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PhosAgro PJSC: PhosAgro Reports 3Q and 9M 2021 Financial Results With Record Quarterly EBITDA of Over RUB 57 Billion

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PhosAgro PJSC (PHOR)
08-Nov-2021 / 13:00 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

8 November 2021

 

 

 

PhosAgro Reports 3Q and 9M 2021 Financial Results

With Record Quarterly EBITDA of Over RUB 57 Billion

 

Moscow - PhosAgro ("the Company") (Moscow Exchange, LSE: PHOR), one of the world's leading vertically integrated phosphate-based fertilizer producers, today announces its consolidated IFRS financial results for the third quarter (3Q) and nine months (9M) ended 30 September 2021.

 

Highlights for 3Q and 9M 2021:

 

Revenue for 3Q 2021 increased by 63.8% year-on-year to RUB 116.3 billion (USD 1.6 billion) on the back of strong seasonal demand for fertilizers.

 

Revenue for 9M 2021 increased by 50.0% year-on-year and amounted to RUB 292.6 billion (USD 4.0 billion). This growth was mainly due to the recovery in global prices for fertilizers during the year, due to high affordability for end consumers and low inventory levels in key markets.

 

In 3Q 2021, the Company's EBITDA more than doubled year-on-year and reached RUB 57.2 billion (USD 779 million). Upgrades to production assets, improved efficiency for key production facilities, and growing self-sufficiency in key feedstocks enabled the Company to achieve an EBITDA margin for the quarter of 49.2%.

 

EBITDA for 9M 2021 increased by 92.2% year-on-year to RUB 130.3 billion (USD 1.8 billion). EBITDA margin for 9M 2021 rose to 44.5%.

 

Capital expenditure for 9M 2021 amounted to RUB 31.7 billion, an increase of 15.8% year-on-year. This growth was driven by investments for the final stage of construction of a modern production complex at the Volkhov site, in line with the Company's long-term development strategy.

 

In 3Q 2021, free cash flow increased by 6.9% year-on-year and amounted to RUB 20.7 billion (USD 283 million).

 

Free cash flow reached RUB 55.0 billion (USD 742 million) for 9M 2021, an increase of 38.5% year-on-year.

 

In 3Q and 9M 2021, adjusted net profit** more than doubled year-on-year, amounting to RUB 39.7 billion (USD 541 million) and RUB 85.1 billion (USD 1.2 billion), respectively.

 

Net debt as of 30 September 2021 decreased by RUB 33.6 billion compared to the end of 2020, amounting to RUB 123.3 billion (USD 1.7 billion). The net debt/EBITDA ratio decreased to 0.83x at the end of 3Q 2021.

 

 

Financial and operational highlights

FINANCIAL HIGHLIGHTS

RUB mln


2021


2020

Chng.
%

3Q
2021

3Q
2020

Chng.
%

Revenue

292,564

194,988

50.0%

116,303

70,992

63.8%

EBITDA*

130,291

67,791

92.2%

57,197

27,927

104.8%

EBITDA margin

44.5%

34.8%

9.8 pp

49.2%

39.3%

9.8 pp

Net profit

87,840

3,958

2,119.3%

39,188

-1,333

n/a 

Adj. net profit**

85,065

41,205

106.4%

39,737

18,968

109.5%

Free cash flow

54,952

39,665

38.5%

20,735

19,391

6.9%

 

30.09.2021

31.12.2020

 

 

 

 

Net debt

123,285

156,875

 

 

 

 

ND/LTM EBITDA

0.83

1.86

 

 

 

 

RUB/USD rates: average 3Q 2021 rate: 73.5; average 3Q 2020 rate: 73.6; as of 30 September 2021: 72.8; 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 from financial activity.

 

Commenting on the Company's financial results, PhosAgro CEO Andrey Guryev said:

"First, I would like to share a very important milestone for us: in the third quarter of 2021, PhosAgro became the first company in Russia to receive a certificate for compliance with the requirements of the national standard for higher quality products. PhosAgro's Cherepovets, Volkhov, and Balakovo production sites were all certified. This means that all of the production output from our mineral fertilizer production facilities has been certified for compliance with the Russian national standard, which introduces the world's toughest restrictions on heavy metals and arsenic contents. This confirms the unique eco-efficiency of PhosAgro products, and we will now be able to label with the national standard. PhosAgro is also able to use a green label on fertilizers it sells in the EU, in line with strict European Commission guidelines regarding cadmium contents in phosphate-based fertilizers.

 

"PhosAgro also continues to ramp up fertilizer production at its production sites. We are currently nearing completion of a state-of-the-art production complex at our Volkhov site with a capacity of up to one million tonnes of eco-efficient fertilizers.

 

"I am also pleased to report another one of PhosAgro's successes in the capital markets: we successfully closed a USD 500 million seven-year bond issue with a coupon of 2.6% per annum. This is a record low coupon among all Russian corporate US dollar issues with a comparable maturity, which will enable PhosAgro to reduce the overall cost of its debt portfolio.

 

"Turning to PhosAgro's 9M 2021 financial performance, I would note that we have again set several records. Upgrades to production assets, improved production efficiency overall and growing self-sufficiency in key feedstocks enabled the Company to increase its phosphoric acid output and further increase fertilizer production by 5% year-on-year, meaning we were able to grow production of the highest-margin fertilizer grades MAP/DAP and NPK by 9% and 7% year-on-year, respectively.

 

"Favourable conditions in global markets for agricultural products and fertilizers in the third quarter contributed to robust cash flow generation of higher profitability. Revenue for the quarter exceeded RUB 116 billion, increasing by more than 50%, while EBITDA more than doubled and amounted to RUB 57.2 billion, a record for the entire public history of the company.

 

"The higher profit levels that the Company has achieved so far in 2021 have resulted in an increase in tax payments at all levels. Compared to the same period last year, tax payments exceeded RUB 28 billion, with more than a 3-fold increase to regional budgets and an almost 6-fold increase to the federal budget. We are confident that these revenues will contribute to the development of the social sphere in all regions where we operate.

 

"Our highly efficient business, flexible capex volumes and effective management of working capital meant that the Company was able to generate free cash flow of more than RUB 20 billion in the third quarter.

 

"The high profitability of sales helped to bring net debt at the end of the quarter down to RUB 123 billion, while the net debt/EBITDA ratio decreased to 0.83x, which corresponds with PhosAgro's long-term goal of maintaining comfortable debt levels.

 

"To summarize the above, I would like to reiterate that the Company's strong operating and financial performance, low debt levels and balanced long-term development programme ensure strong free cash flow generation, financing of its investment and social projects and a fair distribution of profits between the company and its shareholders."

 

3Q 2021 market conditions

Prices for phosphate-based fertilizers once again renewed multiyear highs in early 3Q 2021, rising to USD 700-720 per tonne (FOB Baltic) for MAP, thanks to continued high prices for agricultural products and developing seasonal demand in Brazil. Despite a subsequent correction in global prices for grains and oilseeds, growing exports from China and relatively low import demand for fertilizers in India, global prices for phosphate-based fertilizers remained high. Cutbacks in production and exports in the United States at the end of the quarter, as well as the threat of export restrictions in China helped prices to stabilise and resume an upward trend. The average price for MAP in 3Q 2021 was USD 695 per tonne (FOB Baltic) against USD 617 per tonne (FOB Baltic) in 2Q 2021. Contract prices for phosphoric acid supplies to India in 3Q 2021 were agreed at USD 1,160 per tonne of 100% P2O5 (CFR India), which was USD 162 per tonne higher than in 2Q 2021, in line with changes in the phosphate-based fertilizer market. Phosphate feedstock prices (68%-72% BPL) in 3Q 2021 were set at USD 130-190 per tonne (FOB Morocco) compared to USD 85-155 per tonne (FOB Morocco) in 2Q 2021. World sulphur prices remained relatively stable at previously high levels of USD 180 per tonne (FOB Black Sea/Baltic).

 

Prices for nitrogen-based fertilizers rose on the back of seasonal demand in key markets in Latin America and especially in Brazil, as well as India and other Asian countries. The threat of export restrictions from China has also helped to keep prices high. Average prices for urea in 3Q 2021 reached USD 442 per tonne (FOB Baltic) against USD 359 per tonne (FOB Baltic) in 2Q 2021.

 

Global prices for commercial ammonia continued to rise due to a recovery in industrial demand and continued limited exports from large producers in the Middle East, Southeast Asia and the United States due to unscheduled maintenance. The average price for commercial ammonia in 3Q 2021 was USD 578 per tonne (FOB Black Sea), which is USD 114 or 25% higher than the average price in 2Q 2021.

 

In PhosAgro's priority domestic market, the season of phosphate-based fertilizer application for field work has ended. At present, there is increased demand for ammonium nitrate. Therefore, Russian producers have voluntarily prolonged the price freeze on mineral fertilizers until 31 December 2021 and, as a priority, are meeting increased domestic demand for nitrogen fertilizers. This measure will stimulate preparation for seasonal field work and will strengthen the sustainability of Russian agriculture, fulfilment of harvest plans, saturation of domestic market with domestically grown food with improved characteristics and the export of agricultural products.

 

3Q 2021 financial performance

In 3Q 2021, the Company's revenue increased by 63.8% year-on-year to RUB 116.3 billion (USD 1.6 billion). The main growth driver was the rise in global prices for phosphate- and nitrogen-based fertilizers against the backdrop of high demand and low inventory levels in the main sales markets.

 

EBITDA for 3Q 2021 more than doubled year-on-year and amounted to a record RUB 57.2 billion (USD 779 million). Such significant growth was achieved in part thanks to successful measures aimed at increasing productivity and self-sufficiency in key inputs. EBITDA margin for 3Q 2021 exceeded 49%.

 

 

Net profit adjusted for non-cash FX gain/loss for 3Q 2021 more than doubled year-on-year to RUB 39.7 billion (USD 541 million).

 

In 3Q 2021, the Company's free cash flow amounted to RUB 20.7 billion (USD 283 million). The main source of cash flow was an increase the production of all types of mineral fertilizers, higher income from sales due to higher average prices and an improvement in the finished product portfolio structure.

 

Capex in 3Q 2021 amounted to RUB 10.6 billion (USD 144 million). The Company's investments were primarily focussed on the construction of a large industrial complex at its Volkhov site, where the first production lines have already been launched with a design capacity of almost 800,000 tonnes of MAP per year. Once the project is complete, the total capacity of the new complex will reach almost 900,000 tonnes.

 

As of 30 September 2021, the net debt/EBITDA ratio was 0.83x. PhosAgro was able to decrease its debt burden thanks to higher profits and effective cost controls. Net debt as of 30 September 2021 was RUB 123.3 billion (USD 1.7 billion).

 

COST OF SALES

RUB mln or %


2021


2020

Chng.
%

3Q
2021

3Q
2020

Chng.
%

Amortisation

18,771

18,721

0.3%

6,433

6,498

-1.0%

Materials and services

35,147

31,672

11.0%

12,625

11,352

11.2%

Phosphate rock transport

6,659

6,682

-0.3%

2,422

2,446

-1.0%

Repair expenses

8,609

7,380

16.7%

2,972

2,613

13.7%

Drilling and blasting costs

2,780

2,380

16.8%

973

891

9.2%

Other materials and services

17,099

15,230

12.3%

6,258

5,402

15.8%

Raw materials

43,510

27,871

56.1%

18,773

9,568

96.2%

Ammonia

9,433

3,480

171.1%

4,554

1,213

275.4%

Sulphur and sulph. acid

12,004

3,459

247.0%

5,942

1,201

394.8%

Potassium

11,284

9,811

15.0%

4,985

3,785

31.7%

Natural gas

9,671

9,875

-2.1%

2,795

2,954

-5.4%

Ammonium sulphate

1,118

1,246

-10.3%

497

415

19.8%

Salaries and social contributions

11,562

10,910

6.0%

4,003

3,796

5.5%

Electricity

4,924

4,919

0.1%

1,713

1,683

1.8%

Fuel

4,092

2,970

37.8%

1,369

923

48.3%

Products for resale

7,584

6,795

11.6%

2,291

2,038

12.4%

Customs duties

1,654

1,023

61.7%

516

459

12.4%

Freight, port and stevedoring expenses

19,286

13,909

38.7%

6,469

4,845

33.5%

Russian Railways' tariffs and operators' fees

8,329

8,732

-4.6%

2,730

2,815

-3.0%

Other

962

871

10.4%

373

336

11.0%

Total

155,821

128,393

21.4%

57,295

44,313

29.3%

 

Cost of sales in 9M 2021 increased by 21.4% year-on-year largely due to a considerable increase in prices for raw materials.

 

Cash cost of production in 3Q 2021 increased by 29.3% year-on-year, which was associated with an increase in prices for raw materials, fuel, materials, and services:

 

 

Administrative and selling expenses

RUB mln


2021


2020

Chng.
%

3Q
2021

3Q
2020

Chng.
%

Administrative expenses

14,946

12,941

15.5%

5,057

4,139

22.2%

Salaries and social contributions

9,722

8,376

16.1%

3,280

2,648

23.9%

Professional services

1,279

1,285

-0.5%

441

332

32.8%

Amortisation

1,022

1,019

0.3%

330

341

-3.2%

Security and fire safety services

777

658

18.1%

271

230

17.8%

Other

2,146

1,603

33.9%

735

588

25.0%

Selling and marketing expenses

4,826

4,307

12.1%

1,542

1,418

8.7%

Salaries and social contributions

2,890

2,318

24.7%

980

736

33.2%

Materials and services

850

866

-1.8%

262

304

-13.8%

Amortisation

1,086

1,123

-3.3%

300

378

-20.6%

 

Administrative, selling and marketing expenses in 3Q 2021 increased by 22.2% year-on-year to RUB 5.1 billion (USD 68 million) and by 8.7% to RUB 1.5 billion (USD 21 million), respectively. The main drivers of this increase were changes in payroll and social contributions associated with the adjustment of employee salaries, compensation payments and changes in exchange rates. 

 

Market outlook

In early 4Q 2021, global fertilizer markets saw further price increases due to the unprecedented rise in natural gas prices in Europe and Asia and a subsequent decline in fertilizer production, as well as due to export restrictions from China in favour of domestic supplies. Prices on global markets have renewed multiyear highs and continue to rise, especially for nitrogen-based fertilizers amid approaching seasonal demand in key markets in North America, Europe and China.

 

 

Conference call and webcast:

 

PhosAgro will hold a conference call and webcast today at 14:00 London time (17:00 Moscow; 09:00 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/phosagro20211108

 

Participant dial-in numbers:

 

Russia:

+7 495 213 1767 
8 800 500 9283

 

United Kingdom:

+44 (0) 330 336 9127
0800 358 6377
 

United States:

+1 323-794-2423

888-254-3590

 

Conference ID numbers:

 

In English: 5329184

In Russian: 7839516

 

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.

 

 

 

Nine months ended
30 September

Three months ended
30 September

RUB million

2021

2020

2021

2020

 

 

 

 

 

Revenues

292,564

194,988

116,303

70,992

Cost of Group products sold

(148,237)

(121,598)

(55,004)

(42,275)

Cost of products for resale

(7,584)

(6,795)

(2,291)

(2,038)

 

 

 

 

 

Gross profit

136,743

66,595

59,008

26,679

 

 

 

 

 

 

 

 

 

 

Administrative and selling overhead expenses

(19,772)

(17,248)

(6,599)

(5,557)

Taxes, other than income tax, net

(4,446)

(2,339)

(1,449)

(756)

Other expenses, net

(2,423)

(1,974)

(902)

(529)

Foreign exchange (loss)/gain from operating activities, net

(690)

1,894

76

873

 

 

 

 

 

Operating profit

109,412

46,928

50,134

20,710

 

 

 

 

 

 

 

 

 

 

Finance income

407

576

213

223

Finance costs

(3,914)

(4,357)

(1,437)

(1,484)

Foreign exchange gain/(loss) from financing activities, net

2,775

(37,247)

(549)

(20,301)

COVID-19 related expenses

(350)

(844)

(132)

(555)

 

 

 

 

 

Profit/(loss) before tax

108,330

5,056

48,229

(1,407)

 

 

 

 

 

 

 

 

 

 

Income tax (expense)/benefit

(20,490)

(1,098)

(9,041)

74

 

 

 

 

 

 

 

 

 

 

Profit/(loss) for the period

87,840

3,958

39,188

(1,333)

 

 

 

 

 

Attributable to:

 

 

 

 

Non-controlling interests*

(17)

(6)

(2)

(13)

Shareholders of the Parent

87,857

3,964

39,190

(1,320)

 

 

 

 

 

Basic and diluted earnings/(loss) per share (in RUB)

678

31

303

(10)

 

 

 

 

 

Other comprehensive (loss)/income

 

 

 

 

Items that may be reclassified subsequently to profit or loss

 

 

 

 

Foreign currency translation difference

(453)

3,571

51

2,037

 

 

 

 

 

 

 

 

 

 

Other comprehensive (loss)/income for the period

(453)

3,571

51

2,037

 

 

 

 

 

 

 

 

 

 

Total comprehensive income for the period

87,387

7,529

39,239

704

 

 

 

 

 

 

 

 

 

 

Attributable to:

 

 

 

 

Non-controlling interests*

(17)

(6)

(2)

(13)

Shareholders of the Parent

87,404

7,535

39,241

717

 

 

 

 

 

 

RUB million

30 September

 2021

31 December 2020

 

 

 

Assets

 

 

Property, plant and equipment

229,455

220,031

Advances issued for property, plant and equipment

11,671

7,835

Deferred tax assets

8,491

7,462

Right-of-use assets

6,369

7,335

Non-current spare parts

4,647

4,308

Catalysts

2,184

2,292

Intangible assets

1,568

1,621

Other non-current assets

910

948

Investments in associates

582

556

 

 

 

Non-current assets

265,877

252,388

 

 

 

Cash and cash equivalents

67,989

8,460

Trade and other receivables

34,404

17,515

Inventories

31,981

30,580

VAT and other taxes receivable

8,038

10,285

Income tax receivable

468

479

Other financial assets

271

311

 

 

 

Current assets

143,151

67,630

 

 

 

Total assets

409,028

320,018

 

 

 

Equity

 

 

Share capital

372

372

Share premium

7,494

7,494

Retained earnings

136,656

90,757

Actuarial losses

(717)

(717)

Foreign currency translation reserve

9,128

9,581

 

Equity attributable to shareholders of the Parent

152,933

107,487

Equity attributable to non-controlling interests

112

129

 

 

 

Total equity

153,045

107,616

 

 

 

Liabilities

 

 

Loans and borrowings

152,665

103,824

Deferred tax liabilities

11,979

11,578

Lease liabilities

3,036

4,268

Defined benefit obligations

938

945

 

 

 

Non-current liabilities

168,618

120,615

 

 

 

Trade and other payables

46,382

29,869

Loans and borrowings

33,522

55,316

VAT and other taxes payable

4,367

3,675

Lease liabilities

2,051

1,927

Income tax payable

1,043

1,000

 

 

 

Current liabilities

87,365

91,787

 

 

 

Total equity and liabilities

409,028

320,018

 

 

 

 

 

Nine months ended

30 September

RUB million

2021

2020

 

 

 

Cash flows from operating activities

 

 

Operating profit

109,412

46,928

Adjustments for:

 

 

Depreciation and amortisation

20,879

20,863

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

147

62

 

 

 

Operating profit before changes in working capital and provisions

130,438

67,853

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

(2,257)

2,648

(Increase)/decrease in trade and other receivables

(15,835)

1,241

(Decrease)/increase in trade and other payables

(718)

1,887

 

 

 

Cash flows from operations before income taxes and interest paid

111,628

73,629

Income tax paid

(21,070)

(3,990)

Finance costs paid

(3,164)

(2,396)

 

 

 

Cash flows from operating activities

87,394

67,243

 

 

 

 

 

 

Cash flows from investing activities

 

 

Acquisition of property, plant and equipment and intangible assets

(31,681)

(27,360)

Borrowing cost capitalised paid

(906)

(889)

Other

145

671

 

 

 

 

 

 

Cash flows used in investing activities

(32,442)

(27,578)

 

 

 

 

 

 

Cash flows from financing activities

 

 

Proceeds from borrowings, net of transaction costs

53,296

47,829

Repayment of borrowings

(23,513)

(62,026)

Early eurobond partial redemption fees

-

(292)

Dividends paid to shareholders of the Parent

(22,728)

(18,774)

Dividend paid to non-controlling interests

-

(30)

Lease payments

(1,457)

(1,492)

 

 

 

 

 

 

Cash flows from/(used in) financing activities

5,598

(34,785)

 

 

 

 

 

 

Net increase in cash and cash equivalents

60,550

4,880

 

 

 

 

 

 

Cash and cash equivalents at 1 January

8,460

8,236

Effect of exchange rates fluctuations

(1,021)

2,292

 

 

 

Cash and cash equivalents at 30 September

67,989

15,408

 

 

 

 


ISIN:

US71922G2093

Category Code:

QRT

TIDM:

PHOR

LEI Code:

25340053KRUNNYUWF472

OAM Categories:

2.2. Inside information

Sequence No.:

126253

EQS News ID:

1246930


 

End of Announcement

EQS News Service

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Our goal is to create a safe and engaging place for users to connect over interests and passions. In order to improve our community experience, we are temporarily suspending article commenting