and environmental
cleanliness."
Details about PhosAgro's strategy to 2025 will be disclosed at its Capital
Markets Day in the fall of this year.
About the Company
PhosAgro 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.
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, 39 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, and Global Depositary
Receipts (GDRs) for shares trade on the London Stock Exchange (under the
ticker PHOR). Since 1 June 2016, the Company's GDRs have been included in
the MSCI Russia and MSCI Emerging Markets indexes.
More information about PhosAgro can be found on the website:
www.phosagro.ru.
ISIN: US71922G2093
Category Code: UPD
TIDM: PHOR
LEI Code: 635400F8A3KGJIIBIK95
OAM Categories: 2.2. Inside information
Sequence No.: 7877
EQS News ID: 789771
End of Announcement EQS News Service
(END) Dow Jones Newswires
March 20, 2019 08:45 ET (12:45 GMT)
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