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OJSC PHOSAGRO OJSC PhosAgro: PhosAgro Publishes 2Q and 1H 2021 Financial Results

Transparency directive : regulatory news

06/08/2021 16:30

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

RUB mln

2Q
2021

2Q
2020

Chng
%

1H

2021

1H

2020

Chng
%

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
2021

2Q
2020

Chng
%

1H 2021

1H 2020

Chng
%

 

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%

 

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

RUB mln

2Q
2021

2Q
2020

Chng
%

1H

2021

1H

2020

Chng
%

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
30 June

Three months ended
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

Other financial assets

302

311

 

 

 

Current assets

89,286

67,630

 

 

 

Total assets

351,357

320,018

 

 

 

Equity

 

 

Share capital

372

372

Share premium

7,494

7,494

Retained earnings

117,668

90,757

Actuarial losses

(717)

(717)

Foreign currency translation reserve

9,077

9,581

 

 

 

 

Equity attributable to shareholders of the Parent

133,894

107,487

Equity attributable to non-controlling interests

114

129

 

 

 

Total equity

134,008

107,616

 

 

 

Liabilities

 

 

Loans and borrowings

112,194

103,824

Deferred tax liabilities

11,778

11,578

Lease liabilities

3,545

4,268

Defined benefit obligations

931

945

 

 

 

Non-current liabilities

128,448

120,615

 

 

 

 

 

 

Loans and borrowings

35,667

55,316

Trade and other payables

42,510

29,869

Income tax payable

4,371

1,000

VAT and other taxes payable

4,307

3,675

Lease liabilities

2,046

1,927

 

 

 

Current liabilities

88,901

91,787

 

 

 

Total equity and liabilities

351,357

320,018

 

 

 

 

 

Six months ended 30 June

RUB million

2021

2020

 

 

 

Cash flows from operating activities

 

 

Operating profit

59,278

26,218

Adjustments for:

 

 

Depreciation and amortisation

13,816

13,646

Loss on disposal of property, plant and equipment and intangible assets

188

41

Operating profit before changes in working capital and provisions

73,282

39,905

(Increase)/decrease in inventories, catalysts and non-current spare parts

(2,154)

1,200

(Increase)/decrease in trade and other receivables

(3,383)

867

(Decrease)/increase in trade and other payables

(459)

1,452

Cash flows from operations before income taxes and interest paid

67,286

43,424

Income tax paid

(8,862)

(2,200)

Finance costs paid

(2,512)

(2,211)

 

 

 

 

 

 

Cash flows from operating activities

55,912

39,013

 

 

 

 

 

 

Cash flows from investing activities

 

 

Acquisition of property, plant and equipment and intangible assets

(21,073)

(18,552)

Borrowing cost capitalised paid

(618)

(583)

Other

(4)

396

 

 

 

 

 

 

Cash flows used in investing activities

(21,695)

(18,739)

 

 

 

 

 

 

Cash flows from financing activities

 

 

Proceeds from borrowings, net of transaction costs

15,787

43,647

Repayment of borrowings

(23,246)

(55,881)

Dividends paid to shareholders of the Parent

(6,119)

(8,843)

Dividend paid to non-controlling interests

-

(30)

Lease payments

(954)

(823)

 

 

 

 

 

 

Cash flows used in financing activities

(14,532)

(21,930)

 

 

 

 

 

 

Net increase/(decrease) in cash and cash equivalents

19,685

(1,656)

 

 

 

 

 

 

Cash and cash equivalents at 1 January

8,460

8,236

Effect of exchange rates fluctuations

(1,036)

1,213

 

 

 

 

 

 

Cash and cash equivalents at 30 June

27,109

7,793

 

 

 

 



ISIN: US71922G2093
Category Code: IR
TIDM: PHOR
LEI Code: 25340053KRUNNYUWF472
OAM Categories: 2.2. Inside information
Sequence No.: 119447
EQS News ID: 1224758

 
End of Announcement EQS News Service

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