Acron Group's 2013 output of ammonia, mineral fertilizers up 6% to 5.3 million tonnes, primarily due to increase in nitrogen segment; Group's all-time high operating results supported by macroeconomic environment in Russia, says BOD chair

Elyse Blye

VELIKIY NOVGOROD, Russia , January 30, 2014 (press release) – Chair of Acron’s Board of Directors Alexander Popov comments on the results:

“Acron Group is summing up the results for 2013, which was an eventful year for the Group. Our ambitious investment programme has yielded its first results: the new urea unit is in operation and the Oleniy Ruchey mine is ramping up production. The Group’s all-time high operating results are supported by the macroeconomic environment in Russia: we are confident that as the rouble exchange rate weakens and natural monopolies’ tariff growth slows, Acron Group will stay globally competitive in the years to come. With a more efficient potash CAPEX programme and partial monetisation of portfolio investments, all the conditions are in place to pay a high dividend in accordance with the approved dividend policy, including a special dividend, while maintaining moderate leverage.”

Comments on operating results:

In 2013, Acron Group’s output was up 4% to over 6.1 million tonnes of commercial products for the first time ever. Output of commercial ammonia and mineral fertilisers climbed 6% to 5.3 million tonnes, primarily due to an increase in the nitrogen segment. Ongoing revamping of equipment and introduction of state-of-the-art technologies helped the Group achieve an all-time record ammonia output at both of its Russian facilities, bringing total ammonia output to nearly 2 million tonnes. Acron’s Novgorod facility commissioned its new urea unit in 2012, and this year it increased urea and UAN output 15% and 17%. Dorogobuzh posted record operating results in 2013 due to the stable operation of the ammonia unit at high capacity utilisation coupled with no major overhaul in the reporting period.

By switching to apatite concentrate produced by North-Western Phosphorous Company at the Oleniy Ruchey mine, the Group’s Russian facilities boosted NPK output 9% and secured maximum capacity utilisation. Complex fertiliser output at Hongri Acron decreased 14% due to the ongoing stock optimisation process.

Russian demand for organic compounds and non-organic synthesis products remains stagnant on the back of the general economic slowdown, which is the reason for lower operating results for the key product in this segment. Because its production lines are flexible, Acron Group has successfully offset lower output of industrial products with higher fertiliser output.

In mid-2013, the Oleniy Ruchey mine achieved stable monthly output of 60,000 tonnes of apatite concentrate, meeting Acron and Dorogobuzh’s needs for this input. In the fourth quarter, apatite concentrate output increased and the Group started selling apatite concentrate to third-party consumers.

2013 was a challenge for the global mineral fertiliser market. In the first six month of the year, global demand and supply were well-balanced and the pricing in all segments was comfortable for producers. In the second year-half, however, the market saw excessive supply, which drove prices down in line with a number of factors, including a slump in prices for agricultural products, weaker currencies and a slowdown in developing economies. Large export shipments of urea from China in the second half of the year put even more pressure on the nitrogen segment. NPK prices were down due to sluggishness in raw material markets. Mineral fertiliser markets, however, stabilised in late 2013. Prices in the phosphate and potash sectors hit the bottom and nitrogen fertiliser prices partially recovered. We believe that the coming spring sowing season in the northern hemisphere will encourage customer activity and support demand for mineral fertilisers in Q1 2014.

Group’s Consolidated Output (Operating Results for Acron, Dorogobuzh, Hongri Acron and NWPC)

* Commercial products are output less in-house consumption

* All content is copyrighted by Industry Intelligence, or the original respective author or source. You may not recirculate, redistrubte or publish the analysis and presentation included in the service without Industry Intelligence's prior written consent. Please review our terms of use.