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Acron Group’s Q1 2021 IFRS EBITDA Doubles

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17 May 2021

Acron Group’s Q1 2021 IFRS EBITDA Doubles

Today, Acron Group (Moscow Exchange and LSE: AKRN) released its consolidated IFRS financial statements for Q1 2021.

Key Financials

  • Revenue was up 39% year-on-year to RUB 38,952 million (Q1 2020: RUB 28,079 million). In US dollar equivalent, revenue was up 24% to USD 524 million from USD 423 million.

  • EBITDA* was up 116% year-on-year to RUB 15,739 million (Q1 2020: RUB 7,279 million). In US dollar equivalent, EBITDA was up 93% to USD 212 million from USD 110 million.

  • EBITDA margin was up to 40%, against 26% year-on-year.

  • Net profit was RUB 10,615 million, against a loss of RUB 10,126 million year-on-year. In US dollar equivalent, net profit was USD 143 million.

  • Net debt was RUB 99,464 million, only slightly changed since 31 December 2020. In US dollar equivalent, net debt was down 3% to USD 1,314 million from USD 1,348 million.

  • Net debt/LTM EBITDA** was 2.3, down from 2.8 as of 31 December 2020. In US dollar equivalent, the ratio was down to 2.2 from 2.8.

Operating Results

  • Output of key products was 2.035 million tonnes, up 4% year-on-year.

  • Sales of key products totalled 2.109 million tonnes, up 6% year-on-year.

Alexander Popov, Chairman of Acron’s Board of Directors, commented on the results:

‘Acron Group posted several all-time highs for Q1 2021, with EBITDA almost doubling year-on-year to USD 212 million and EBITDA margin reaching 40%. Net profit was USD 143 million. This strong financial performance was driven by robust sales, higher global dollar prices for mineral fertilisers, and a weaker rouble.

‘In Q1 2021, sales of Acron Group's key products were up 6% to a record 2.1 million tonnes, made possible by three investment projects that were completed in 2020. This year, we are continuing to carry out our investment programme, and the Urea 6+ project is at the final stage of construction. In Q1 2021, the Group allocated USD 44 million to capital expenditures.

‘The Group's debt burden in the reporting period decreased. In US dollar equivalent, net debt/EBITDA was down to 2.2 from 2.8 as of the end of 2020, and we expect it to decrease further in the coming quarters.

‘Although favourable market conditions and strong demand for our products have continued into the second quarter, we have cautious optimism about the current market environment and will focus on reducing our debt burden in the short run’.


APPENDIX

Notes on Key Items in the Financial Statements

Financial Performance

In Q1 2021, Acron Group’s revenue was up 39% year-on-year to RUB 38,952 million, driven by 6% higher sales of the Group’s key products, higher global dollar-denominated prices for mineral fertilisers, and a 12% increase in the average USD-RUB exchange rate.

Average Indicative Prices, FOB Baltic Sea/Black Sea

USD/t

Q1 2021

Q1 2020

Change

NPK 16-16-16

312

252

24%

AN

234

187

25%

UAN

213

123

73%

Urea

326

217

50%

Ammonia

329

222

48%

In the reporting period, the cost of sales was up 2% year-on-year to RUB 17,874 million, mainly due to higher sales and personnel costs, which were significantly offset by smaller depreciation and amortisation and a decline in expenses for third-party services related to mined rock at the Oleniy Ruchey mine.

Selling, general, and administrative expenses were up 32% to RUB 2,876 million, mainly due to higher personnel costs, which accounted for a greater portion of both the cost of sales and selling, general, and administrative expenses due to salary adjustments, staff costs denominated in foreign currency, and a weaker rouble.

Transportation expenses were up 21% to RUB 5,363 million, driven by increased sales and a higher cost of logistics outside Russia due to a weaker rouble. Increased sales to Latin America on terms including transportation also contributed to the change in this item.

EBITDA increased 116% to RUB 15,739 million. In the reporting period, EBITDA margin reached 40%, against 26% in Q1 2020.

Interest expense was RUB 573 million, up from RUB 486 million in Q1 2020, due to lower borrowing costs capitalised as part of assets under construction and the subsoil licence.

In Q1 2021, the Group posted a net exchange loss of RUB 504 million from revaluation of assets, loans and liabilities, against a loss of RUB 12,301 million in Q1 2020. In the reporting period, financial derivatives delivered a profit of RUB 1,444 million, against a loss of RUB 978 million in Q1 2020.

In Q1 2021, net profit was RUB 10,615 million, against a loss of RUB 10,126 million in first three months of 2020.

Cash Flow

In Q1 2021, net operating cash flow increased by a factor of 6.0 to RUB 4,631 million from RUB 774 million in Q1 2020 because of an increase in net profit and an upswing in working capital, which increased RUB 8,452 million in Q1 2021 (up RUB 5,979 million in Q1 2020).

Net cash used in investing activities in Q1 2021 was down 16% to RUB 3,183 million from RUB 3,791 million in Q1 2020. Capital expenditures were down 12% to RUB 3,266 million from RUB 3,708 million in Q1 2020. In dollar equivalent, capital expenditures were USD 44 million against USD 56 million in Q1 2020.

Net cash used in financial activities in Q1 2021 was RUB 5,090 million, against RUB 11,450 million generated by the Group from financing activities in Q1 2020. The cash outflow in the reporting period was due to RUB 4,813 million in repaid net borrowings, while cash inflow in Q1 2020 resulted from net borrowings of RUB 17,929 million.

Debt Burden

On 31 March 2021, total debt was RUB 111,542 million, down 3% from RUB 115,537 million on 31 December 2020. In US dollar equivalent, total debt was USD 1,473 million, down 5% from USD 1,558 million as of the end of 2020. The share of long-term debt was 67% as of the end of Q1 2020.

Net debt as of the end of Q1 2021 was RUB 99,464 million, changed only slightly from 31 December 2020. In US dollar equivalent, net debt was USD 1,314 million, down 3% from USD 1,348 million on 31 December 2020.

Net debt/LTM EBITDA at the end of Q1 2021 was 2.3, against 2.8 on 31 December 2020. In US dollar equivalent, the ratio was down to 2.2 from 2.8.

Market Trends

Global urea prices grew rapidly in Q1 2021. Baltic FOB prices reached a seven-year record-high of USD 350. This sharp rise was driven by several factors, including strong seasonal demand in Europe and the United States, limited urea volume available for export from China, an increase in global prices for natural gas, and record-high grain prices. India’s urea purchases and limited Chinese supplies of the product are giving the market additional support in Q2.

First-quarter AN and UAN prices also increased to their highest levels in several years due to strong seasonal demand in the Northern Hemisphere and growth in urea prices, which are used as a benchmark for other nitrogen fertiliser prices.

NPK prices increased in Q1 2021 as well, mainly driven by higher prices for basic products (urea, DAP, and potassium chloride). The increase in basic product prices outstripped blends because of their higher liquidity, so the NPK 16-16-16 premium over the basic product basket decreased to 5% from the historical average of 20%.

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

Q1 2021

Q4 2020

Q1 2020

Q1 2021/

Q4 2020

change

Q1 2021/

Q1 2020

change

NPK 16-16-16

312

262

252

19%

24%

AN

234

166

187

41%

25%

UAN

213

119

123

79%

73%

Urea

326

234

217

39%

50%

Ammonia

329

211

222

56%

48%

The full version of Acron Group’s financial statements is available at www.acron.ru/en

Note: The exchange rate used for currency conversion was RUB 75.7023 to USD 1 as of 31 March 2021 and RUB 77.7325 to USD 1 as of 31 December 2020. The average exchange rate for the first three months of 2021 was RUB 74.3414 to USD 1. The average exchange rate for the first three months of 2020 was RUB 66.3818 to USD 1.

* EBITDA is calculated as operating profit adjusted for depreciation and amortisation, foreign exchange gain or loss on operating transactions, and other non-cash and extraordinary items.

** LTM EBITDA is EBITDA calculated for the past 12 months.


Media Contacts:

Sergey Dorofeev

Anastasia Gromova

Tatiana Smirnova

Public Relations

Phone: +7 (495) 777-08-65 (ext. 5196)

Investor Contacts:

Ilya Popov

Sergey Smirnov

Investor Relations

Phone: +7 (495) 745-77-45 (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 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 owns transportation and logistics infrastructure, including three Baltic seaport terminals and distribution networks in Russia and China. Acron 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 2020, the Group sold 7.8 million tonnes of main products to 74 countries, with Russia, Brazil, Europe and the United States as key markets.

In 2020, the Group posted consolidated IFRS revenue of RUB 119,864 million (USD 1,661 million), with EBITDA of RUB 35,311 million (USD 489 million). Acron’s shares are traded on the Moscow Exchange and its global depositary receipts are traded at the London Stock Exchange (ticker AKRN). Acron employs over 11,000 people.

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


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