Moscow – PhosAgro ("PhosAgro" or "the Company") (Moscow Exchange, LSE: PHOR), a leading global vertically integrated phosphate-based fertiliser producer, today announces the publication of its audited consolidated IFRS financial results for the year ended 31 December 2012. PhosAgro generated net income for the year of RUB 24.5 billion (USD 788 million), compared to RUB 22.5 billion (USD 765 million) in 2011. Basic and diluted earnings per share came to RUB 166 (USD 5.34) for 2012 compared to RUB 161 (USD 5.48) in 2011.
2012 Financial and Operational Highlights:
Result |
2012 |
2011 |
Change (RUB vs. RUB), % |
||
---|---|---|---|---|---|
RUB |
USD |
RUB |
USD |
||
Revenue |
105,303 m |
3,387 m |
100,518m |
3,420m |
5% |
EBITDA* |
34,695 m |
1,116 m |
35,371m |
1,204m |
(2%) |
EBITDA margin |
33% |
33% |
35% |
35% |
|
Net Profit |
24,510 m |
788 m |
22,476m |
765m |
9% |
Earnings per share |
166 |
5.34 |
161 |
5.48 |
3% |
Sales volumes |
kmt |
kmt |
% |
||
Phosphate-based fertilisers (MAP/DAP/NPK/NPS**) |
4,242.9 |
4,061.7 |
4% |
||
Nitrogen fertilisers |
1,094.9 |
889.4 |
23% |
||
Apatit mine and beneficiation plant |
4,583.1 |
4,149.3 |
10% |
||
Other products |
257.3 |
347.0 |
(26%) |
RUB/USD Rates: average 2012: 31.0930; average 2011: 29.3874
As of 31 December 2012: 30.3727; as of 31 December 2011: 32.1961
*EBITDA is calculated as operating profit adjusted for depreciation and amortisation.
** A compound of nitrogen, phosphate and sulphur.
Strategic highlights
- Total fertilizer production and sales in FY 2012 grew 8.6% a record 5.4 million tonnes and 7.8% to an all-time high of 5.3 million tonnes, respectively;
- Production facilities operated at full capacity throughout 2012;
- PhosAgro has achieved a 93% increase in fertilizer production over the past 10 years (2002-2012).
- Flexible production and sales models enabled PhosAgro to adapt to changes in global demand patterns;
- Launch of brand new 500 kt p.a. urea plant on 2H 2012 has doubled PhosAgro's urea production capacity. As result, nitrogen fertilizers production and sales grew 21.8% and 23.1% y-o-y, respectively, in 2012.
- 17 July 2012: Completed PhosAgro-Cherepovets merger, combining subsidiaries Ammophos and Cherepovetsky Azot into a single entity;
- 4 September 2012: PhosAgro won the privatisation tender for the Russian Federation’s 20% stake in Apatit and increased its stake in Apatit’s share capital from 57.57% to 77.57% after settlement in October 2012;
- 17 October 2012: PhosAgro acquired 24% of Nordic Rus Holding, which owns more than 7% of Apatit’s share capital;
- 8 November 2012: PhosAgro announced the launch of a mandatory tender offer for the acquisition of Apatit shares held by minority shareholders;
- December 2012: Consolidated technical phosphate plant Metachem through increase of PhosAgro’s stake to 74.76%.
PhosAgro today reports its 2012 net profit of RUB 24.5 billion (USD 788 million), an increase of 9% from RUB 22.5 billion (USD 765 million) in 2011. Revenue for the period was up 5% y-o-y at RUB 105.3 billion (USD 3,387 million) compared to RUB 100.5 billion (USD 3,420 million) for 2011.
PhosAgro’s 2012 EBITDA was RUB 34.7 billion (USD 1,116 million), down 2% from RUB 35.4 billion (USD 1,204 million) a year earlier. EBITDA margin remained relatively stable at 33%, compared to 35% for 2011. Operating profit for 2012 was RUB 28.2 billion (USD 906 million), a 4% decrease from 2011.
Cash flows from operating activities amounted to RUB 25.5 billion (USD 819 million) in 2012, compared to RUB 32.4 billion (USD 1,102 million) in 2011. The company’s capital expenditure in cash terms during the year ended 31 December 2012 was RUB 13.4 billion (USD 430 million), compared to RUB 12.9 billion (USD 439 million) in 2011.
Net debt at 31 December 2012 increased to RUB 26.8 billion (USD 883 million) from RUB 15.2 billion (USD 472 million) on 31 December 2011, resulting in a net debt to EBITDA ratio of 0.77x.
Commenting on the 2012 IFRS results PhosAgro CEO Maxim Volkov said: “In 2012 we increased revenue by 5% y-o-y, while delivering growth in production and sales of phosphate-based fertilisers of 6% and 4%, respectively. By operating at full capacity and increasing the efficiency of our production units we were able to maintain a very solid EBITDA margin of 33%, which is only a slight decrease in a year when DAP/MAP pricing was under pressure globally: the average price of DAP in 2012 was USD 539 FOB Tampa, down 14% y-o-y from an average of USD 624 for 2011.
“We have also delivered on a number of key strategic priorities, including consolidation of our key subsidiaries and significant capacity increases.
“At the same time we continued to pay over 49% of our net profits attributable to PhosAgro shareholders in dividends, and will continue to work towards increasing shareholder value through further expansion projects while maintaining a good level of dividend payments.”
2012 market conditions
Phosphate segment
Result |
2012 RUB million |
2011 RUB million |
Change, % |
---|---|---|---|
Revenue |
91,233 |
88,982 |
3% |
Cost of goods sold |
(55,276) |
(50,631) |
9% |
Gross profit |
35,957 |
38,351 |
(6%) |
Phosphate segment revenue increased by 3% y-o-y and totalled RUB 91,233 million (USD 2,934 million) in 2012. The Company increased production of phosphate-based fertilisers and MCP by 6% y-o-y, while sales volumes were up 4% y-o-y. Production and sales volumes for phosphate rock and nepheline concentrate increased in 2012 compared to 2011 by 3% and 10%, respectively.
Revenue from NPK fertiliser export sales increased 39% in 2012 to RUB 15,617 million (USD 502 million) from RUB 11,254 million (USD 383 million) as a result of a 48% increase in NPK export sales volumes. Revenue from NPS export sales increased over 3 times, mainly due to an identical rise in export volumes. The record levels of NPK production and sales contributed to a 24% decline in export sales revenue for DAP/MAP to RUB 29,969 million (USD 964 million) in 2012 from RUB 39,594 million (USD 1,347 million) for 2011. Domestic MAP revenues increased 24% to RUB 3,887 million (USD 125 million) from RUB 3,138 million (USD 107 million) as a result of an 8% increase in revenue per tonne and a 15% increase in sales volumes. Revenue from phosphate rock increased 34% y-o-y in 2012, reaching RUB 19,452 million (USD 626 million) on higher revenue per tonne (domestic: up 19% y-o-y; export: up 8% y-o-y) and higher sales volumes (domestic: up 6% y-o-y; export: up 37% y-o-y).
PhosAgro is largely self-sufficient in key raw materials for phosphate fertiliser production, and therefore is not subject to price inflation for phosphate rock. Expenditure on potash, a key raw material for NPK fertilisers, increased 52% y-o-y in 2012, reaching RUB 4,598 million (USD 148 million), due to a 21% y-o-y increase in volumes of potash purchased and a 26% increase in cost per tonne to RUB 8,202 (USD 264) from RUB 6,505 (USD 221). This was partially compensated by a 26% y-o-y decline in expenditures on sulphur and sulphuric acid, used primarily in the production of phosphate-based fertilisers, to RUB 3,597 million (USD 116 million) in 2012 from RUB 4,838 million (USD 165 million) in 2011. Sulphur purchase prices declined by 25% y-o-y to RUB 2,442 (USD 79) per tonne for 2012 from RUB 3,271 (USD 111) per tonne in 2011, while volumes purchased decreased slightly (less than 1% y-o-y) in 2012. These factors, combined with a 4% increase in sales volumes of phosphate-based fertilisers, contributed to a 9% increase in cost of goods sold to RUB 55,276 million (USD 1,778 million) from RUB 50,631 million (USD 1,723 million).
The phosphate segment’s gross profit for 2012 decreased 6% to RUB 35,957 million (USD 1,156 million) from RUB 38,351 million (USD 1,305 million), resulting in a 2012 gross profit margin of 39%, compared to 43% in 2011.
Principal phosphate-based fertilisers, feed phosphate and phosphate rock: revenue per tonne
Product |
2012 RUB |
2011 RUB |
change, % |
4Q 2012 RUB |
4Q 2011 RUB |
change, % |
---|---|---|---|---|---|---|
Domestic: |
||||||
MAP |
18,704 |
17,387 |
8% |
17,912 |
17,672 |
1% |
DAP |
17,676 |
17,444 |
1% |
17,385 |
18,903 |
(8%) |
NPK |
14,569 |
15,944 |
(9%) |
14,222 |
16,337 |
(13%) |
MCP |
19,273 |
18,581 |
4% |
19,061 |
18,678 |
2% |
NPS |
12,259 |
11,209 |
9% |
12,742 |
12,500 |
2% |
Phosphate rock |
4,199 |
3,536 |
19% |
4,351 |
3,445 |
26% |
Export: |
||||||
MAP |
16,916 |
17,032 |
(1%) |
16,976 |
19,539 |
(13%) |
DAP |
16,646 |
17,150 |
(3%) |
16,557 |
18,881 |
(12%) |
NPK |
13,949 |
14,917 |
(6%) |
13,035 |
16,856 |
(23%) |
MCP |
17,205 |
17,780 |
(3%) |
17,752 |
19,777 |
(10%) |
NPS |
11,628 |
12,593 |
(8%) |
10,649 |
14,034 |
(24%) |
Phosphate rock |
9,138 |
8,475 |
8% |
8,819 |
9,442 |
(7%) |
Nitrogen segment
Result |
2012 RUB million |
2011 RUB million |
y-o-y change, % |
---|---|---|---|
Revenue |
13,048 |
10,727 |
22% |
Inter-segment revenues |
3,175 |
3,629 |
(13%) |
Cost of goods sold |
(7,632) |
(7,495) |
2% |
Gross profit |
8,591 |
6,861 |
25% |
Revenue in the nitrogen segment was RUB 13,048 million (USD 420 million) in 2012, an increase of 22% from RUB 10,727 million (USD 365 million) in 2011. Sales volumes of nitrogen fertilisers increased 23% y-o-y in 2012, primarily as a result of the ramp up and launch of the new urea production unit at PhosAgro-Cherepovets during the second half of 2012.
Urea revenue increased 68% y-o-y to RUB 8,394 million (USD 270 million) in 2012 from RUB 5,004 million (USD 170 million) a year earlier as result of a 62% y-o-y increase in sales volumes and a 3% y-o-y increase in export prices. This was partially offset by a 26% y-o-y decrease in revenue from ammonium nitrate (AN) sales to RUB 2,837 million (USD 91 million) from RUB 3,822 million (USD 130 million).
As a result, nitrogen segment gross profit increased by 25% y-o-y to RUB 8,591 million (USD 276 million) in 2012, with a gross profit margin of 53%.
Principal nitrogen fertilisers: revenue per tonne
Prod1uct |
2012 RUB |
2011 RUB |
Change, % |
4Q 2012 RUB |
4Q 2011 RUB |
Change, % |
---|---|---|---|---|---|---|
Domestic: |
||||||
Ammonium nitrate |
8,601 |
7,550 |
14% |
9,707 |
8,466 |
15% |
Urea |
12,455 |
13,021 |
(4%) |
12,300 |
14,389 |
(15%) |
Export: |
||||||
Ammonium nitrate |
10,437 |
8,954 |
17% |
10,641 |
9,552 |
11% |
Urea |
11,691 |
11,301 |
3% |
11,669 |
14,717 |
(21%) |
Cost of goods sold
PhosAgro’s cost of goods sold rose by 7% y-o-y in 2012 to RUB 60,136 million (USD 1,935 million) from RUB 56,196 million (USD 1,913 million). This was in line with the Company’s 8% increase in fertiliser sales volumes. The increase in cost of sales was primarily due to the following changes in 2012 compared to 2011:
· A 9% increase in materials and services costs due to higher fertiliser sales volumes and inflation (Russian PPI of 5% for 2012) to RUB 21,792 million (USD 701 million) from RUB 20,006 million (USD 681 million);
· A 52% increase in expenditure on potash due to substantially higher NPK sales (up 39% y-o-y in volumes) as well as a 26% increase in potash cost per tonne to RUB 8,202 (USD 264) in 2012 from RUB 6,505 (USD 221) in 2011;
· An 16% increase in expenditure on natural gas to RUB 5,733 million (USD 184 million) from RUB 4,951 million (USD 168 million). This was due to an 8% increase in consumption of natural gas related to an 8% y-o-y increase in ammonia production, and to the launch of a new 32 MW electricity generation unit at the Cherepovetsk nitrogen complex, as well as to an 8% y-o-y increase in the price of gas to RUB 3,248 (USD 104) per thousand cubic meters from RUB 3,015 (USD 103) in 2011.
Item |
2012 |
2011 |
Change y-o-y |
|||||
---|---|---|---|---|---|---|---|---|
RUB million |
USD million |
% of cost of sales |
RUB million |
USD million |
% of cost of sales |
RUB mln |
% |
|
Materials and services |
21,792 |
701 |
36% |
20,006 |
681 |
36% |
1,786 |
9% |
Salaries and social contributions |
11,963 |
385 |
20% |
11,078 |
377 |
20% |
885 |
8% |
Potash |
4,598 |
148 |
8% |
3,026 |
103 |
5% |
1,572 |
52% |
Natural gas |
5,733 |
184 |
9% |
4,951 |
168 |
9% |
782 |
16% |
Depreciation |
5,936 |
191 |
10% |
5,486 |
187 |
10% |
450 |
8% |
Fuel |
4,579 |
147 |
8% |
4,207 |
143 |
7% |
372 |
9% |
Sulphur and sulphuric acid |
3,597 |
116 |
6% |
4,838 |
165 |
9% |
(1,241) |
(26%) |
Electricity |
3,255 |
105 |
5% |
3,290 |
112 |
6% |
(35) |
(1%) |
Other items |
88 |
3 |
0% |
51 |
2 |
0% |
37 |
73% |
Change in stock of WIP and finished goods |
(1,405) |
(45) |
(2%) |
(737) |
(25) |
(2%) |
(668) |
91% |
Total |
60,136 |
1,935 |
100% |
56,196 |
1,913 |
100% |
3,940 |
7% |
Other expenses
Administrative expenses rose by 10% y-o-y to RUB 6,646 million (USD 214 million) in 2012 from RUB 6,036 million (USD 197 million) in 2011. This was mainly due to an increase in salaries and social contributions of RUB 216 million (USD 7 million), or 6%, primarily as a result of increases in salaries in line with 2012 CPI of 6.6%, and continued pay-outs related to employee redundancy.
Selling expenses rose by 19% y-o-y to RUB 7,720 million (USD 248 million) in 2012 from RUB 6,492 million (USD 221 million) in 2011. The Russian Railways infrastructure tariff and operators’ fees increased by 10% y-o-y to RUB 3,825 million (USD 123 million) from RUB 3,488 million (USD 119 million) as a result of a 6% increase in the Russian Railways tariff and increased transportation volumes. Port and stevedoring expenses rose by 47% to RUB 2,309 million (USD 74 million) from RUB 1,571 million (USD 53 million) y-o-y primarily due to a 9% increase in export sales volumes of PhosAgro’s end products and a substantial increase of CFR deliveries as a result of the introduction of container sales from the beginning of 2012.
Rouble exchange rates have experienced significant volatility in 2011 and 2012. The average RUB/USD rate for 2012 was 31.0930, an increase of 6% from the average for 2011 of 29.3874. PhosAgro uses foreign currency-denominated loans as a natural hedge against export sales, which accounted for approximately 69% of revenue in 2012. While the weaker rouble increases export sales in rouble terms, the Company accounts for the foreign exchange rate gain or loss at the end of the period on foreign currency denominated loans. From 31 December 2011, the rouble appreciated against the USD from 32.1961 to 30.3727 as of 31 December 2012, resulting in an exchange rate gain of RUB 1,576 million, compared with a loss of RUB 2,836 million in 2011.
PhosAgro’s capital expenditure, which consists of all additions to property, plant and equipment, amounted to RUB 14,881 million (USD 479 million) in 2012, compared to RUB 16,801 million (USD 572 million) in 2011. Capital expenditure focused on the construction of the main ore shaft № 2 at the Kirovsky underground mine (expected to enable the mine to increase production up to 14 mtpa after 2016) as well as the construction of the new 500 kt p.a. urea production line and a 32 MW electricity generation unit at PhosAgro’s Cherepovets site, which were officially launched on 26 October 2012.
Total debt at 31 December 2012 amounted to RUB 36,469 million (USD 1,201 million), versus RUB 32,153 million (USD 999 million) at the end of 2011. The increase in total debt was due to new short-term debt facilities obtained during the period, denominated in USD, EUR and RUB.
Outlook
Market:
Company:
· PhosAgro has completed the mandatory tender offer for the acquisition of Apatit shares from minority shareholders following its purchase of the Russian Government’s 20% stake in Apatit in October 2012, resulting in PhosAgro and affiliated companies currently owning around 96% of Apatit. The Company will continue to focus on consolidation of up to 100% of Apatit shares, followed by the consolidation of PhosAgro-Cherepovets shares;
· The Company is starting several significant expansion projects, including: a new 760 kt per annum ammonia plant, a new 450 kt per year flexible NPK production line at Balakovo Mineral Fertilizers and a 100 kt per year PKS production line at Metachem.
Conference Call and Webcast
On 24 April 2013 at 13:00 London time (16:00 Moscow; 08:00 New York) PhosAgro will host a conference call and webcast to present its audited consolidated IFRS financial results for the full year ended 31 December 2012 and its operating results for the three months ended 31 March 2013.
PhosAgro CEO Maxim Volkov will answer questions from conference call and webcast participants after a presentation of the results.
The call will be held in English, with simultaneous translation into Russian on a separate line. Participants will be required to tell the operator their preferred language when dialling in.
Webcast links:
English: www.media-server.com/en
Russian: www.media-server.com/ru
Conference call dial-ins:
Moscow: +7 499 272 4337
New York: +1 646 843 4608
London: +44 (0) 20 3003 2666
Toll Free:
UK: 0808 109 0700
USA: 1 866 966 5335
Russia (Moscow only): 8 10 8002 1774011
Conference call password: PhosAgro
A replay of the webcast and conference call in Russian and English, as well as a transcript in English, will be made available on PhosAgro’s website shortly after the call.