PhosAgro IFRS net profits soar 160% to 12.3 bln dollars in H1
MOSCOW. Sept 7 (Interfax) - Net profits at OJSC PhosAgro surged 160% year-on-year to 12.291 billion rubles as calculated to International Financial Reporting Standards (IFRS) in the first half of 2011, the company reported.
Renaissance Capital, Troika Dialog , and Citi analysts had predicted - on average - that the company would close the half with 11.372 billion rubles in net profits in a consensus forecast compiled by Interfax.
PhosAgro posted sales revenues of 48.764 billion rubles, up 35% year-on-year and almost coinciding with the analysts' forecast (48.718 billion rubles). EBITDA (earnings before interest, taxes, depreciation, and amortization) jumped 110% to 17.752 billion rubles, where the analysts had predicted 17.627 billion rubles.
The EBITDA margin was 36.4% (23.8% in H1 2010). This was largely due to higher fertilizer prices, the company said.
Sales revenues from the company's phosphate business increased 32.4% to 42.508 billion rubles, and from its nitrogen business - 70% to 5.874 billion rubles.
Sales of phosphate-based fertilizers and feed additives increased 3.8% to 1.992 million tonnes, of nitrogen-based fertilizers - 21.5% to 491,000 tonnes. Sales of apatite concentrate dropped 17.8% to 1.588 million tonnes.
The holding's companies produced 3.861 million tonnes of apatite concentrate, 478,000 tonnes of nepheline concentrate, 2.041 million tonnes of phosphate fertilizers and feed additives, 239,000 tonnes of ammonium sulfate, and 252,000 tonnes of carbamide.
Cash flow from operations increased 132% to 17.9 billion rubles. Capital expenditures increased 80% to 5.9 billion rubles, the bulk of which was put into the construction of ore shaft #2 at the Kirovsky underground mine (OJSC Apatit ), which is expected to increase output to an annual 14 million tonnes of ore in two or three years, as well as the construction of "new urea capacity and a 32 mWt gas-powered electricity generation facility" at Cherepovets Azot , the company said.
Combined debts stood at 26.767 billion rubles as of June 30, almost tripling over the six months. This was mostly due to new long and short-term credits in euros and dollars. Net debt rose 16.1 billion rubles to 19.8 billion rubles over the half. This resulted in an annual net-debt/EBITDA ratio of 0.56.
"Demand for phosphate fertilizers was robust throughout the first six months of 2011, with the export price for DAP during the period rising from $590/mt to $650/mt FOB Tampa, representing an average weekly price of $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 fertilizer exports from China," the company said.
"Nitrogen fertilizers also continue to perform well, with Urea prices in the first six months of 2011 rising from $350/mt to $485/mt FOB Baltics, representing an average weekly price of $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," PhosAgro said. The average gas purchase price for the group increased to 3,021 rubles per thousand cubic meters from 2,635 rubles per thousand cubic meters in H1 2010.
"PhosAgro is largely self-sufficient in phosphate fertilizer 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 fertilizers, amounted to 2,007 million rubles ($70 million) in H1 2011, up 75.0% from 1,147 million rubles ($38 million) a year ago, the company said.
Administrative expenses increased 3% to 2.562 billion rubles, commercial expenses - 12.3% to 3.331 billion rubles.
"We see continued tightness in soft commodities markets at least through the end of the year supporting fertilizer prices and volumes globally as farmers invest in maximizing crop output. The new capacity from Magadan in Saudi Arabia has not to date caused disruptions to the market, and we believe that demand will at least match capacity going forward," CEO Maxim Volker is quoted as saying.