PhosAgro Reports Operating and Financial Results for H1 2023

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MOSCOW , August 29, 2023 (press release) –

PhosAgro Group (“PhosAgro” or “the Company”) (Moscow Exchange, LSE: PHOR), one of the world’s leading vertically integrated phosphate-based fertilizer producers, today announces its consolidated interim condensed financial results for the six months ended 30 June 2023

1H 2023 highlights
In 1H 2023, production of mineral fertilizers and other chemicals increased by 4.3% year-on-year to over 5.6 million tonnes. This growth was driven primarily by an increase in DAP/MAP production during the ramp-up to design capacity at the production complex in Volkhov, which was built as part of the Company’s comprehensive long-term development programme.  

Total fertilizer sales in 1H 2023 decreased by 4.3% year-on-year to about 5.5 million tonnes, mainly due to the stockpiling of mineral fertilizers for seasonal deliveries to markets in Latin America and Asia after meeting the needs of the Russian market. At the same time, DAP/MAP sales rose by 5.8% over the same period, driving high margins in the current price environment. 
Выручка за 6 месяцев 2022 года выросла на 90,9% к уровню аналогичного периода прошлого года и составила 336,5 млрд рублей (4,4 млрд долларов). Рост стал следствием реализации масштабной программы модернизации и строительства новых производств, что позволило нарастить объемы выпуска минеральных удобрений и существенно увеличить производительность оборудования. 

Revenue for 1H 2023 amounted to RUB 212.8 billion (USD 2.8 billion), down 36.8% year-on-year. The decrease in revenue was due to a drop in global fertilizer prices from their peak in early 2022, when a high level of uncertainty and sanctions pressure on Russian producers (the largest players in the global fertilizer market) drove up prices for all types of fertilizers amid disruptions in global supply chains. 

In 1H 2023, the Company’s EBITDA amounted to RUB 96.5 billion (USD 1.26 billion), down 28.8% year-on-year. Effective cost management and increased sales of high-margin products drove an EBITDA margin of 45.4%, a 5.1 p.p. increase from 1H 2022 

In 1H 2023, the Company’s free cash flow amounted to RUB 60.1 billion (USD 0.8 billion), up 47.1% year-on-year.  

Net debt as of 30 June 2023 amounted to RUB 200.2 billion (USD 2.30 billion), and the ratio of net debt to adjusted EBITDA at the end of the quarter was 1.09x. 

Financial and operating highlights:



Financial and operating highlights:

RUB mln.

1H 2023

1H 2022

Change, %

Revenue 212,752 336,509 -36.8%
EBITDA* 96,518 135,548 -28.8%
EBITDA margin 45.4% 40.3%  
Adj. EBITDA** 82,816 165,322 -49.9%
Net profit 41,497 129,048 -67.8%
Adj. net profit*** 55,772 108,553 -48.6%
Free cash flow 60,116 40,870 47.1%
  30 June 31 December  
Net debt 200,179 180,338  
ND/adj. LTM EBITDA 1.09x 0.68x  






Operating highlights

Production volumes by category


1H 2023

1H 2022

Change, %

Phosphate-based fertilizers and feed phosphates 4,226.9 4,054.0 4.3%
Nitrogen-based fertilizers 1,318.9 1,265.6 4.2%
Other products 138.8 130.7 6.2%
TOTAL fertilizers 5,684.6 5,450.3 4.3%

Sales volumes by category


1H 2023

1H 2022

Change, %

Phosphate-based fertilizers and feed phosphates 4,117.9 4,335.3 -5.0%
Nitrogen-based fertilizers 1,316.2 1,346.4 -2.2%
Other products 82.9 82.0 1.1%
TOTAL fertilizers 5,517.0 5,763.7 -4.3%


RUB/USD exchange rate: average 1H 2023 rate: 76.8996; average 1H 2022 rate: 76.2975; as of 30 June 2023: 87.0341; as of 31 December 2022: 70.3375.
* EBITDA is calculated as operating profit adjusted for depreciation and amortisation.
** Adj. EBITDA is EBITDA as reported minus FX differences from operating activities.
*** Adj. net profit is net profit as reported minus FX gain or loss.

The high EBITDA margin (accounting for FX differences) in 1H 2023 was driven by, among other factors, a decrease in the cost of key feedstocks and the flexibility of the Company’s production chains, which made it possible to switch to the production of the highest-margin products in the current environment. 

Sales volumes and regional product distribution in 2Q 2023 were in line with seasonal changes in demand, with increased sales to markets in Russia, North America and Europe (nitrogen-based fertilizers). Overall, the Company increased fertilizer sales to North America, Latin America and the CIS countries in 1H 2023.

Excess fertilizer production compared with sales in 2Q 2023 enabled the Company to stockpile a sufficient amount of product to satisfy the expected seasonal increase in demand in 3Q from key markets in India, Brazil and other regional markets in Asia and Latin America.
Thanks to its efficient operations, the Company was able to generate a high amount of free cash flow in 1H 2023 despite a correction in global fertilizer prices.
As of the end of the first half of the year, the Company’s debt load remained at a comfortable level. As of 30 June 2023, the Company’s net debt amounted to RUB 200.2 billion, and its net debt/adjusted EBITDA ratio was 1.09x. The increase from the beginning of the year was mainly due to the depreciation of the rouble against the US dollar and the revaluation of the USD-denominated portion of the Company’s debt at the new exchange rate.
At the same time, it should be noted that the percentage of USD-denominated in debt in the Company’s loan portfolio is decreasing, thanks in part to the replacement of the redeemed PHOR-23 Eurobond issue with issues of Russian RUB- and RMB-denominated exchange-traded bonds.
Other factors that had an impact on the Company’s loan portfolio included the issuance of replacement bonds for two remaining Eurobond issues: PHOR-25 and PHOR-28. Despite the stable mechanism for separate payments on Eurobonds, the Company was one of the first Russian issuers to issue replacement bonds. Thus, the Company was able to meet the requirements of Decree of the President of Russia No. 364 of 22 May 2023, and noteholders in the Russian Federation were able to receive a high-quality liquid investment instrument. As a result of this process, more than 74% of two Eurobond issues worth USD 740.4 million were replaced.
According to the Russian Fertilizer Producers Association, PhosAgro remains the leader in terms of supplies of agrochemical products to the priority Russian market.

Market situation in 2Q 2023

According to the Russian Fertilizer Producers Association, as of mid-August domestic producers had already fulfilled more than 80% of the annual plan for all of 2023 for the supply of agrochemical products to the priority domestic market, where the Company is the largest supplier of its own agrochemicals (with a 21% share).
The mineral fertilizer market in the first half of 2Q saw the end of seasonal demand in key markets in the Northern Hemisphere (Europe, North America, the Russian domestic market, China) and the development of a downward price trend. The market situation stabilised in the second half of the quarter, and prices gradually began to rise.
Phosphate-based fertilizer markets at the beginning of 2Q were supported by strong demand from India for DAP/NPK, while seasonal demand for MAP from Brazil, the main international market, intensified in May–June. The average price for MAP in 2Q 2023 was USD 477 per tonne (FOB Baltic).
The situation in markets for nitrogen-based fertilizers stabilised in the middle of 2Q, partly in response to reduced exports, for technical reasons, on the part of a number of major producers and in connection with the ramp-up of seasonal demand in Asian and Latin American markets. The average price of prilled urea in 2Q 2023 was USD 256 per tonne (FOB Baltic), and the average price of ammonium nitrate was USD 150 per tonne (FOB Baltic).
The prices of key commodities also stabilised in the middle of the quarter, following a prolonged downward trend in prices starting in 2H 2022, due in part to improved conditions in fertilizer markets. The average price of sulphur in 2Q 2023 was USD 68 per tonne (FOB Baltic), and the average price of standard potassium chloride was USD 389 per tonne (FOB Baltic). Prices for phosphate feedstocks remained stable at USD 285 per tonne (FOB Morocco) as of the end of 2Q 2023 (for feedstocks with P2O5 content of 31%–33%).

Market outlook

The third quarter has historically been marked by increased seasonal demand from key markets for nitrogen- and phosphate-based fertilizers in India, Brazil and other regional locations in Asia and Latin America. The low levels of carry-over stocks in North American and European markets will drive an earlier resumption of seasonal demand. As a result, prices have shown a strong increase since the start of the third quarter and may stabilise above 2Q 2023 prices.

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