DJ OJSC PhosAgro: PhosAgro Publishes 2Q and 1H 2021 Financial Results
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
2Q 2Q Chng 1H 1H Chng
RUB mln 2021 2020 % %
2021 2020
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 2Q Chng 1H 2021 1H 2020 Chng
2021 2020 % %
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%
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