DJ OJSC PhosAgro: PhosAgro Publishes 2Q and 1H 2021 Financial Results
OJSC PhosAgro (PHOR) OJSC PhosAgro: PhosAgro Publishes 2Q and 1H 2021 Financial Results 06-Aug-2021 / 17:30 MSK Dissemination of a Regulatory Announcement that contains inside information according to REGULATION (EU) No 596/2014 (MAR), transmitted by EQS Group. The issuer is solely responsible for the content of this announcement. ----------------------------------------------------------------------------------------------------------------------- For Immediate Release 6 August 2021
PhosAgro Publishes 2Q and 1H 2021 Financial Results
Moscow - PhosAgro ("the Company") (Moscow Exchange, LSE: PHOR), one of the world's leading vertically integrated phosphate-based fertilizer producers, today announced its consolidated IFRS financial results for the second quarter (2Q) and first half (1H) of 2021.
2Q and 1H 2021 highlights
Revenue for 2Q 2021 increased by 48.0% year-on-year to RUB 88.7 billion (USD 1.2 billion).
Revenue for 1H 2021 increased by 42.2% year-on-year to RUB 176.3 billion (USD 2.4 billion). The growth was largely a result of implementation of the Company's long-term development strategy, which has enabled the launch of new production capacities and improved the efficiency of existing facilities. The rise in revenue was also driven by an improvement in the Company's sales structure in favour of high-margin fertilizers at a time of higher average sales prices in global markets.
In 2Q 2021, EBITDA more than doubled year-on-year to RUB 38.8 billion (USD 523 million). Upgrades to production assets, improved efficiency of the main production lines and an increase self-sufficiency of key feedstocks enabled the Company to achieve an EBITDA margin for the quarter of 43.7%.
In 1H 2021, EBITDA increased by 83.4% year-on-year to RUB 73.1 billion (USD 984 million). EBITDA margin for the period rose to 41.5%.
In 2Q 2021, free cash flow amounted to RUB 19.0 billion (USD 256 million), a more than nine times higher year-on-year, driven by working capital optimisation.
In 1H 2021, free cash flow amounted to RUB 34.2 billion (USD 461 million), up 68.8% year-on-year.
In 2Q and 1H 2021, adjusted net profit amounted to RUB 24.1 billion (USD 325 million) and RUB 45.3 billion (USD 610 million), respectively. These results for 2Q and 1H 2021 are four times and two times higher year-on-year, respectively.
As of 30 June 2021, net debt had decreased by RUB 30.5 billion since the end of 2020, amounting to RUB 126.3 billion (USD 1.7 billion). The net debt/EBITDA ratio had dropped to 1.07x as of the end of 2Q 2021.
Financial and operational highlights
Financial highlights
2Q 2Q Chng 1H 1H Chng
RUB mln 2021 2020 % %
2021 2020
Revenue 88,682 59,938 48.0% 176,261 123,996 42.2%
EBITDA* 38,785 19,126 102.8% 73,094 39,864 83.4%
EBITDA margin 43.7% 31.9% 11.8 pp 41.5% 32.1% 9.3 pp
Net profit 30,308 20,879 45.2% 48,652 5,291 819.5%
Adj. net profit** 24,099 5,646 326.8% 45,328 22,237 103.8%
Free cash flow 19,002 2,021 840.2% 34,217 20,274 68.8%
30.06.2021 31.12.2021
Net debt 126,343 156,875
ND/LTM EBITDA 1.07x 1.86x
RUB/USD rates: average 2Q 2021 rate: 74.2; average 2Q 2020 rate: 72.4; as of 30 June 2021: 72.4; as of 31 December 2020: 73.9.
* EBITDA is calculated as operating profit adjusted for depreciation and amortisation.
** Net profit as reported minus FX gain or loss.
Commenting on the Company's financial results, PhosAgro CEO Andrey Guryev said:
"The second quarter of 2021 was one of the most successful in the Company's history. Thanks to the modernisation of production units, we were able to increase production of phosphoric acid despite brining forward a portion of our planned maintenance from the third quarter. This growth enabled us to maintain a high level of production of phosphate-based fertilizers, thus satisfying demand in key markets.
"In the context of a favourable global market environment for agricultural products and fertilizers, this enabled us to increase profitability considerably. As a result, revenue for the quarter approached RUB 89 billion, an increase of 48%, and EBITDA more than doubled to RUB 38.8 billion, our best result since going public. At the same time, EBITDA margin was nearly 44%.
"High levels of efficiency, predictable capex and effective management of working capital enabled the Company to generate free cash flow in the second quarter of more than RUB 19 billion.
"As a result, the Group's net debt at the end of the quarter had decreased to RUB 126 billion, and the net debt/ EBITDA ratio had dropped to 1.07x, which is in line with the Company's financial policy and reflects a comfortable long-term position.
"To wrap up, I would like to emphasise once again that the Company's strong operating and financial performance and balanced long-term development programme have enabled us to maintain a low level of debt and protect the Group's long-term advantage in global markets."
2Q 2021 market conditions
Prices for phosphate-based fertilizers continued to rise in most markets in 2Q 2021, supported by high prices for agricultural products, continued demand in the US and European domestic markets, and the development of seasonal demand in Latin American markets - Brazil in particular.
Increased subsidies in India boosted import demand at the start of the quarter, which helped absorb the bulk of DAP exports from China. A sharp rise in global prices for potash as a result of production cuts in the United States and the introduction of sectoral sanctions on Belarusian products helped drive greater demand and higher prices for NPK fertilizers.
Prices for nitrogen-based fertilizers also trended upward on the back of strong demand from markets in Central and South America and the start of regular seasonal purchases of urea in India.
Global prices for commercial ammonia continued to rise, as demand outstripped supply in the wake of unplanned shutdowns in Central America and the Middle East. The average price for commercial ammonia in 2Q 2021 was USD 464 per tonne (FOB Yuzhny), up from USD 199 per tonne (FOB) in 2Q 2020.
Global sulphur prices remained high at USD 177 per tonne (FOB Black Sea) in 2Q 2021.
Prices for phosphate raw materials also continued to rise in line with prices for phosphate-based fertilizers. Contract prices for phosphoric acid supplies to India in 2Q 2021 were agreed at USD 998 per tonne of 100% P2O5 (CFR India), which was USD 203 per tonne higher than in 1Q 2021 and USD 391 per tonne higher than in 2Q 2020. Phosphate rock prices (68%-72% BPL) in 2Q 2021 were USD 85-155 per tonne (FOB Morocco), compared with USD 70-105 per tonne (FOB Morocco) in 2Q 2020.
2Q 2021 financial performance
In 2Q 2021, the Company's revenue increased by 48.0% year-on-year to RUB 88.7 billion (USD 1.2 billion). The main growth drivers were the rise in global prices for phosphate- and nitrogen-based fertilizers amid the depreciation of the rouble against the US dollar. At the same time, the sales volume of nitrogen-based fertilizers for the quarter increased by 3.3% year-on-year.
EBITDA for 2Q 2021 increased by 102.8% year-on-year to a record RUB 38.8 billion (USD 523 million). Despite the significant increase in prices for key feedstocks, EBITDA margin amounted to 43.7%. -- EBITDA in the phosphate-based fertilizers segment amounted to RUB 29.7 billion (USD 400 million), a nearly twofold
increase year-on-year. Higher profits were recorded for all key products, mainly due to farmers' record-high
purchasing power on the back of high prices for agricultural products. -- EBITDA in the nitrogen-based fertilizer segment amounted to RUB 9.1 billion (USD 122 million), was twice the result
for 2Q 2020.
Net profit (defined as net profit excluding non-cash FX gain/loss and other non-cash factors) for 2Q 2021 more than quadrupled year-on-year to RUB 24.1 billion (USD 325 million).
In 2Q 2021, the Company's free cash flow amounted to RUB 19.0 billion (USD 256 million). The main source of cash flow was an increase in sales income due to higher average global prices, an improvement in the structure of finished products and effective management of working capital, which balanced cash flows for capital expenditure.
Capex in 2Q 2021 amounted to RUB 11.2 billion (USD 150 million). The Company invested primarily in the construction of its large industrial complex at its Volkhov site, where the first production lines have already been launched with a design capacity of more than 800 thousand tonnes of MAP per year. Once the project is complete, the total capacity of the new complex will reach almost 900 thousand tonnes.
As of 30 June 2021, the net debt/EBITDA ratio was 1.07x. PhosAgro was able to decrease its debt burden thanks to higher profits along with effective cost controls. Net debt as of 30 June 2021 was RUB 126.3 billion (USD 1.7 billion).
Cost of sales
RUB million or % 2Q 2Q Chng 1H 2021 1H 2020 Chng
2021 2020 % %
Amortisation 5,578 5,997 -7.0% 12,338 12,223 0.9%
Materials and services 10,378 9,510 9.1% 22,522 20,320 10.8%
Phosphate rock transport 1,953 1,976 -1.2% 4,237 4,236 0.0%
Repair expenses 2,748 2,351 16.9% 5,637 4,767 18.3%
Drilling and blasting costs 822 720 14.2% 1,807 1,489 21.4%
Other materials and services 4,855 4,463 8.8% 10,841 9,828 10.3%
Raw materials 12,946 8,267 56.6% 24,737 18,303 35.2%
Ammonia 2,798 1,076 160.0% 4,879 2,267 115.2%
(MORE TO FOLLOW) Dow Jones Newswires
August 06, 2021 10:30 ET (14:30 GMT)
DJ OJSC PhosAgro: PhosAgro Publishes 2Q and 1H 2021 -2-
Sulphur and sulph. acid 4,016 1,063 277.8% 6,062 2,258 168.5% Potassium 3,038 2,820 7.7% 6,299 6,026 4.5% Natural gas 2,886 3,124 -7.6% 6,876 6,921 -0.7% Ammonium sulphate 208 184 13.0% 621 831 -25.3% Salaries and social contributions 3,325 3,527 -5.7% 7,559 7,114 6.3% Electricity 1,410 1,530 -7.8% 3,211 3,236 -0.8% Fuel 1,217 903 34.8% 2,723 2,047 33.0% Products for resale 1,980 1,666 18.8% 5,293 4,755 11.3% Customs duties 396 204 94.1% 1,138 564 101.8% Freight, port and stevedoring expenses 6,327 4,564 38.6% 12,817 9,064 41.4% Russian Railways' tariffs and operators' fees 2,475 2,935 -15.7% 5,599 5,917 -5.4% Other 286 184 55.4% 589 406 45.1% Total 46,318 39,287 17.9% 98,526 83,949 17.4%
Cost of sales in 2Q 2021 increased by 17.9% year-on-year largely due to a considerable increase in feedstock prices: -- Expenses for materials and services increased by 9.1% year-on-year to RUB 10.4 billion (USD 140 million) due to an
increase in the amount of planned repairs and a slight increase in costs associated with the extraction of
phosphorus ore. -- Expenses for raw materials increased by 56.6% year-on-year to RUB 12.9 billion (USD 174 million):
- a 160.0% increase in ammonia costs to RUB 2.8 billion (USD 38 million) as a result of higher prices for this
feedstock;
- a 277.8% increase in expenses for sulphur and sulphuric acid to RUB 4.0 billion (USD 54 million) as a result of
higher global prices for sulphur;
- a 7.6% decrease in natural gas costs to RUB 2.9 billion (USD 39 million) due to lower sales of fertilizer
grades high in ammonia. -- Spending on customs duties increased by 94.1% year-on-year to RUB 0.4 billion due to an increase in the share of
exports in the Company's sales structure. -- Freight, port and stevedoring expenses increased by 38.6% to RUB 6.3 billion (USD 85 million) as a result of higher
transportation tariffs and the devaluation of the rouble against the dollar at the beginning of the year.
Administrative and selling expenses
2Q 2Q Chng 1H 1H Chng
RUB mln 2021 2020 % %
2021 2020
Administrative expenses 4,997 4,150 20.4% 9,889 8,802 12.3%
Salaries and social contributions 3,281 2,646 24.0% 6,442 5,728 12.5%
Professional services 414 534 -22.5% 838 953 -12.1%
Amortisation 336 342 -1.8% 692 678 2.1%
Other 966 628 53.8% 1,917 1,443 32.8%
Selling and marketing expenses 1,684 1,402 20.1% 3,284 3,020 8.7%
Salaries and social contributions 936 713 31.3% 1,910 1,582 20.7%
Materials and services 353 336 5.1% 588 693 -15.2%
Amortisation 395 353 11.9% 786 745 5.5%
Administrative and selling expenses in 2Q 2021 increased by 20.3% year-on-year to RUB 6.7 billion (USD 90 million). The main drivers behind this increase were changes in payroll and social contributions associated with the indexation of employee salaries, compensation payments and changes in exchange rates.
Market outlook
The expected seasonal activity in the main fertilizer markets in Brazil and India in 3Q combined with the projected decrease in exports from China in order to supply the domestic market will help support prices.
Conference call and webcast:
PhosAgro will hold a conference call and webcast today at 16:00 London time (18:00 Moscow; 11:00 New York).
The call will be held in English, with simultaneous translation into Russian on a separate line.
Webcast link:
https://www.webcast-eqs.com/phosagro20210806
Participant dial-in numbers:
Russia:
+7 495 213 1767 8 800 500 9283
United Kingdom:
+44 (0) 330 336 9125 0800 358 6377
United States:
+1 323-334-2082
866-575-6539
Conference ID numbers:
In English: 1398933
In Russian: 1846165
Contacts
PJSC PhosAgro
Andrey Serov, Head of the Investor Relations Department
+7 495 231 2747 ext. ext. 2183
ir@phosagro.ru
Timur Belov, Press Officer
+7 495 231 2747 ext. 2652
pr@phosagro.ru
EM
Sam VanDerlip
vanderlip@em-comms.com
+44 207 002 7859
About PhosAgro
PhosAgro (www.phosagro.com) 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 102 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.
Six months ended Three months ended
30 June 30 June
RUB million 2021 2020 2021 2020
Revenues 176,261 123,996 88,682 59,938
Cost of Group products sold (93,233) (79,194) (44,338) (37,621)
Cost of products for resale (5,293) (4,755) (1,980) (1,666)
Gross profit 77,735 40,047 42,364 20,651
Administrative and selling overhead expenses (13,173) (11,822) (6,681) (5,552)
Taxes, other than income tax, net (2,997) (1,583) (1,479) (709)
Other expenses, net (1,521) (1,445) (864) (741)
Foreign exchange (loss)/gain from operating activities, net (766) 1,021 (864) (1,215)
Operating profit 59,278 26,218 32,476 12,434
Finance income 194 353 110 88
Finance costs (2,477) (2,873) (1,195) (1,435)
Foreign exchange gain/(loss) from financing activities, net 3,324 (16,946) 6,209 15,233
COVID-19 related expenses (218) (289) (99) (289)
Profit before tax 60,101 6,463 37,501 26,031
Income tax expense (11,449) (1,172) (7,193) (5,152)
Profit for the period 48,652 5,291 30,308 20,879
Attributable to:
Non-controlling interests* (15) 7 (6) 8
Shareholders of the Parent 48,667 5,284 30,314 20,871
Basic and diluted earnings per share (in RUB) 376 41 234 161
Other comprehensive (loss)/income
Items that may be reclassified subsequently
to profit or loss
Foreign currency translation difference (504) 1,534 (718) (1,052)
Other comprehensive (loss)/income for the period (504) 1,534 (718) (1,052)
Total comprehensive income for the period 48,148 6,825 29,590 19,827
Attributable to:
Non-controlling interests* (15) 7 (6) 8
Shareholders of the Parent 48,163 6,818 29,596 19,819
RUB million 30 June 2021 31 December 2020
Assets
Property, plant and equipment 226,404 220,031
Advances issued for property, plant and equipment 10,239 7,835
Deferred tax assets 8,459 7,462
Right-of-use assets 6,801 7,335
Non-current spare parts 4,526 4,308
Catalysts 2,536 2,292
Intangible assets 1,576 1,621
Other non-current assets 948 948
Investments in associates 582 556
Non-current assets 262,071 252,388
Trade and other receivables 20,945 17,515
Inventories 31,809 30,580
Cash and cash equivalents 27,109 8,460
VAT and other taxes receivable 8,658 10,285
Income tax receivable 463 479
(MORE TO FOLLOW) Dow Jones Newswires
August 06, 2021 10:30 ET (14:30 GMT)
