Acron Group's Commercial Output Up 3% in H1 2020

17 July 2020

Acron Group's Commercial Output Up 3% in H1 2020

Group's consolidated output (including operating results for Acron, Dorogobuzh and North-Western Phosphorous Company)

Product, '000 t	6M 2020	6M 2019	YOY, %
MINERAL FERTILISERS
Ammonia	1,374	1,362	0.9
Incl. in-house consumption	1,306	1,189
Nitrogen fertilisers, including	2,442	2,561	-4.7
Incl. in-house consumption	403	577
AN	1,227	1,072	14.4
Incl. in-house consumption	135	219
Urea	568	631	-10.1
Incl. in-house consumption	269	358
UAN	648	858	-24.5
Complex fertilisers, including	1,140	1,056	8.0
Incl. in-house consumption	16	15
NPK	1,080	998	8.2
Incl. in-house consumption	16	15
Bulk blends	60	58	3.7
Total commercial output for Mineral Fertilisers	3,231	3,197	1.1
INDUSTRIAL PRODUCTS
Organic compounds, including	187	242	-22.7
Incl. in-house consumption	94	125
Methanol	44	51	-13.6
Incl. in-house consumption	35	45
Formalin	67	87	-22.8
Incl. in-house consumption	58	79
Urea-formaldehyde resins	75	104	-27.2
Incl. in-house consumption	1	1
Non-organic compounds, including:	493	399	23.5
Low-density and technical-grade AN	156	93	67.2
Industrial urea	66	60	10.6
Calcium carbonate	243	217	11.8
Liquid carbon dioxide	24	25	-2.6
Argon	3	4	-4.5
Total commercial output for Industrial Products	585	516	13.4
PHOSPHATE INPUTS
Apatite concentrate	538	482	11.5
Incl. in-house consumption	433	393
Total commercial output for Apatite Concentrate	105	90	17.2
TOTAL COMMERCIAL OUTPUT	3,921	3,803	3.1

Note: Commercial output is output less in-house consumption

Comments from Alexander Popov, Chairman of Acron's Board of Directors:

"In H1 2020, Acron Group beat its previous record for commercial output. In the reporting period, the Group produced 3,921,000 tonnes of commercial products up 3% year-on-year. Mineral fertiliser output was up 1% to 3,231,000 tonnes.

"Ammonia output increased 1% to 1,374,000 tonnes, and ammonia processed into finished products went up 10% to a record 1,306,000 tonnes. We plan to further increase our ammonia output by the end of 2020 by upgrading the Ammonia-4 unit, which will expand its capacity to 900,000 tonnes per annum. In the reporting period, agricultural-grade AN output was up 14% to 1,227,000 tonnes. Technical-grade AN output increased 67% to 156,000 tonnes, driven by the Group's efforts to promote this niche product.

"UAN output was down 25% to 648,000 tonnes, and this reflects the pricing environment, which varied by quarter. Prices were low in Q1 2020, so we dialled back UAN output to 265,000 tonnes. However, in Q2 2020, UAN prices went up due to strong demand and we reacted by increasing UAN output to 383,000 tonnes, which is close to our maximum.

"In May 2020, the Acron facility in Veliky Novgorod launched a new granulated urea unit, improving production chain flexibility and introducing a new product, granulated urea. Since the unit's commissioning, Acron has produced 34,000 tonnes of granulated urea.

"NPK output was up 8% to 1,140,000 tonnes in response to strong demand and stable supplies of phosphate feedstock - apatite concentrate - from the Group's Oleniy Ruchey mine. In the reporting period, apatite concentrate output was up 12% to 538,000 tonnes".

Market Trends

In Q2 2020, global urea prices dropped as expected for the low-demand season. Prices found support in early June 2020, however, and industry experts expect a smooth recovery in the coming months due to strong demand in India and Brazil. The market environment will further improve when demand heats up in Q4 2020 in the Northern Hemisphere.

Urea prices are a benchmark for other nitrogen fertilisers, and AN prices followed that benchmark down in Q2 2020. UAN prices, on the contrary, were up, supported by strong demand in the United States, a key market for this product.

In Q2 2020, NPK prices remained relatively stable, supported by a similar pricing trend for the basic product basket. The prices remained flat in the phosphate segment, and a decrease in the nitrogen segment was offset by a price recovery in the potash segment.

Average Indicative Prices, USD/t, FOB Baltic/Black Sea

	Q2 2020	Q1 2020	Q2 2019	Q2 2020 / Q1 2020 change	Q2 2020 / Q2 2019 change
NPK 16-16-16	258	252	305	2.4%	-15.3%
AN	153	187	197	-18.6%	-22.5%
UAN	144	123	138	17.2%	4.8%
Urea	207	217	250	-4.7%	-17.3%
Ammonia	197	222	223	-11.4%	-11.9%

Media Contacts:

Sergey Dorofeev
Anastasia Gromova
Tatiana Smirnova
Public Relations
Phone: [phone] (ext. 5196)

Investor Contacts:

Ilya Popov
Investor Relations
Phone: [phone] (ext. 5252)

Background Information

Acron Group is a leading vertically integrated mineral fertiliser producer in Russia and globally, with chemical production facilities in Veliky Novgorod (Acron) and the Smolensk region (Dorogobuzh). The Group owns and operates a phosphate mine in Murmansk region (North-Western Phosphorous Company, NWPC) and is implementing a potash development project in Perm Krai (Verkhnekamsk Potash Company, VPC). It has a wholly owned transportation and logistics infrastructure, including three Baltic seaport terminals and distribution networks in Russia and China. Acron's subsidiary, North Atlantic Potash Inc. (NAP), holds mining leases and an exploration permit for ten parcels of the potassium salt deposit at Prairie Evaporite, Saskatchewan, Canada. Acron also holds a minority stake (19.8%) in Polish Grupa Azoty S.A., one of the largest chemical producers in Europe.

In 2019, the Group sold 7.6 million tonnes of main products to 78 countries, with Russia, Brazil, Europe and the United States as key markets.

In 2019, the Group posted consolidated IFRS revenue of RUB 114,835 million (USD 1,774 million) and net profit of RUB 24,786 million (USD 383 million). Acron's shares are on the Level 1 quotation list of the Moscow Exchange and its global depositary receipts are traded at the London Stock Exchange (ticker AKRN). Acron employs around 11,000 people.

For more information about Acron Group, please visit www.acron.ru/en.