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PhosAgro Announces Strong Performance in First Half of 2011

7 September 2011

Moscow – PhosAgro (MICEX, RTS, LSE: PHOR), a leading global vertically integrated phosphate-based fertiliser producer, today publishes its Interim Condensed Consolidated IFRS Financial Statements as at 30 June 2011 with the Independent Auditors’ Review Report. For the first six months of 2011, PhosAgro net income increased 156% year-on-year (y-o-y) to RUB 12.3 billion (USD 429 million) and diluted earnings per share grew 126% y-o-y to RUB 926 (32.35 USD).

Financial and Operational Highlights:

6M 2011

6M 2010

y-o-y Change


















Net Income






Diluted earnings per share









Phosphate Fertiliser and MCP sales




Phosphate Rock sales




Nitrogen fertilisers sales




Rates: average 6M 2010: 30.07 USD/RUB; 6M 2011: 28.62 USD/RUB
As of 30 June 2010: 31.20 USD/RUB; as of 30 June 2011: 28.08 USD/RUB
*EBITDA is calculated as Operating Profit adjusted for Depreciation and Amortisation

Operational and Other Highlights

  • 6M 2011 production:
    • Phosphate rock: 3,861 kmt
    • Nepheline concentrate: 478 kmt
    • Phosphate-based fertilisers and feed phosphate: 2,041 kmt
    • Ammonium nitrate: 239 kmt
    • Urea: 252 kmt
  • Modernization of #4 MAP/DAP line at Ammophos and Urea capacity increase at Cherepovetsky Azot on track for launch in 2012

PhosAgro today reports 6M 2011 net profit of RUB 12.3 billion (USD 429 million), an increase of 156% year-on-year (y-o-y) from RUB 4.8 billion (USD 160 million) in 6M 2010.  Revenue for the period was 35% higher y-o-y at RUB 48.8 billion (USD 1.7 billion) compared to RUB 36.1 billion (USD 1.2 billion) for 6M 2010.

Operating profit for the first six months of 2011 was RUB 14.9 billion (USD 520 million), which is 142% higher than the result for 6M 2010.  EBITDA increased 106.4% y-o-y to RUB 17.8 billion (USD 620 million) in 6M 2011, representing an EBITDA margin of 36.4%, compared to an EBITDA margin of 23.8% on a RUB 8.6 billion (USD 286 million) result in 6M 2010.  Financial performance in the first six months of 2011 was influenced primarily by higher fertiliser prices compared to the same period in 2010.

Cash flow from operations amounted to RUB 17.9 billion (USD 627 million) in 6M 2011, compared to RUB 4.3 billion (USD 142 million) in 6M 2010.  The company’s capital expenditure (capex) during the same period was RUB 5.9 billion (USD 205 million), compared to RUB 3.3 billion (USD 109 million) in 6M 2010.  Investments in the construction of ore shaft № 2 at the Kirovsky underground mine (expected to enable the Company to increase production to 14 mtpa in 2-3 years), as well as construction of new urea capacity and a 32 Mw gas-powered electricity generation facility at Cherepovetsky Azot, were the main sources of capex in the first half of 2011.  Net debt stood at RUB 19.8 billion (USD 705 million), up by RUR 16.1 billion from 31 December 2010. This puts PhosAgro’s Net debt/annualized EBITDA at a very comfortable level of 0.56x.

CEO Maxim Volkov comment:

“I am very pleased to announce a strong set of financial results in our inaugural post-IPO disclosure.  While fundamental demand to increase crop output has lifted the fertiliser market globally, PhosAgro’s performance and margins are underpinned by our position as a vertically-integrated, low-cost business with a premium resource base.  In addition, our financial position is exceptionally stable, with low debt levels and a successful IPO on the London Stock Exchange in July.

“We see continued tightness in soft commodities markets at least through the end of the year supporting fertiliser prices and volumes globally as farmers invest in maximizing crop output.  The new capacity from Ma’aden in Saudi Arabia has not to date caused disruptions to the market, and we believe that demand will at least match capacity going forward.

“PhosAgro’s unique position as a global leading phosphate-based fertiliser producer with a highly integrated, low-cost production model, combined with a strong balance sheet, means that the company is well positioned to deliver value for its shareholders.”

Market Conditions

While global economic uncertainties continued in connection with questions about the sustainability and pace of economic growth, as well as sovereign debt in a number of European countries, the fundamentals driving the fertiliser market remained strong.  Grain stocks-to-use ratios are at historically low levels on strong demand, and a string of weather-related factors have reduced expected output this year.  This has helped sustain soft commodities prices at levels that make increased fertiliser application an attractive way for farmers to increase output. 

Demand for phosphate fertilisers was robust throughout the first six months of 2011, with the export price for DAP during the period rising from USD 590/mt to USD 650/mt FOB Tampa, representing an average weekly price of USD 615/mt.  Near term demand is expected to continue to support prices, driven by seasonal demand in India, the United States, West Europe, while factors affecting supply include the continued shut-down of Mosaic’s South Fort Meade mine and the expectation of lower phosphate fertilisers exports from China. 

Nitrogen fertilisers also continue to perform well, with Urea prices in the first six months of 2011 rising from USD 350/mt to USD 485/mt FOB Baltics, representing an average weekly price of USD 377/mt.  While gas prices for US producers have made them globally competitive, lower supply from China combined with demand from Asia and Latin America continues to support prices.  PhosAgro’s nitrogen margins also benefit from significantly lower gas costs in Russia.


Phosphate segment revenue in 6M 2011 was strong, increasing 32.4% to RUB 42,508 million (USD 1,485 million), versus RUB 32,114 million (USD 1,068 million) a year earlier.  Segment gross profit for the period was RUB 18,422 million (USD 644 million), up 65.5% from RUB 11,134 million (USD 370 million) in the first six months of 2010. 

Phosphate-based fertilisers and feed phosphate MCP sales were largely unchanged in 6M 2011 and totalled 1,992 kmt versus 1,920 kmt a year earlier. Phosphate rock sales in 6M 2011 amounted to 1,588 kmt compared to 1,933 kmt in 6M 2010. The decrease in phosphate rock sales in 6M 2011 was principally due to a slight decrease in phosphate rock production and a slight increase in the production and sales of phosphate-based fertilisers and feed phosphates, which resulted in an increase in internal consumption of phosphate rock.

Export MAP revenue per tonne rose y-o-y in 6M 2011 by 26.2% from RUB 12,714 (USD 423) to RUB 16,039 (USD 560). (Domestic revenue per tonne: up 54.6% from RUB 10,835 (USD 360) to RUB 16,752 (USD 585)).  Export phosphate rock revenue per tonne increased significantly y-o-y from RUB 4,288 (USD 143) to RUB 8,010 (USD 280), or by 86.8% (Domestic revenue per tonne: up 13.8% from RUB 3,162 (USD 105) to RUB 3,599 (USD 126)). 

PhosAgro is largely self-sufficient in phosphate fertiliser production and therefore is not subject to price inflation for phosphate rock.  However, expenditures on sulphur and sulphuric acid, used primarily in the production of phosphate fertilisers, amounted to RUB 2,007 million (USD 70 million) in 6M 2011, up 75.0% from RUB 1,147 million (USD 38 million) a year ago.


Revenue in the nitrogen segment was RUB 5,874 million (USD 205 million) in 6M 2011, an increase of 73.1% y-o-y, compared to RUB 3,394 million (USD 113 million) in 6M 2010.  Gross profit rose 159.6% to RUB 3,917 million (USD 137 million) from RUB 1,509 million (USD 50 million) in the first six months of 2010. 

Nitrogen-based fertilisers and ammonia sales in 6M 2011 increased to 491 kmt and 112 kmt, respectively, compared to 404 kmt and 83 kmt in 6M 2010.  The increases in nitrogen-based fertilisers and ammonia sales in 6M 2011 were mainly due to increases in global demand for these products.

Average revenue per tonne for exported urea was 31.7% higher in 6M 2011 compared to 6M 2010, at RUB 9,794 (USD 342) vs. RUB 7,437 (USD 247), respectively, (Domestic revenue per tonne: up 17.3% from RUB 8,614 (USD 286) to RUB 10,100 (USD 353)).

The price of natural gas, while significantly lower than prices for producers in Europe and the United States, continue to increase in Russia as Gazprom gradually moves towards liberalizing domestic gas prices.  The Group's average natural gas purchase price increased in 6M 2011 by 14.6% to RUB 3,021 (USD 106) /th. m3 from RUB 2,635 (USD 88)/th. m3 in H1 2010.

Financial Performance

Cost of sales in 6M 2011 increased at a slower rate than revenue, and at a slower pace than Russian PPI of 19.3%, for the period from 30 June 2010 to 30 June 2011.  The result amounted to RUB 26,934 million (USD 941 million), an increase of 14.4% from RUB 23,545 million (USD 783 million) in 6M 2010.  This increase was primarily due to rising costs of raw materials such as sulphur and fuel compared to 6M 2010. 

Selling, general and administrative expenses also increased during the first half of 2011 compared to the same period in 2010, also at a slower rate than revenue and gross profit.  Administrative expenses rose just 3.0% to RUB 2,562 million (USD 90 million) in 6M 2011.  Selling expenses equalled RUB 3,331 million (USD 116), up 12.3% from RUB 2,967 (USD 99 million) million in 6M 2010.

Capital expenditure (capex) during the first half of 2011 amounted to RUB 5,857 million (USD 205 million), 79% higher than the RUB 3,272 billion (USD 109 million) spent on capex in 6M 2010.  These expenditures were focused on the construction of ore shaft № 2 at the Kirovsky underground mine (expected to enable the mine to increase production to 14 mtpa in 2-3 years), as well as construction of new urea capacity and a 32 Mw gas-powered electricity generation facility at Cherepovetsky Azot.  All of these projects remain on track for completion within planned timelines.

Total debt at 30 Jun 2011 amounted to RUB 26,767 million (USD 953 million), versus RUB 8,932 million (USD 286 million) at the end of 2010.  This increase was primarily due to new EUR- and USD-denominated long- and short-term debt facilities obtained in the first half of the year at very low interest rates. 


  • As a leading global producer of phosphate fertilisers, PhosAgro is well positioned to benefit from long-term global trends that will drive farmers to invest in enhancing crop output;
  • Vertical integration helps the company to achieve the full benefit of higher prices and minimize the effects of volatility in key input prices;
  • In the near-term, demand and fertiliser prices are expected to remain stable, while some further inflation in input costs compared to H1 2011 is possible.
  • The fertiliser supply outlook is supportive of current price levels: the expected impact of Ma’aden start production has not materialized, while Chinese export of phosphate fertilisers is expected to decline due to higher internal use.

For further information please contact:

OJSC "PhosAgro"
+7 495 231 2747
Irina Evstigneeva, Head of Corporate Finance and Investor Relations
Timur Belov, Press Officer

+ 44 20 7920 2317
Stuart Leasor

+7 495 663 8005
Sam VanDerlip

Notes to Editors

PhosAgro is a leading global vertically integrated phosphate-based fertiliser producer.  The Group focuses on the production of phosphate-based fertilisers, feed phosphate and high-grade phosphate rock, as well as ammonia and nitrogen-based fertilisers.  In 2010, the Group was the largest phosphate-based fertiliser producer in Europe, the largest producer of high-grade phosphate rock worldwide and the third largest MAP/DAP producer in the world (excluding China) according to Fertecon. PhosAgro controls approximately 2.1 billion tonnes of high quality apatite-nepheline ore resources, which translates to over 75 years of production. The Group's strategic aim is to reinforce its position as a leading integrated global producer of fertilisers and to enhance overall value for its shareholders through increasing fertiliser and feed phosphate production capacities, utilising the full potential of its apatite-nepheline ore reserves base and continuing to improve operational flexibility and efficiency. PhosAgro is listed on the MICEX stock exchange (MICEX: PHOR) with its global depositary receipts listed on the London Stock Exchange (PHOR LI). The Group had revenues of approximately $2.5 billion in 2010 with EBIDTA of approximately $674 million. PhosAgro employs approximately 25,000 people.

For further information on PhosAgro please visit the company's website: www.PhosAgro.ru