OJSC PhosAgro (PHOR) PhosAgro 2Q 2019 FCF up 22% to RUB 10.2 bln 28-Aug-2019 / 13:00 CET/CEST Dissemination of a Regulatory Announcement that contains inside information according to REGULATION (EU) No 596/2014 (MAR), transmitted by EQS Group. The issuer / publisher is solely responsible for the content of this announcement.
PhosAgro 2Q 2019 FCF up 22% to RUB 10.2 bln
Moscow - PhosAgro ("PhosAgro" or "the Company") (Moscow Exchange, LSE: PHOR), one of the world's leading vertically integrated phosphate-based fertilizer producers, today announces its interim condensed consolidated IFRS financial results for the three months (2Q) and six months (1H) ended 30 June 2019.
Revenue for 2Q 2019 rose by 3% year-on-year to RUB 58.1 billion (USD 901 million). EBITDA remained almost flat year-on-year at RUB 18.3 billion (USD 284 million) in the period, with 2Q 2019 EBITDA margin at 32%.
2Q 2019 financial and operational highlights
RUB/USD rates: average 2Q 2019: 64.6; average 2Q 2018: 61.8; as of 30 June 2019: 63.1; as of 31 December 2018: 69.5 ** EBITDA is calculated as operating profit adjusted for depreciation and amortisation. * adjusted for non-cash FX items (Net profit as reported minus FX gain or loss)
Commenting on the 2Q 2019 financial results, PhosAgro CEO Andrey Guryev said:
"While 2019 has seen market turbulence on unfavourable weather conditions in the USA and Europe and high export activity in China and the Middle East, PhosAgro has shown its resilience with an industry-leading EBITDA margin, impressive free cash flow generation and decreasing leverage. This performance is driven by the successful completion of our five-year strategy, which was focused on vertical integration and flexibility in distribution. This has enabled us to maximise value for a wide range of stakeholders. Consistent strong free cash flow performance and stable dividend distributions over the last four quarters shows we achieved these goals.
"Equally important, by delivering double-digit growth in production over the last 5 years PhosAgro has enhanced its ability to produce and sell products with exceptional environmental characteristics that can set the global standard. As one of the world's largest fertilizer producers, with products used in 100 countries globally, we are conscious of our role in supporting food security, protecting soil resources and producing clean and healthy agricultural products on a global scale. In the long term, we aim to further leverage the unique apatite-nepheline ore that PhosAgro mines in Khibiny and implement best available technologies to achieve our strategic goals that will strengthen our position as a producer of environmentally safe phosphate-based fertilizers while also further enhancing the Company's cash cost advantage. The Board of Directors and I have full confidence that this approach will make PhosAgro an even more sustainable producer of mineral fertilizers and unlock additional value for the Company and its products.
"Looking ahead at the short-term outlook, we believe that our 2Q 2019 EBITDA margin will be sustainable through the year end, driven by a recovery in seasonal demand from Europe and Latin America, a correction in feedstock prices, as well as a recovery in the premium NPK market and a stable nitrogen market. Our domestic market, which is a strategic priority for us, is also expected to support sales, driven by high farmer purchasing power. We are therefore comfortable to once again reiterate our full-year production guidance of around 9.4-9.5 million tonnes of fertilizers."
2Q 2019 market conditions
2Q 2019 Financial performance
In 2Q 2019, PhosAgro's revenue rose by 3% year-on-year to RUB 58.1 billion (USD 901 million), mainly driven by meaningful growth in domestic sales of 37% year-on-year, to 0.8 million tonnes, due to an early start of the high season. However, this growth was largely offset by a decline in export sales volumes of 18% year-on-year to 1.4 million tonnes.
Revenue by key products
In 2Q 2019, PhosAgro's gross profit was RUB 26.4 billion (USD 411 million) with the gross profit margin at 45%, compared to 47% in 2Q 2018. Gross profit and margin performance for the phosphate and nitrogen segments were as follows:
Consolidated EBITDA decreased by 2% year-on-year to RUB 18.3 billion (USD 284 million), with an EBITDA margin of 32% for 2Q 2019, compared to 33% in 2Q 2018. Net profit adjusted for non-cash FX items was down 21% year-on-year to RUB 9.2 billion (USD 142 million) for 2Q 2019.
In 2Q 2019, the RUB/USD exchange rate increased by 5% year-on-year to average RUB 64.6, from RUB 61.8 in 2Q 2018. This had a net positive impact, as prices for most of the Company's products are denominated in USD, while costs are primarily rouble-based. The appreciation of the rouble as of 30 June 2019 (RUB 63.1 per USD) compared to 31 March 2019 (RUB 64.7 per USD) resulted in an FX gain of RUB 2.6 billion (compared to a RUB 8.7 billion FX loss in 2Q 2018).
Net operating cash flow increased by 20% year-on-year to RUB 19.4 billion (USD 300 million) on working capital release, primarily driven by the launch of a factoring programme and an increased focus on the domestic market. In 2Q 2019, domestic sales of fertilizers accounted for 36% of total fertilizer sales volumes, compared to 27% in 1Q 2019.
PhosAgro's capital expenditure for 2Q 2019 totalled RUB 9.1 billion (USD 141 million), up by 19% year-on-year and representing 50% of the Company's EBITDA for the same period. The main capex items were scheduled maintenance and development of the upstream business, as well as finishing construction of new mid-stream capacities at Cherepovets (nitric acid, sulphuric acid and ammonium sulphate lines).
Net debt/LTM EBITDA as of 30 June 2019 declined to 1.3x from 1.8x as of 31 December 2018, reflecting solid EBITDA performance and the gradual rouble appreciation against the US dollar throughout 1H 2019. Net debt totalled RUB 109.7 billion (USD 1.7 billion) as of 30 June 2019.
Cost of Sales
Cost of sales increased by 6% year-on-year in 2Q 2019 to RUB 31.7 billion (USD 491 million). The key factors behind this growth were:
Administrative expenses for 2Q 2019 rose by 13% year-on-year to RUB 4.1 billion (USD 64 million), primarily due to 14% year-on-year growth in salaries and social contributions.
In 2Q 2019, selling expenses remained flat year-on-year around RUB 8.4 billion (USD 130 million). This performance was primarily due to:
Phosphate-based fertilizer prices are expected to stabilise in the medium term, followed by a gradual recovery driven by the following factors:
Other factors that are expected to influence the market in 2H 2019 include the launch of new phosphate-based fertilizers production capacities at OCP and Ma'aden.
Conference call and webcast:
PhosAgro will hold a conference call and webcast today at 14:30 London time (16:30 Moscow; 09:30 New York).
The call will be held in English, with simultaneous translation into Russian on a separate line. Webcast links: English: <~text text="http"><~text text="://"><~text text="event"><~text text="."><~text text="onlineseminarsolutions"><~text text="."><~text text="com"><~text text="/"><~text text="wcc"><~text text="/"><~text text="r"><~text text="/2068718-1/"><~text text="D"><~text text="1"><~text text="B"><~text text="34"><~text text="BAEC"><~text text="8"><~text text="FE"><~text text="72"><~text text="AB"><~text text="5"><~text text="FBE"><~text text="81"><~text text="D"><~text text="4207507"><~text text="AF"><~text text="?"><~text text="partnerref"><~text text="="><~text text="rss">-events Russian: <~text text="http"><~text text="://"><~text text="event"><~text text="."><~text text="onlineseminarsolutions"><~text text="."><~text text="com"><~text text="/"><~text text="wcc"><~text text="/"><~text text="r"><~text text="/2068723-1/770"><~text text="F"><~text text="2"><~text text="E"><~text text="4289"><~text text="A"><~text text="6111967147443"><~text text="A"><~text text="49"><~text text="E"><~text text="74"><~text text="C"><~text text="6?"><~text text="partnerref"><~text text="="><~text text="rss">-events Participant dial-in numbers: Russian Federation Toll +7 495 646 9315 Russian Federation Toll-Free 8 800 500 9863 United Kingdom Toll +44 207 194 3759 United Kingdom Toll-Free 0800 376 6183 United States Toll-Free 1 844 286 0643 United States Toll +1 646 722 4916 Conference ID numbers: English call: 61550404# Russian call: 50509429# For further information please contact: PJSC PhosAgro Andrey Serov, Head of Investor Relations Department +7 495 232 9689 ext 2187 email@example.com Timur Belov, Press Officer +7 495 232 9689
EM Sam VanDerlip firstname.lastname@example.org +44 7554 993 032 +7 499 918 3134
+7 916 770 89 09
+7 495 363 28 49
About the Company
PhosAgro 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.
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, 39 grades of fertilizers, feed phosphates, ammonia, and sodium tripolyphosphate, which are used by customers in 100 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.
More information about PhosAgro can be found on the website: www.phosagro.ru.
|OAM Categories:||1.2. Half yearly financial reports and audit reports/limited reviews|
|2.2. Inside information|
|EQS News ID:||864639|
|End of Announcement||EQS News Service|