Uralkali revenue declines 18% to $738 mln in Q1
MOSCOW. June 17 (Interfax) - Revenue at Russia potash producer Uralkali declined 18% in the first quarter of 2013 year-on-year to $738 million under international financial reporting standards (IFRS), the company said in a press release.
The decline was largely the result of the decrease in the average export price (FCA) to $313 per tonne in the first quarter of 2013, from $376 per tonne in the first quarter last year, the press release said.
Uralkali raised production of potassium chloride 10% to 2.1 million tonnes in the three months. Sales in the period declined 10% year-on-year to 1.9 million tonnes.
Net sales revenues were down 21% at $614 million.
Net company debt amounted to $2.3 billion on June 1.
Uralkali operated at up to 70% load on capacity in Q1.
"In Q1 2013 the company's performance reflected the market conditions which only started to recover following a weak H2 2012. Consistent with our announcements in November 2012, we decreased the output in Q1 and utilized this time to implement maintenance and development works. The start of the year is traditionally slow with potash consumers only preparing for the upcoming planting campaign. We see that Q2 began with robust demand from our customers, as application season approached. With increased planting acreage expected this year supported by low grain stocks and positive agriculture economics, we hope to see worldwide potash consumption growing by around 7% in 2013 compared to 2012," company chief Vladislav Baumgertner is quoted in the statement as saying.
"The company has to date completed freezing holes drilling at shaft #1 of the new Ust-Yayvinsky mine, with similar works in progress at shaft #2 and project works on the above-ground facilities going at a high pace," the statement says. "Another major project for Q1 2013 was the ongoing granulation expansion at Solikamsk-2, which, once completed, will increase the plant's granulation capacity by 0.5 million tonnes to 1.55 million tonnes per year," it says.
Chinese and Indian importers returned to the potash fertilizer market in Q1. China signed contracts for 3.1 million tonnes of potassium at $400 per tonne on CFR terms, where contracts for H1 2012 were for 2.1 million tonnes for $470/tonne. According to varying estimates, India contracted with international suppliers for 3.7 million tonnes in the 2013/2014 financial year at $427/tonne (CFR), with an option to buy an additional 0.9 million tonnes of potassium chloride.
"Brazil was the most active market in Q1 2013. Very strong demand is anticipated in July and August as buyers will seek to stock up ahead of the September/October application season. Potash demand is expected to exceed last year's record level, potentially reaching 7.8-7.9 million tonnes in 2013," the statement says.
Demand in North America is projected to grow this year to 9 million tonnes from 8 million tonnes in 2012.
Uralkali also anticipates rising demand for potash in Southeast Asia.
"Former Soviet Union markets (in particular, Russia, Ukraine and Belarus) are expected to demonstrate growth in potash consumption this year, though the Russian market contracted from 0.5 million tonnes in Q1 2012 to 0.4 million tonnes in Q1 2013, largely driven by the change in domestic potash pricing scheme following Russia's entry to the WTO. The new market system is expected to work more efficiently starting from Q2 onwards, and the Russian market is expected to return to the annual market growth of 10% a year that it has recorded over the last decade," the statement says.
In January, Belarusian Potash Company (BPC, Uralkali and Belaruskali's trader on export markets) concluded contracts with major Chinese mineral fertilizer importers Sinochem and CNAMPGC for the first-half deliver of potash at $400/tonne (CFR) - 700,000 tonnes in all, with an option for 300,000 tonnes.
In February, BPC secured a contract with major Indian mineral fertilizer importer Indian Potash for potassium chloride at $427/tonne (CFR). Total delivery volume from this February to next January will amount to one million tonnes.
Uralkali has production capacity for 13 million tonnes of potassium chloride per year. It produced 9.1 million tonnes in 2012.