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    PHOR   RU000A0JRKT8

PUBLIC JOINT-STOCK COMPANY PHOSAGRO

(PHOR)
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PhosAgro Reports 2Q and 1H 2021 Operating Results: 1H Fertilizer Production Reached 5.1 Million Tonnes; Production of Key Products (DAP/MAP + NPK) in 2Q Increased 8% Year-on-Year

07/30/2021 | 12:09pm EDT

Moscow - PhosAgro ('PhosAgro' or 'the Company') (Moscow Exchange, LSE: PHOR), one of the world's leading vertically integrated phosphate-based fertilizer producers, announces that its fertilizer production in 1H 2021 increased by 0.7% year-on-year to 5.1 million tonnes.

2Q and 1H 2021 highlights

In 1H 2021, production of phosphate rock and nepheline concentrate decreased by 1.9% year-on-year to 5.8 million tonnes; in 2Q 2021, production of phosphate rock and nepheline concentrate decreased by 1.7% to 2.9 million tonnes.

Fertilizer output in 1H 2021 increased by 0.7% to 5.1 million tonnes thanks to capacity upgrades to increase the production of NPK fertilizers.

Fertilizer sales in 1H 2021 remained essentially unchanged year-on-year at 5.2 million tonnes. At the same time, sales of nitrogen-based fertilizers increased by 8% over the same period on the back of strong seasonal demand.

Fertilizer sales in 2Q 2021 amounted to 2.3 million tonnes. The year-on-year decrease was due to a delay in the start of seasonal demand in India, postponing some sales to the third quarter.

Production and sales volumes

Production volumes by category

(kt)

1H 2021

1H 2020

Chng, %

2Q 2021

2Q 2020

Chng, %

Phosphate-based & MCP

3,825.5

3,807.5

0.5%

1,842.4

1,869.6

-1.5%

Nitrogen-based fertilizers

1,231.6

1,215.2

1.3%

600.2

597.8

0.4%

TOTAL fertilizers

5,057.1

5,022.7

0.7%

2,442.6

2,467.4

-1.0%

Phosphate rock and nepheline concentrate

5,819.4

5,931.3

-1.9%

2,927.2

2,976.4

-1.7%

Other products

85.4

92.8

-8.0%

37.6

42.7

-11.9%


Sales volumes by category

(kt)

1H 2021

1H 2020

Chng, %

2Q 2021

2Q 2020

Chng, %

Phosphate-based & MCP

3,743.6

3,876.7

-3.4%

1,667.1

1,789.4

-6.8%

Nitrogen-based fertilizers

1,413.6

1,308.9

8.0%

626.3

606.1

3.3%

TOTAL fertilizers

5,157.2

5,185.6

-0.5%

2,293.4

2,395.5

-4.3%

Phosphate rock and nepheline concentrate

1,951.3

2,159.7

-9.6%

964.1

1,084.0

-11.1%

Other products

87.9

90.7

-3.1%

39.6

39.1

1.3%


PhosAgro CEO Andrey Guryev said:

'PhosAgro managed to maintain fertilizer production and sales at record high levels the second quarter and the first half of the year. This was driven by our ongoing investments in building new production facilities and upgrading existing ones, as well as strong seasonal demand in our traditional sales markets; low carry-over stocks in India, South Asia and the United States; and the excellent affordability of fertilizers for farmers.

'This year, our output profile has continued to move in the direction of a greater share of high-margin complex NPK fertilizers. Over the first half of the year, we increased production of these fertilizers by more than 11% year-on-year. This demonstrates the soundness of the Company's development strategy, which is aimed at increasing our presence in premium market segments by offering customers comprehensive solutions.

'I would also like to note that our high sales volumes were driven by a recovery in global fertilizer prices after a 1.5-fold decline during the previous three years. This fact will undoubtedly be reflected in the Company's financial performance for the period.

'In the short term, we expect the traditional seasonal increase in demand in the Indian and Brazilian markets to support global demand for fertilizers. This factor may help keep fertilizer prices at their current levels.'

Production volumes by type:

Production volumes by category

(kt)

1H 2021

1H 2020

Chng, %

2Q 2021

2Q 2020

Chng, %

Phosphate rock

5,257.0

5,354.2

-1.8%

2,642.3

2,684.6

-1.6%

Nepheline concentrate

562.4

577.1

-2.5%

284.9

291.8

-2.4%

TOTAL

5,819.4

5,931.3

-1.9%

2,927.2

2,976.4

-1.7%

Phosphate-based fertilizers

DAP/MAP

1,655.0

1,617.1

2.3%

807.6

770.8

4.8%

NPK

1,544.1

1,386.6

11.4%

768.5

693.2

10.9%

NPS

314.1

444.0

-29.3%

121.4

235.0

-48.3%

APP

99.3

116.7

-14.9%

39.2

58.0

-32.4%

MCP

202.2

202.2

0.0%

99.9

101.9

-2.0%

PKS

10.8

40.9

-73.6%

5.8

10.7

-45.8%

TOTAL

3,825.5

3,807.5

0.5%

1,842.4

1,869.6

-1.5%

Nitrogen-based fertilizers

AN

358.5

362.8

-1.2%

176.1

180.9

-2.7%

Urea

837.2

843.6

-0.8%

408.9

408.1

0.2%

Ammonium sulphate

35.9

8.8

308.0%

15.2

8.8

72.7%

TOTAL

1,231.6

1,215.2

1.3%

600.2

597.8

0.4%

TOTAL fertilizers

5,057.1

5,022.7

0.7%

2,442.6

2,467.4

-1.0%

Other products

STPP

41.6

47.6

-12.6%

17.6

21.7

-18.9%

Other

43.8

45.2

-3.1%

20.0

21.0

-4.8%

TOTAL other products

85.4

92.8

-8.0%

37.6

42.7

-11.9%

Feedstocks

Ammonia

956.6

1,012.6

-5.5%

456.4

505.0

-9.6%

Phosphoric acid

1,420.1

1,380.6

2.9%

699.5

684.8

2.1%

Sulphuric acid

3,554.0

3,393.9

4.7%

1,739.4

1,714.0

1.5%

Ammonium sulphate

102.6

143.1

-28.3%

29.8

75.9

-60.7%

TOTAL feedstocks

6,033.3

5,930.2

1.7%

2,925.1

2,979.7

-1.8%


The production of phosphoric acid, the main feedstock in the production of phosphate-based fertilizers, increased by 2.1% in 2Q 2021 to 0.7 million tonnes. The increase was made possible thanks to upgrades to production units and efficiency improvements. The growth in phosphoric acid production during the quarter was limited by the large volume of scheduled maintenance that was postponed until the third quarter.

The 1.5% year-on-year decrease in the production of phosphate-based fertilizers in 2Q 2021 was driven by an increase in the production of complex NPK fertilizers, which in the current market conditions netted higher returns and enabled the Company to bolster its positions in priority sales markets.

In the first half of the year, production in the phosphorus segment rose by 0.5% year-on-year due to an increase in the production of premium brands of NPK fertilizers. This growth was related directly to work carried out to increase the productivity of the Company's phosphoric acid production lines.

In 1H and 2Q 2021, production in the nitrogen segment grew by 1.3% and 0.4%, respectively, year-on-year thanks to an increase in the production of commercial ammonium sulphate.

In the first half of the year, the production of sulphuric acid rose by 4.7% year-on-year to 3.6 million tonnes. The reason for this considerable increase was that the new sulphuric acid production unit in Cherepovets reached full capacity in early 2021. With an annual nameplate capacity of 1,100 thousand tonnes, the new production line will increase the Company's self-sufficiency in sulphuric acid.

Sales volumes by type:

Sales volumes by category

(kt)

1H 2021

1H 2020

Chng, %

2Q 2021

2Q 2020

Chng, %

Phosphate rock

1,386.0

1,581.6

-12.4%

680.2

790.6

-14.0%

Nepheline concentrate

565.3

578.1

-2.2%

283.9

293.4

-3.2%

TOTAL

1,951.3

2,159.7

-9.6%

964.1

1,084.0

-11.1%

Phosphate-based fertilizers

DAP/MAP

1,692.7

1,745.6

-3.0%

815.3

820.7

-0.7%

NPK

1,418.2

1,357.3

4.5%

607.1

575.7

5.5%

NPS

309.2

419.7

-26.3%

100.5

220.3

-54.4%

APP

104.2

109.8

-5.1%

40.8

46.7

-12.6%

MCP

211.8

199.5

6.2%

98.1

102.1

-3.9%

PKS

7.5

44.8

-83.3%

5.3

23.9

-77.8%

TOTAL

3,743.6

3,876.7

-3.4%

1,667.1

1,789.4

-6.8%

Nitrogen-based fertilizers

AN

438.9

394.4

11.3%

186.1

158.4

17.5%

Urea

934.7

911.9

2.5%

430.5

445.1

-3.3%

Ammonium sulphate

40.0

2.6

1,438.5%

9.7

2.6

273.1%

TOTAL

1,413.6

1,308.9

8.0%

626.3

606.1

3.3%

TOTAL fertilizers

5,157.2

5,185.6

-0.5%

2,293.4

2,395.5

-4.3%

Other products

STPP

44.2

44.5

-0.7%

19.5

18.4

6.0%

Other

43.7

46.2

-5.4%

20.1

20.7

-2.9%

TOTAL other products

87.9

90.7

-3.1%

39.6

39.1

1.3%


Fertilizer sales in 1H and 2Q 2021 decreased year-on-year to 5.2 million tonnes and 2.3 million tonnes, respectively. The decrease was due to, among other factors, restrained seasonal demand in India as a result of a late decision on subsidies and the relatively small level of subsidies.

Sales of phosphate-based fertilizers in 2Q 2021 amounted to 1.7 million tonnes. The 6.8% decline year-on-year was due to the high base in the previous period, when the decrease in fertilizer production in China and India enabled the Company not only to sell stocks carried over from 1Q but also to reduce its winter stocks. At the same time, the volume of fertilizer sales in 2Q 2021 has remained at a normal level for this period despite the sharp increase in prices, which was due to their excellent affordability for end users at a time of rapidly rising prices for basic agricultural crops.

The year-on-year decrease in sales of NPS fertilizers in 2Q 2021 was driven by a shift in market demand towards DAP/MAP/NPK grades.

Sales of nitrogen-based fertilizers in 1H and 2Q 2021 increased by 8.0% and 3.3%, respectively, year-on-year to 1.4 million tonnes and 0.6 million tonnes. Sales rose for all grades of nitrogen-based fertilizers, driven by both high seasonal demand and the affordability of fertilizers for end users.

Market highlights

The price recovery trend continued in mineral fertilizer markets throughout 2Q 2021, which was driven by:

  • ongoing favourable situation in markets for agricultural products, which has supported the affordability of fertilizers;
  • the development of seasonal demand in key fertilizer markets in Latin America and South Asia (India, Pakistan);
  • unscheduled limitations on the production of ammonia and potassium chloride for technical reasons, which has helped support high feedstock prices;
  • a decrease in fertilizer exports from China; as a result, demand is outstripping supply, especially in the Asian region.

The third quarter is forecast to see peak of seasonal demand for phosphate-based fertilizers in key international markets.

Disclaimer

OAO PhosAgro published this content on 30 July 2021 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 30 July 2021 16:08:02 UTC.


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Financials (USD)
Sales 2021 4 663 M - -
Net income 2021 1 214 M - -
Net Debt 2021 2 022 M - -
P/E ratio 2021 10,2x
Yield 2021 7,91%
Capitalization 8 793 M 8 731 M -
EV / Sales 2021 2,32x
EV / Sales 2022 2,28x
Nbr of Employees 25 174
Free-Float 35,4%
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Mean consensus OUTPERFORM
Number of Analysts 4
Last Close Price 67,90 $
Average target price 59,45 $
Spread / Average Target -12,4%
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Managers and Directors
Andrey A. Guryev Chief Executive Officer & Executive Director
Alexander Sharabaika Deputy CEO-Finance & International Projects
Xavier Robert Rolet Chairman
Sven Ombudstvedt Independent Director
Marcus James Rhodes Independent Non-Executive Director
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