The Board of Directors of PhosAgro (Moscow Exchange, LSE: PHOR), one of the world’s leading vertically integrated phosphate-based fertilizer producers, has declared that the Company’s operational and financial results for 2019 were a success.
In summing up the results for 2019, PhosAgro Management Board Chairman, CEO and Board of Directors member Andrey Guryev said:
“PhosAgro continues its confident development as a result of the potential created by the previous investment cycle, as well as ongoing work to achieve further efficiency gains across its production sites.
“Our vertical integration provides for a high degree of self-sufficiency in key inputs, which has enabled PhosAgro to remain one of the most efficient enterprises in the industry globally. This has allowed us to remain in a comfortable position during what has been a difficult period for many industry players, marked by low prices in global fertilizer markets.
“In 2019, PhosAgro’s enterprises produced a record volume of mineral fertilizers and feed phosphates, which rose by 6.1% year-on-year to more than 9.5 million tonnes and is fully in line with previously announced plans. Phosphate rock and nepheline concentrate production grew by 5.8% year-on-year to a record 11.7 million tonnes.
“Sales volumes to our priority domestic market and to other CIS countries surpassed 3 million tonnes for the first time in history, rising by 10.5% and 65%, respectively. Today, according to the Russian Fertilizer Producers Association, 35% of all mineral fertilizers purchased by Russian farmers are produced by PhosAgro. At the same time, during the past year we continued to work on expanding our distribution network, which is the largest in Russia, by opening three new regional centres. Today PhosAgro sells its products directly to farmers in 71 Russian regions, from Kaliningrad to Vladivostok. PhosAgro has also strengthened its position in the key European market, with sales volumes increasing by 28% year-on-year to 2.6 million tonnes.
“PhosAgro was awarded as a ‘Leader of the Commodities Trading Market’ for its contribution to the development of exchange-based trading of mineral fertilizers in Russia. According to the St Petersburg International Mercantile Exchange, around 40% of mineral fertilizers sold on the exchange in 2019 were from PhosAgro.
“We have continued to treat efforts to integrate the UN’s Sustainable Development Goals (SDGs) into our operations as a priority. In May 2019, PhosAgro’s Board of Directors established a Sustainable Development Committee, which is headed by Irina Bokova, an independent director with unique expertise in this field and who previously served as the Director-General of UNESCO.
“While recognising the importance of all 17 SDGs, PhosAgro supports UN efforts by directly contributing to 10 of them. In September 2019, PhosAgro was granted LEAD status for its commitment to the UN Global Compact (an international initiative for socially responsible businesses) and its 10 principles for responsible business. PhosAgro was recognised as one of 36 global companies making the greatest contribution to sustainable development.
“PhosAgro is an active participant in projects to create the Green One standard for Russian agricultural products with improved environmental characteristics. In particular, in support of the Green One standard, PhosAgro initiated the idea of eco-labelling, which has been supported by all members of the Russian Fertilizer Producers Association, confirming the high environmental characteristics of Russian-made mineral fertilizers. In January, we presented the eco-label and a new packaging design for our fertilizers, which reflects the idea of environmental friendliness and participation in the values of the Russian Green One standard, to participants and visitors of the Green Week 2020 international agricultural exhibition held in Berlin.
“PhosAgro considers environmental safety an overarching priority. Last year, the Company allocated over RUB 9 billion for environmental protection. And as has
“In line with tradition, last year we allocated more than RUB 2.5 billion to social and charitable projects. In 2019 we began to see the first results of the educational programme implemented by PhosAgro. Nine children who attended PhosAgro Classes, a project implemented since 2013 at PhosAgro sponsored schools in the cities where the Company operates, have graduated from specialised universities and have been hired by PhosAgro. Starting from 2022 we aim to recruit up to 50 young specialists who have been trained as part of our educational projects every year.”
At the meeting, the results of KPMG’s assessment of the Board of Directors’ work were taken under advisement.
After discussing PhosAgro’s IFRS financial results for FY 2019, which will be disclosed tomorrow, the Board of Directors recommended that the Annual General Meeting of Shareholders (AGM) approve a dividend payment of RUB 2.33 billion, or RUB 18 per ordinary share (RUB 6 per global depositary receipt). As a result, total dividend payments for 2019 may remain at the same level as 2018, when the global pricing environment for fertilizers was significantly better, and amount to RUB 24.9 billion.
The Board also took note of the annual financial statements for 2019 and submitted them for consideration at the AGM. A report from the Company’s Internal Audit Department on its work for 2019 was also approved at the meeting, along related party transactions. The Company’s annual report for 2019 received preliminary approval and has been submitted for approval by the AGM.
In addition, three risk-related issues were reviewed: an assessment of the effectiveness of the Company’s risk management system in 2019, the results of a reassessment of Company risks, and an update of the risk map for 2020. The Board of Directors also took note of information on the development of the system for procuring material goods by PhosAgro companies.