• OCI Global (Euronext: OCI) reported total Q1 2024 revenues of $1,224 million, a decrease of 11% YoY, and total Q1 2024 adjusted EBITDA of $297 million, a decrease of 12% YoY. The declines against the comparative period were primarily driven by lower nitrogen pricing globally following high product pricing in early 2023. The impact of lower pricing was partially offset by improved operational performance in Q1 2024 compared to Q1 2023.
• Total adjusted EBITDA in the quarter includes $47 million in realized losses from natural gas hedges.
• Adjusted net profit from total operations in Q1 2024 was $36 million, versus adjusted net loss of $15 million in Q1 2023.
• Total operating free cash flow was $73 million in Q1 2024. Net debt from total operations was $3,795 million on 31 March 2024, with a total net leverage on trailing 12-month adjusted EBITDA of 3.2x on a consolidated basis.
• Q1 2024 adjusted EBITDA from continuing operations of $24 million compares to a $54 million loss in Q1 2023. Continuing operations benefited from a marked improvement in own-produced sales volumes across the European Nitrogen and Methanol segments, reduced realized hedge losses and improved margin given lower gas prices compared to last year.
Business Highlights
• In March 2024, OCI commenced production of AdBlue (or diesel exhaust fluid, "DEF") in Europe, a solution used in diesel engines to reduce harmful emissions. OCI Nitrogen's current 300,000 tonnes per annum AdBlue capacity has meaningful potential for expansion and will serve a growing European market for diesel exhaust fluid driven by regulation. The introduction of AdBlue further leverages OCI's existing nitrogen platform towards increased diversification and higher value products.
• Results in the first quarter reflect positive momentum in OCI's manufacturing excellence program with achieved efficiency gains reflecting continued investment in OCI's productive assets; this remains a key area of management focus.
Strategic Review
• In December 2023, OCI announced the divestments of its 50% equity holding in Fertiglobe Plc ("Fertiglobe") and 100% of its equity interests in Iowa Fertilizer Company LLC ("IFCo") to Abu Dhabi National Oil Company P.J.S.C. ("ADNOC") and to Koch Ag & Energy Solutions ("KAES") respectively. This followed a multi-faceted global strategic review, with the objective of closing OCI's HoldCo discount and crystallizing value for shareholders. Both transactions are expected to close during 2024, subject to legal and regulatory conditions and relevant anti-trust approvals.
• As previously guided, OCI intends to use the $6.2 billion of net cash proceeds to significantly deleverage the company, and to fully fund the remaining capital expenditure required to complete Texas Blue Clean Ammonia. OCI also plans to deliver a substantial extraordinary return of capital to shareholders of at least $3 billion with the close of both transactions.
• OCI held an extraordinary shareholders meeting ("EGM") on 25 April 2024 and received unanimous shareholder approval for: (i) the divestment of OCI's entire equity stake in the share capital of Fertiglobe to ADNOC; and (ii) the payment of an extraordinary interim cash distribution of EUR 4.50 per share (equivalent to ~$1 billion) subject to the completion of the divestment of Fertiglobe, through a repayment of capital or, at the election of the shareholder, as a cash dividend. A further extraordinary cash distribution is expected during 2024, subject to the completion of the divestment of IFCo. As a result of these strategic events and the upcoming extraordinary distributions of cash to shareholders, OCI has suspended the payment of regular dividends during the transition period. For context, OCI has distributed over $2 billion in cash since commencing its dividend distributions in FY 2021.
• Following significant inbound interest in the continuing business, OCI continues to assess various options and opportunities to maximize value for all stakeholders. OCI expects to update the market on its strategic review at the time of the Q2 2024 results announcement.
Ahmed El-Hoshy, CEO of OCI Global commented:
"We are pleased with OCI's resilient performance in the first quarter of 2024 and the continued progress towards efficiency gains alongside execution of our global decarbonization strategy. Further to the announced divestitures in December 2023 of our equity stakes in Fertiglobe and IFCo, we remain focused on successfully running our continuing business and growing our leadership position in low-carbon offerings across our key markets.
Following extremely challenging market conditions in 2023 conflated with prolonged turnarounds at some of OCI's assets, OCI benefited in the first quarter of 2024 from improved asset reliability. Efficiency improvements helped offset disruption from unplanned outages in our methanol business in January on account of freezing weather conditions, and more cautious purchasing activity in north-western Europe due to inclement weather later in the quarter. Notwithstanding these issues, OCI's manufacturing excellence program and investments to improve reliability continue to drive efficiency gains, with asset utilization rates approaching - and in some cases - surpassing historical levels across both the nitrogen and methanol complex by the end of the quarter. The improvement is further evident in the 25% year-on-year increase in own-produced sales from total operations during the quarter, or an 80% year-on-year improvement on a continuing basis.
On a continuing basis, our differentiated and well capitalized platform is optimally positioned to accelerate efforts in the energy transition space. In the US, this portfolio includes OCI's Texas Blue Clean Ammonia facility, which remains on track for production in H1 2025, alongside our first-quartile methanol complex also located in Beaumont Texas. In Europe, this portfolio includes our leading integrated nitrates platform strategically located in Europe's nitrogen heartland and our proprietary import and distribution capacity at the Port of Rotterdam. With recent expansions into AdBlue and the CAN+S markets, we have enriched and diversified our European capacity set through increased exposure to attractive non-agricultural, non-cyclical and premium fertilizer markets and we remain on track to increase the volume of lower carbon products that we supply to our distribution customers in Europe, where we continue to replace conventional products with more sustainable ones.
In closing, I wish to extend my thanks to the entire OCI team for their relentless focus on process safety and operational excellence, which remains our top priority, and my colleagues' ongoing commitment to manufacturing excellence."
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