MOSCOW , May 28, 2024 (press release) –
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 interim condensed financial results for the three months ended 31st March 2024.
1Q 2024 highlights
Production of agrochemicals in 1Q 2024 increased by 6.9% year-on-year to 3.01 million tonnes. This growth was driven mainly by a 9.2% increase in the production of phosphate-based fertilizers and feed phosphates, to 2.26 million tonnes.
Total fertilizer sales in 1Q 2024 increased by 11.4% year-on-year to over 3 million tonnes. At the same time, sales of phosphate-based fertilizers and feed phosphates rose 16%.
Revenue for 1Q 2024 amounted to RUB 119.3 billion (USD 1.31 billion), an increase of 2.7% year-on-year amid increased production and sales.
The Company’s EBITDA was RUB 39.1 billion (USD 0.43 billion) in 1Q 2024, down 29.5% year-on-year.
In 1Q 2024, the Company’s free cash flow amounted to RUB 1.8 billion (USD 18 million), having entered positive territory in comparison with the previous quarter.
Net debt as of 31 March 2024 amounted to RUB 263.8 billion (USD 2.86 billion), and the net debt/EBITDA ratio at the end of the quarter was a comfortable 1.58x.
Financial and operating highlights:
| RUB mln. | 1Q 2024 | 1Q 2023 | Change, % |
|---|---|---|---|
| RUB mln. Revenue | 1Q 2024 119,272 | 1Q 2023 116,178 | Change, % 2.7% |
| RUB mln. EBITDA * | 1Q 2024 39,060 | 1Q 2023 55,395 | Change, % -29.5% |
| RUB mln. EBITDA margin | 1Q 2024 32.7% | 1Q 2023 47.7% | Change, % |
| RUB mln. Adj. EBITDA** | 1Q 2024 37,876 | 1Q 2023 48,978 | Change, % -22.7% |
| RUB mln. Net profit | 1Q 2024 18,754 | 1Q 2023 28,059 | Change, % -33.2% |
| RUB mln. Adj. net profit*** | 1Q 2024 21,486 | 1Q 2023 33,897 | Change, % -36.6% |
| RUB mln. Free cash flow | 1Q 2024 1,801 | 1Q 2023 43,419 | Change, % -95.9% |
| RUB mln. | 1Q 2024 31.03.2024 | 1Q 2023 31.12.2023 | |
| RUB mln. Net debt | 31.03.2024 263,839 | 31.12.2023 223,207 | |
| RUB mln. ND/LTM EBITDA | 31.03.2024 1.58x | 31.12.2023 1.22x |
| kt | 1Q 2024 | 1Q 2023 | Change, % |
|---|---|---|---|
| kt Phosphate-based fertilizers and feed phosphates | 1Q 2024 2,260.3 | 1Q 2023 2,070.3 | Change, % 9.2% |
| kt Nitrogen-based fertilizers | 1Q 2024 672.7 | 1Q 2023 675.6 | Change, % -0.4% |
| kt Other products | 1Q 2024 71.5 | 1Q 2023 65.9 | Change, % 8.5% |
| kt TOTAL agrochemicals | 1Q 2024 3,004.5 | 1Q 2023 2,811.8 | Change, % 6.9% |
| kt | 1Q 2024 | 1Q 2023 | Change, % |
|---|---|---|---|
| kt Phosphate-based fertilizers and feed phosphates | 1Q 2024 2,338.5 | 1Q 2023 2,016.7 | Change, % 16.0% |
| kt Nitrogen-based fertilizers | 1Q 2024 676.8 | 1Q 2023 686.6 | Change, % -1.4% |
| kt Other products | 1Q 2024 72.5 | 1Q 2023 69.2 | Change, % 4.8% |
| kt TOTAL agrochemicals | 1Q 2024 3,087.8 | 1Q 2023 2,772.5 | Change, % 11.4% |
RUB/USD exchange rates: average for 1Q 2024: 90.7471; average for 1Q 2023: 72.7738; as of 31 March 2024: 92.3660; as of 31 December 2023: 89.6883.
* EBITDA is calculated as operating profit adjusted for depreciation and amortisation.
** Adj. EBITDA is calculated as EBITDA adjusted for FX differences from operating activities.
*** Adj. net profit is net profit as reported minus FX gain or loss.
The Company’s 1Q 2024 revenue increased year-on-year despite lower average sales prices. Revenue growth was mainly associated with increased production and sales of phosphate-based fertilizers, made possible thanks to the completion of investment projects as part of the Company’s long-term development strategy.
The Company’s EBITDA for the quarter exceeded RUB 39 billion. The year-on-year decrease in EBITDA was the result of lower fertilizer prices in global markets and the payment of export duties introduced in 2023.
At the same time, EBITDA margin in 1Q 2024 was 32.7%. This level of profitability was driven by increased production of high-margin fertilizers and basic feedstocks as well as the Company’s flexible sales policy.
In 1Q 2024, free cash flow entered positive territory, amounting to around RUB 2 billion. Nevertheless, free cash flow faced pressure during the quarter from factors such as a higher level of capital investments compared with 2023, the payment of customs duties on exports and the use of cash for working capital linked to the replenishment of fertilizer stocks in the trader’s warehouses before the start of the spring season and increased sales to Latin America.
Thanks to its strong financial position, the Company was able to service all its debt obligations, including those denominated in foreign currency, on time and in full. As of the end of 1Q 2024, the Company’s debt position remained at a comfortable level. As of 31 March 2024, net debt amounted to RUB 263.8 billion, and the net debt/EBITDA ratio was 1.58x.
Two of the major factors that increased net debt for the period were cash payments in January 2024 and the use of RUB 10.3 billion in cash for working capital.
Fertilizer market in 1Q 2024
As is typically the case, the beginning of the year in the global fertilizer market saw increased seasonal demand in the domestic markets of China, Russia, Europe and North America. Residual demand in India also provided strong support in fertilizer markets.
The market for phosphate-based fertilizers remained largely balanced. The off-season in Latin America and in most Asian markets was offset by China’s ongoing export restrictions in favour of supplying the domestic market. As a result, prices for the main types of phosphate-based fertilizers in 1Q 2024 remained stable, above USD 500 per tonne (FOB Baltic). The average price for MAP was USD 514 per tonne (FOB Baltic); for DAP, USD 535 per tonne (FOB Baltic).
The market for nitrogen-based fertilizers enjoyed stable seasonal demand from Western markets, including Europe as well as Central and North America. A major tender in India at the beginning of the quarter resulted in stable supplies from producers in Russia and the Middle East. There were no supplies from China, as the country focused on its domestic market. The average price for urea (prilled) in 1Q 2024 was USD 293 per tonne (FOB Baltic); for ammonium nitrate, USD 224 per tonne (FOB Baltic).
Outlook for 2Q 2024
Historically, the start of the second quarter has seen the end of seasonal demand in markets in the Northern Hemisphere alongside price corrections. The easing of export restrictions in China is another factor putting pressure on prices. In late May and early June, however, demand from markets in Latin America and South Asia (India, Pakistan, Bangladesh) is expected to intensify, which should stabilize prices in the global market as a whole. Low carryover stocks in key markets, including Brazil and India (for phosphate-based fertilizers), are an additional factor that will drive increased fertilizer demand and higher prices.
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