OJSC PhosAgro (PHOR)
1Q 2020 Operating Results: PhosAgro Increases Fertilizer Sales Amid Record
Demand in the Russian Market
23-Apr-2020 / 12:00 MSK
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For Immediate Release 23 April 2020
1Q 2020 Operating Results: PhosAgro Increases Fertilizer Sales Amid Record
Demand in the Russian Market
Moscow - PhosAgro (MOEX/LSE ticker: PHOR), one of the world's leading
vertically integrated phosphate-based fertilizer producers, announces that
its fertilizer sales in 1Q 2020 increased by 10% year-on-year to 2.8 million
tonnes.
1Q 2020 highlights
Production of phosphate rock and nepheline concentrate increased by 0.9%
year-on-year to 2,995.0 kt. Production rose by 2.0% quarter-on-quarter.
Total fertilizer production in 1Q 2020 amounted to 2,546.6 kt. Year-on-year
growth of 8.6% was due to upgrades to production capacities and efficiency
gains achieved during the previous year. Total fertilizer production was up
8.0% quarter-on-quarter.
Sales of phosphate-based fertilizers grew by 8.2% year-on-year to 2,087.2
kt. The increase reached 20.1% quarter-on-quarter on the back of a recovery
in seasonal demand and positive demand expectations for agricultural
products.
Sales of nitrogen-based fertilizers rose by 13.8% year-on-year and amounted
to 702.8 kt. In quarter-on-quarter terms the growth was 30.9%.
Domestic fertilizer sales accounted for 33% of the total in 1Q 2020
(compared with 17% in 4Q 2019 and 24% 1Q 2019), driven by the Company's
focus on its priority Russian market and the strong recovery in domestic
demand.
PhosAgro production and sales volumes
Production volumes by category
(kt) 1Q 2020 1Q 2019 Chg y/y 4Q 2019 Chg q/q
Phosphate-based & 1,929.1 1,777.6 8.5% 1,780.3 8.4%
MCP
Nitrogen-based 617.5 567.6 8.8% 578.6 6.7%
fertilizers
TOTAL fertilizers 2,546.6 2,345.2 8.6% 2,358.9 8.0%
Phosphate rock and 2,955.0 2,928.1 0.9% 2,897.0 2.0%
nepheline
concentrate
Other products 50.1 48.3 3.8% 44.6 12.5%
Sales volumes by category
(kt) 1Q 2020 1Q 2019 Chg y/y 4Q 2019 Chg q/q
Phosphate-based & 2,087.2 1,929.0 8.2% 1,738.5 20.1%
MCP
Nitrogen-based 702.8 617.4 13.8% 537.0 30.9%
fertilizers
TOTAL fertilizers 2,790.0 2,546.4 9.6% 2,275.5 22.6%
Phosphate rock and 1,075.7 1,121.7 -4.1% 1,152.9 -6.7%
nepheline
concentrate
Other products 51.6 49.2 4.8% 48.3 6.8%
PhosAgro CEO Andrey Guryev said:
"The world is currently facing an unprecedented challenge: the novel
coronavirus pandemic declared by the World Health Organization on 11 March
2020, which has created significant risks for the global economy and for
business.
"During this challenging time, we, as part of the global fertilizer
industry, are aware of our contribution to food security both in Russia and
globally.
"Our employees are our greatest asset. To protect the frontline staff
involved in maintaining the safe functioning of our uninterrupted cycle
production facilities, we have put in place special operating procedures and
are proactively undertaking a number of preventative measures to reduce the
risk of the spread of infection. All other employees are already working
remotely. To date there have been no confirmed cases of coronavirus
infection at our facilities, and during the first quarter facilities that
operate on an uninterrupted production cycle were able to increase output
across all key products.
"Thanks to timely maintenance work carried out during the low season and
technical upgrades to our production units, the efficiency of our production
lines has improved, downtime has been reduced and bottlenecks have been
eliminated, which has enabled an increase in the production of fertilizers.
"In addition, we began to ramp up new lines for the production of ammonium
sulphate and sulphuric acid with nameplate capacities of 300 kt and 1,100 kt
per year, respectively. These should further bolster the Company's position
as an integrated producer of fertilizers with high environmental
characteristics.
"Seeing a record increase in demand in the first quarter, we redirected
supplies to our domestic market. As a result, the Russian market's share in
total sales increased to 33%. A significant increase in purchases for spring
field work, which started earlier this year and has been much more intense,
can be attributed to the large increase in agricultural production last
year, which was the result of the introduction of sound government policies
in the agricultural sector and support from fertilizer producers.
"In terms of the global fertilizer market, fertilizer prices began to
recover in the first quarter on the back of seasonal recovery in demand.
Prices also got a boost during this period from a global reduction in supply
due to weak profitability for producers, as well as measures introduced to
counteract the spread of the coronavirus."
Production volumes by type
Production volumes by category
(kt) 1Q 2020 1Q 2019 Chg y/y 4Q 2019 Chg q/q
Phosphate rock 2,669.6 2,637.3 1.2% 2,606.9 2.4%
Nepheline 285.3 290.8 -1.9% 290.1 -1.7%
concentrate
TOTAL 2,955.0 2,928.1 0.9% 2,897.0 2.0%
Phosphate-based fertilizers
DAP/MAP 837.4 812.9 3.0% 771.6 8.5%
NPK 693.4 599.8 15.6% 672.7 3.1%
NPS 209.0 198.3 5.4% 155.3 34.6%
APP 58.7 49.6 18.3% 59.9 -2.0%
MCP 100.3 96.5 4.0% 99.3 1.0%
PKS 30.2 20.5 47.6% 21.5 40.5%
TOTAL fertilizers 1,929.1 1,777.6 8.5% 1,780.3 8.4%
Nitrogen-based fertilizers
AN 181.9 145.3 25.2% 165.8 9.7%
Urea 435.5 422.2 3.1% 412.8 5.5%
TOTAL fertilizers 617.5 567.6 8.8% 578.6 6.7%
Other products
STPP 25.9 26.2 -1.2% 25.6 1.2%
Other 24.2 22.1 9.7% 19.0 27.7%
TOTAL other products 50.1 48.3 3.8% 44.6 12.5%
Feedstocks
Ammonia 507.6 491.6 3.2% 460.1 10.3%
Phosphoric acid 695.8 673.9 3.3% 663.9 4.8%
Sulphuric acid 1,679.9 1,498.4 12.1% 1,512.2 11.1%
Ammonium sulphate 67.2 0.0 - 0.0 -
TOTAL feedstocks 2,950.5 2,663.9 10.8% 2,636.3 11.9%
In 1Q 2020, production in the phosphate and nitrogen segments increased by
8.5% and 8.8% year-on-year, respectively, thanks to the completion of
upgrades to key production equipment at our plants in Cherepovets and
Balakovo. The majority of work focussed on refurbishment of phosphoric acid
production systems, namely, increasing the depth of processing of phosphate
rock (improving the P2O5 recovery ratio) and making it possible to use
different concentrations of phosphoric acid, which helped to optimise
production time while maintaining fertilizer quality. An additional growth
factor was the completion of some overhauls at the end of last year, which
increased the productivity of current fertilizer production lines.
Ammonia production in 1Q 2020 amounted to 507.6 kt, an increase of 10.3%
from 4Q 2019 due to the completion of planned maintenance at the end of the
year.
Sulphuric acid production increased by 12.1% year-on-year and by 11.1%
quarter-on-quarter to 1,679.9 kt due to the completion a new sulphuric acid
production line in Cherepovets and the ramp-up of production. With a
nameplate capacity of up to 1,100 kt per year, the new line should increase
the Company's self-sufficiency in this feedstock.
As part of the strategy to 2025, PhosAgro launched and ramped up its
production line for synthetic ammonium sulphate in Cherepovets to full
capacity (up to 300 kt per year), which will enable the enterprise to reduce
its purchases of ammonium sulphate - a feedstock for the production of
NPK(S) grades of sulphates - by more than 50%.
Sales volumes by type
Sales volumes by category
(kt) 1Q 2020 1Q 2019 Chg y/y 4Q 2019 Chg q/q
Phosphate rock 791.0 825.7 -4.2% 857.9 -7.8%
Nepheline 284.7 296.0 -3.8% 295.0 -3.5%
concentrate
TOTAL 1,075.7 1,121.7 -4.1% 1,152.9 -6.7%
Phosphate-based fertilizers
DAP/MAP 924.9 944.3 -2.1% 694.8 33.1%
NPK 781.6 655.9 19.2% 670.2 16.6%
NPS 199.4 169.5 17.6% 177.6 12.3%
APP 63.1 61.8 2.1% 64.9 -2.8%
MCP 97.4 87.3 11.5% 122.9 -20.8%
PKS 20.9 10.2 104.8% 8.1 157.9%
TOTAL fertilizers 2,087.2 1,929.0 8.2% 1,738.5 20.1%
Nitrogen-based fertilizers
AN 236.0 170.6 38.4% 115.0 105.3%
Urea 466.8 446.8 4.5% 422.0 10.6%
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