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 interim condensed consolidated IFRS financial results for the three and six months ended 30 June 2017.
Revenue in 2Q 2017 decreased by 3% year-on-year to RUB 44.7 billion (USD 783 mln), resulting in RUB 89.1 billion (USD 1.54 billion) revenue for the first half of the year. EBITDA for 2Q 2017 was RUB 12.2 billion (USD 214 mln), with an EBITDA margin of 27%. EBITDA for 1H 2017 was RUB 24.9 billion (USD 429 mln). Net income (adjusted for non-cash FX items) for 2Q 2017 decreased by 33% year-on-year to RUB 6.1 billion (USD 106 mln), bringing adjusted net income for 1H 2017 to RUB 11.7 billion (USD 202 mln).
Commenting on the results, PhosAgro CEO Andrey Guryev said:
“I am very pleased that PhosAgro has maintained EBITDA almost unchanged quarter-on-quarter, despite further appreciation of the ruble and some weaking in phosphate and nitrogen prices in the second quarter. This is primarily thanks to our fundamental advantages, including production and sales flexibility and organic growth through debottlenecking and modernisation.
“Our continued focus on cost control (cost of goods sold net of D&A per tonne of production was down 5% year-on-year) and decrease in capex as we are completing key projects enabled us to generate RUB 3.6 billion (USD 63 mln) of free cash flow in the quarter, meaning that the Board was able to recommend dividends of RUB 8 per GDR.
“In terms of operations, we further increased downstream phosphate-based fertilizer production by almost 20% year-on-year in 2Q, on the back of continued modernisation and debottlenecking. Phosphate rock production grew by more than 18% year-on-year, and we are well on track to deliver on the goals of our strategy to 2020. Looking at our sales mix, we achieved a 20% year-on-year increase in sales to the priority Russian market, while more than doubling volumes to Latin America and recording an 18% year-on-year increase in sales of phosphates to Europe.
“During the quarter we saw additional pressure on phosphate prices from higher exports of phosphates from China and the MENA region (in particular as a result of the commissioning of a new unit in Morocco in March), which coincided with a delay to the start of the high season in India.
“Looking ahead to the remainder of 2017, as application season comes to an end in Russia, and Europe and the US are approaching low season, which together with the ramp up of new capacities in MENA region might put additional pressure on the prices. However, we may see a further rise in phosphate prices this year with the onset of the winter season in Brazil and India and subsequently the spring season in Europe and the US.
“In closing, I want to reiterate that our two key investment projects – the construction of new ammonia and urea units – are both on schedule and due to be fully operational in autumn.”