Uralkali IFRS revenue drops 17% to $720 mln in Q1
MOSCOW. June 29 (Interfax) - Uralkali saw revenue decline 17% in the first quarter of 2015 year-on-year to $720 million under international financial reporting standards (IFRS), the potash miner said in a statement.
Net revenue was down 6% to $612 million.
Potash sales declined 17% to 2.53 million tonnes, although the average export price rose 19% to $256 per tonne.
Potash production (KC1) fell 8% year-on-year to 2.7 million tonnes as a result of decreased output capacity following the accident at the Solikamsk-2 mine.
"In the first quarter, lower demand across the majority of our key markets resulted in a fall in net revenue of approximately 6% year-on-year as the agricultural sector felt the adverse effect of currency fluctuations, lower crop prices and farmers using their existing stocks," said Dmitry Osipov, Uralkali CEO.
"Still, we remain confident about the long-term strong prospects of the potash industry. In March, following the Solikamsk-2 accident we reviewed and adopted an updated capacity development programme to ensure we maintain our industry leading position going forward," he said.
Shipments to all markets in H2 2015 are expected to increase following a draw-down of inventories. Overall, the Company expects global potash demand in 2015 to be down to 58-59 million tonnes from 63 million tonnes of KCl in 2014, reflecting industry destocking during Q1 2015 and a lower grain price environment," Uralkali said.
Net debt fell to $2.967 billion from $3.75 billion during Q1 2015, Uralkali said in a presentation.
Following the detection of a higher level of brine inflow and hydrogen sulphide in November 2014, the situation at the Solikamsk-2 is currently stable. Uralkali continues to implement the plan to address the consequences of the accident and mitigate the potential negative impact. The company is pumping out brine from the inflow area, proceeding with works to strengthen the cut-off walls between the Solikamsk-1 and Solikamsk-2 fields, and is tamping the water channels in the water-blocking layer. As of 29 June 2015, the sinkhole was measured 118 by 129 metres at the surface. In addition, Uralkali backfills the worked-out areas of the mine using hydraulic methods to reduce rock mass deformation. The impact of the spring high water season was limited, with the average brine inflow from 6 March 2015 until 29 June 2015 amounting to approximately 300 cubic metres per hour.
Uralkali said in March that it would build two new shafts by 2020 to safely mine the remaining reserves of Solikamsk-2. Construction costs are estimated at $723 million.