DJ 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 Dissemination of a Regulatory Announcement that contains inside information in accordance with the Market Abuse Regulation (MAR), transmitted by EQS Group. The issuer is solely responsible for the content of this announcement.
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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 1H Chng
2022 2021 %
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 1H Chng
2022 2021 %
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 1H Chng
2022 2021 %
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 toa reduction in domestic production capacity and an increase in import demand and higher prices for both feedstocksand 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 P[2]O[5] 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 P[2]O[5] 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 P[2]O[5] 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
31
30 June December
RUB million Note 2022 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
Six months ended
30 June
RUB million Note 2022 2021
Cash flows from operating activities
Operating profit 120,174 59,278
Adjustments for:
6,
Depreciation and amortisation 7 15,374 13,816
Loss on disposal of property, plant and equipment and other
non-current assets 9 221 188
Operating profit before changes in working capital and provisions 135,769 73,282
Increase in inventories, catalysts and non-current spare parts (7,162) (2,154)
Decrease/(increase) in trade and other receivables* 19,663 (3,383)
Decrease in trade and other payables* (14,116) (459)
Cash flows from operations before income taxes and interest paid 134,154 67,286
Income tax paid (24,599) (8,862)
Finance costs paid (2,987) (2,512)
Cash flows from operating activities 106,568 55,912
Cash flows from investing activities
Cash and cash equivalents disposed as a result of loss of control
over subsidiaries 26 (36,729) -
Acquisition of property, plant and equipment and intangible assets (28,423) (21,073)
Loans issued 15 (3,130) -
Proceeds from disposal of financial assets measured at fair value
through profit or loss 14 1,778 -
Advances issued for right-of-use assets (419) -
Borrowing cost capitalised paid 12 (465) (618)
Finance income received 1,611 1
Other 79 (5)
Cash flows used in investing activities (65,698) (21,695)
Cash flows from financing activities
Proceeds from borrowings, net of transaction costs 20 29,462 15,787
Repayment of borrowings 20 (13,798) (23,246)
Dividends paid to shareholders of the Parent - (6,119)
Lease payments 21 (854) (954)
Cash flows from/(used in) financing activities 14,810 (14,532)
Net increase in cash and cash equivalents 55,680 19,685
Cash and cash equivalents at 1 January 21,710 8,460
Effect of exchange rates fluctuations (5,463) (1,036)
Cash and cash equivalents at 30 June 18 71,927 27,109
exchange differences from operating activities
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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 =------------------------------------------------------------------------------------
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