PR Newswire
London, March 26
For Immediate Release | 27 March 2017 |
PhosAgro 2016 Net Profit up 64% to RUB 59.9 bln
Moscow � PhosAgro ("PhosAgro" or "the Company") (Moscow Exchange, LSE: PHOR), one of the world�s leading vertically integrated phosphate-based fertilizer producers, today announces its audited consolidated IFRS financial results for the 12 months ended 31 December 2016.
PhosAgro�s revenue for the period decreased by 1% year-on-year to RUB 187.7 billion (USD 2,801 million). EBITDA for 2016 was RUB 72.4 billion (USD 1,080 million), with an EBITDA margin of 39%. EPS increased by 64% year-on-year to RUB 462, from RUB 281 for 2015.
FY2016 financial and operational highlights:
Result | 2016 | 2015 | year-on-year change (RUB vs. RUB), % | ||
RUB | USD | RUB | USD | ||
million | million | ||||
Revenue | 187,742 | 2,801 | 189,732 | 3,113 | (1%) |
EBITDA* | 72,365 | 1,080 | 82,464 | 1,353 | (12%) |
EBITDA margin | 39% | 43% | (4 p.p.) | ||
Net profit | 59,886 | 893 | 36,436 | 598 | 64% |
RUB | USD | RUB | USD | ||
Earnings per share | 462 | 7 | 281 | 5 | 64% |
Sales volumes | Kmt | Kmt | |||
Phosphate-based products | 5,925.3 | 5,383.9 | 10% | ||
Nitrogen-based fertilizers | 1,394.0 | 1,365.4 | 2% | ||
Apatit mine and beneficiation plant | 3,418.0 | 2,917.0 | 17% | ||
Other products | 94.1 | 102.6 | (8%) |
RUB/USD rates: average 2016: 67.0349; average 2015: 60.9579
��������������������������� as of 31 December 2016: 60.6569; as of 31 December 2015: 72.8827
*EBITDA is calculated as operating profit adjusted for depreciation and amortisation.
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Annual dividend recommendation:
Production and sales:
EBITDA for 2016 decreased by 12% year-on-year to RUB 72.4 billion (USD 1,080 million) from RUB 82.5 billion (USD 1,353 million) in 2015. The EBITDA margin for the period declined by 4 p.p. to 39%, compared to 43% a year earlier. PhosAgro�s operating profit in the reporting period was RUB 61.6 billion (USD 919 million), a 16% decrease from RUB 73.3 billion (USD 1,203 million) in 2015.
Net profit for 2016 grew 64% year-on-year to RUB 59.9 billion (USD 893 million), compared to RUB 36.4 billion (USD 598 million) in 2015. Basic and diluted earnings per share increased by 64% to RUB 462 (USD 7) for 2016 from RUB 281 (USD 5) in 2015.
The higher average USD/RUB exchange rate during 2016 in comparison with 2015 (average USD/RUB foreign exchange rates for 2016 and 2015 were RUB 67.03 and RUB 60.96, respectively) had a net positive impact on PhosAgro�s results in the reporting period, as prices for most of the Company�s products are denominated in USD, while costs are primarily RUB-based. At the same time, the appreciation of the rouble as of 31 December 2016 (RUB 60.66 per USD) compared to 31 December 2015 (RUB 72.88 per USD) resulted in a foreign exchange gain of RUB 16,962 million (USD 253 million) in 2016; in 2015 the foreign exchange loss was RUB 22,178 million (USD 364 million).
Cash flow from operating activities decreased by 20% year-on-year in 2016, to RUB 50.4 billion (USD 751 million), compared to RUB 63.3 billion (USD 1,038 million) in 2015, due to lower operating cash flow and higher income tax payments, which was partially offset by favourable changes in working capital.
Gross debt at 31 December 2016 decreased to RUB 112.4 billion (USD 1,853 million), compared to RUB 134.5 billion (USD 1,846 million) at 31 December 2015. Net debt at 31 December 2016 stood at RUB 105.1 billion (USD 1,733 million), down from RUB 105.2 billion (USD 1,443 million) at 31 December 2015, as a result of rouble appreciation against the USD as of 31 December 2016. Most of the Company�s debt is denominated in US dollars and naturally hedged by primarily USD-denominated sales. The Company�s net debt to EBITDA ratio increased to 1.45 as of 31 December 2016, from 1.28 as of 31 December 2015.
Commenting on the 2016 results, PhosAgro CEO Andrey Guryev said:
�I am very pleased that, despite the challenging environment in 2016 � a year when phosphate and nitrogen prices bottomed out at levels last seen during the 2009 financial crisis, PhosAgro continues to generate solid operating cash flows and, despite being in a capex-intensive period, is paying robust dividends to its shareholders. The total amount of dividends for 2016 has reached RUB 165 per share (RUB 55 per GDR), which represents a sector-leading dividend yield of over 6%. Since the IPO in 2011, PhosAgro has paid out almost USD 1.7 billion as dividends, which implies a more than 30% return on the IPO price. In terms of financial performance, in 2016 we delivered an EBITDA margin of nearly 40%, which remains an unachievable target for even our most integrated and largest phosphate-based fertilizer peers. ���
�Strong operating performance is one of PhosAgro�s key fundamental strengths. In 2016 we managed to increase overall fertilizer production by 9.4% year-on-year on the back of continued modernisation and debottlenecking projects. Since 2012 when we initiated the debottlenecking programme, production of phosphate-based fertilizers has grown by 1.6 mln tonnes, or by 37%. At the same time, this debottlenecking programme cost PhosAgro only USD 95 million, or USD 59 per tonne of new capacity, which is far below any green- or brownfield project in the sector.
�Turning to the market environment, I would like to highlight the tremendous performance of our domestic market in 2016: demand grew by 16% year-on-year for all fertilizers, and by 24% year-on-year for phosphate-based fertilizers (DAP/MAP/NPK). During the same period, our total domestic sales grew by more than 30% year-on-year and reached almost 2.1 million tonnes. Looking at our performance since the IPO in 2011, PhosAgro�s domestic sales have more than doubled, and our market share has reached almost 30%. We are extremely pleased that our home market holds one of the best growth opportunities globally thanks to state support for the agriculture industry.
�Global demand for phosphate-based fertilizers remained robust in 2016, and grew by more than 3% according to preliminary numbers from IFA. Growing demand was supported by a recovery in consumption in Latin America, driven by stable soybean prices and favourable exchange rates. Both factors helped farmers in Brazil and Argentina to maintain highly attractive margins on soybean production. Furthermore, the profitability of farmers in Argentina was supported by a reduction in export duties. India�s phosphate consumption remained stable despite challenges related to the currency reform.
�On the supply side, lower production and exports from China due to rising cash costs and new environmental restrictions were offset by higher volumes from other major players that have undertaken large-scale development programmes, as well as increased production from non-integrated players due to low feedstock prices.
�Looking ahead to 2017, we have started the year at prices that represent historical lows for the past 10 years. However during January-February we witnessed a combination of fundamental factors that played out simultaneously and pushed DAP/MAP prices up by USD 50-70 to USD 375 per tonne DAP FOB Tampa and USD 370-385 per tonne MAP FOB Baltics. These factors included the quick development of the high season in key agriculture regions, tight product availability on the seaborne market due to minimal export flows from China, and rising cash costs in the industry due to a sharp recovery in feedstock prices. I expect price seasonality in 2017 to be in line with what the market sees in a normal year. In terms of potential downside risks, we believe that new production capacities coming online in North Africa and Saudi Arabia could constrain potential price growth.
�Returning to PhosAgro and our plans, we remain focused on completing our main investment projects on schedule. These projects aim to improve self-sufficiency in ammonia, increase production volumes, and further reduce cash costs to sustain Company�s leading position in the sector. These contributions to our performance going forward, in addition to reduced capital expenditure, should further improve our free cash flow, which I expect should be reflected in returns to shareholders.�
FY2016 market conditions:
Main feedstock prices:
Phosphate-Based Products Segment
Result |
2016
RUB mln |
2015
RUB mln |
year-on-year change, % |
Revenue | 168,136 | 167,430 | - |
Cost of goods sold | (74,667) | (70,344) | 6% |
Gross profit | 93,469 | 97,086 | (4%) |
Phosphate-based products segment revenue increased slightly to RUB 168.1 billion (USD 2,508 million) in 2016. PhosAgro increased both production and sales volumes of phosphate-based fertilizers and MCP by 11% year-on-year in 2016. Sales volumes for phosphate rock and nepheline concentrate in 2016 increased by 17% year-on-year.
The growth in fertilizer sales volumes was primarily due to the Company�s flexible production and sales models, which enabled it to increase substantially sales of MAP and NPK to the domestic market, NPS to export markets, and phosphate rock to both markets.
The phosphate-based products segment�s gross profit for 2016 decreased by 4% to RUB 93.5 billion (USD 1,394 million), resulting in a gross profit margin of 56%, compared to a 58% margin in 2015.
Nitrogen Segment
Result |
2016
RUB mln |
2015
RUB mln |
year-on-year change, % |
Revenue | 18,829 | 21,574 | (13%) |
Cost of goods sold | (11,025) | (12,063) | (9%) |
Gross profit | 7,804 | 9,511 | (18%) |
Nitrogen segment revenue decreased from RUB 21.6 billion (USD 354 million) in 2015 to RUB 18.8 billion (USD 281 million) in 2016. PhosAgro increased production and sales volumes of nitrogen-based fertilizers by 4% and 2%, respectively, year-on-year in 2016.
Export revenue from urea declined from RUB 15.7 billion (USD 258 million) in 2015 to RUB 13.3 billion �(USD 199 million) in 2016. The decrease in revenue per tonne of 18% year-on-year was partially balanced by a 3% year-on-year increase in sales volumes. Total revenue from ammonium nitrate (AN) decreased by 13% year-on-year, from RUB 5.4 billion (USD 88 million) in 2015, to RUB 4.6 billion (USD 69 million) in 2016, due to a 10% year-on-year decrease in sales volumes and a 4% year-on-year decrease in revenue per tonne.
Nitrogen segment gross profit for 2016 decreased by 18% year-on-year to RUB 7.8 billion (USD 116 million). The gross margin for 2016 was 41%, compared with 44% in 2015. This was primarily due to the decrease in prices: during 2016, average revenue per tonne for the Company�s nitrogen-based fertilizers decreased by 15%.
Cost of Sales
Item | 2016 | 2015 | Change y-on-y | |||||
RUB | USD | % of cost | RUB | USD | % of cost | RUB | % | |
mln | mln | of sales | mln | mln | of sales | mln | ||
Materials and services | 25,746 | 384 | 30% | 22,905 | 376 | 27% | 2,841 | 12% |
Salaries and social contributions | 10,784 | 161 | 12% | 10,155 | 167 | 12% | 629 | 6% |
Depreciation | 9,377 | 140 | 11% | 8,057 | 132 | 10% | 1,320 | 16% |
Natural gas | 8,084 | 121 | 9% | 7,484 | 123 | 9% | 600 | 8% |
Potash | 7,104 | 106 | 8% | 7,559 | 124 | 9% | (455) | (6%) |
Sulphur and sulphuric acid | 6,065 | 90 | 7% | 8,385 | 138 | 10% | (2,320) | (28%) |
Ammonia | 5,801 | 87 | 7% | 8,190 | 134 | 10% | (2,389) | (29%) |
Electricity | 4,462 | 67 | 5% | 3,927 | 64 | 5% | 535 | 14% |
Chemical fertilisers and other products for resale | 4,254 | 63 | 5% | 4,091 | 67 | 5% | 163 | 4% |
Ammonium sulphate | 2,547 | 38 | 3% | 2,176 | 36 | 3% | 371 | 17% |
Fuel | 2,299 | 34 | 3% | 2,865 | 47 | 3% | (566) | (20%) |
Heating energy | 676 | 10 | 1% | 718 | 12 | 1% | (42) | (6%) |
Other items | 42 | 1 | - | 23 | - | - | 19 | 83% |
Change in stock of WIP and finished goods | (850) | (13) | (1%) | (3,471) | (57) | (4%) | 2,621 | (76%) |
Total | 86,391 | 1,289 | 100% | 83,064 | 1,363 | 100% | 3,327� | 4% |
PhosAgro�s cost of sales increased by 4% year-on-year in 2016, to RUB 86.4 billion (USD 1,289 million), while overall fertilizer sales volumes increased by 9% year-on-year. This cost of sales performance was primarily due to the following factors:
Administrative expenses rose by 14% year-on-year to RUB 13.9 billion (USD 207 million) in 2016, primarily due to an increase in personnel costs of RUB 1.1 billion (USD 16 million), or 16%, year-on-year. The increase was mainly due to the indexation of salaries, PhosAgro 15th-anniversary bonuses, and the relocation of a significant proportion of operational management to Cherepovets.
Selling expenses rose by 19% year-on-year, from RUB 17.8 billion (USD 291 million) in 2015 to RUB 21.1 billion (USD 315 million) in 2016. This was primarily due to the following changes:
PhosAgro�s foreign exchange gain in 2016 was RUB 16.96 billion (USD 253 million), versus a foreign exchange loss of RUB 22.2 billion (USD 364 million) in 2015. This was primarily the result of the devaluation of USD-denominated debt due to the rouble�s 17% appreciation against the US dollar during 2016 (from RUB 72.8827 at 31/12/2015 to RUB 60.6569 at 31/12/2016), in comparison with 30% rouble depreciation against the US dollar during 2015 (from RUB 56.2584 as of 31/12/2014 to RUB 72.8827 as of 31/12/2015).
Cash spent on capital expenditure in 2016 amounted to RUB 40.2 billion (USD 600 million), a decrease of 6% in comparison with RUB 42.7 billion (USD 700 million) in 2015. PhosAgro�s capital expenditure, which consists of additions to property, plant and equipment, amounted to RUB 45.3 billion (USD 676 million) for 2016, compared to RUB 44.2 billion (USD 725 million) in 2015. Capital expenditure focused on construction of the new 760 ths tonnes/year ammonia plant and the new 500 ths tonnes/year urea plant at PhosAgro-Cherepovets.
Outlook
Market outlook
Company
For further information please contact:
PJSC PhosAgro
Alexander Seleznev, Head of Investor Relations Department
+7 495 232 9689 ext 2187
[email protected]
Timur Belov, Press Officer
Anastacia Basos, Deputy Press Secretary
+7 495 232 9689
EM
Sam VanDerlip
[email protected]
+44 7554 993 032
+7 499 918 3134
Tom Blackwell
[email protected]
+7 919 102 9064
�
Notes to Editors
PhosAgro is one of the leading global vertically integrated phosphate-based fertilizer producers. The Company focuses on the production of phosphate-based fertilizers, feed phosphate and high-grade phosphate rock (P2O5 content of not less than 39%).
The Company is the largest phosphate-based fertilizer producer in Europe, the largest producer of high-grade phosphate rock worldwide and the third largest MAP/DAP producer in the world (excluding China), according to Fertecon. PhosAgro is also one of the leading producers of feed phosphates (MCP) in Europe, and the only producer in Russia. It is Russia�s only producer of nepheline concentrate.
PhosAgro�s main products include phosphate rock, 33 grades of fertilizers, feed phosphates, ammonia, and sodium tripolyphosphate, which are used by customers in 100 countries spanning all of the world�s inhabited continents. The Company�s priority markets outside of Russia and the CIS are Latin America, Europe and Asia.
PhosAgro�s shares are traded on the Moscow Exchange, and global depositary receipts (�GDRs�) for shares trade on the London Stock Exchange (under the ticker PHOR). Since 1 June 2016, the Company�s GDRs have been included in the MSCI Russia and MSCI Emerging Markets indexes.
PJSC �PhosAgro� - Consolidated Statement of Profit or Loss and Other Comprehensive Income for 2016
2016 | 2015 | |||
RUB Million | RUB Million | |||
Revenues | 187,742 | 189,732 | ||
Cost of sales | (86,391) | (83,064) | ||
Gross profit | 101,351 | 106,668 | ||
Administrative expenses | (13,891) | (12,184) | ||
Selling expenses | (21,129) | (17,751) | ||
Taxes, other than income tax | (2,261) | (1,994) | ||
Other expenses, net | (2,472) | (1,408) | ||
Operating profit | 61,598 | 73,331 | ||
Finance income | 909 | 1,222 | ||
Finance costs | (4,682) | (6,093) | ||
Foreign exchange gain/(loss), net | 16,962 | (22,178) | ||
Share of profit/(loss) of associates | 140 | (59) | ||
Profit before tax | 7 4 , 927 | 46,223 | ||
Income tax expense | (15,041) | (9,787) | ||
Profit for the year | 59,886 | 3 6 , 436 | ||
Attributable to: | ||||
����� Non-controlling interests ^ | 2 | (6) | ||
����� Shareholders of the Parent | 59,884 | 36,442 | ||
Other comprehensive income | ||||
Actuarial gains and losses, net of tax | (68) | (4) | ||
Foreign currency translation difference | (3,105) | 3,405 | ||
Other comprehensive (loss)/income for the year | (3,173) | 3,4 01 | ||
Total comprehensive income for the year | 56,713 | 39,837 | ||
Attributable to: | ||||
����� Non-controlling interests ^ | 2 | (6) | ||
����� Shareholders of the Parent | 56,711 | 39,843 | ||
Basic and diluted earnings per share (in RUB) | 462 | 281 |
PJSC �PhosAgro� - Consolidated Statement of Financial Position as at 31 December 2016
31 December 2016 | 31 December 2015 | ||||
RUB million | RUB million | ||||
Assets | |||||
Property, plant and equipment | 154,713 | 120,952 | |||
Advances issued for property, plant and equipment | 4,684 | 7,424 | |||
Intangible assets | 1,165 | 566 | |||
Investments in associates | 816 | 810 | |||
Deferred tax assets | 5,110 | 5,901 | |||
Other non-current assets | 2,226 | 2,822 | |||
Non-current assets | 168,714 | 138,475 | |||
Other current investments | 3,282 | 4,902 | |||
Inventories | 19,934 | 17,814 | |||
Current income tax receivable | 339 | 453 | |||
Trade and other receivables | 29,674 | 25,511 | |||
Cash and cash equivalents | 7,261 | 29,347 | |||
Current assets | 60,490 | 78,027 | |||
Total assets | 229,204 | 216,502 | |||
Equity | |||||
Share capital | 372 | 372 | |||
Share premium | 7,494 | 7,494 | |||
Retained earnings | 74,932 | 43,460 | |||
Other reserves | 5,486 | 8,659 | |||
Equity attributable to shareholders of the Parent | 88,284 | 59,985 | |||
Equity attributable to non-controlling interests | 137 | 213 | |||
Total equity | 88,421 | 60, 198 | |||
Liabilities | |||||
Loans and borrowings | 98,239 | 105,565 | |||
Defined benefit obligations | 767 | 424 | |||
Deferred tax liabilities | 4,600 | 3,677 | |||
Non-current liabilities | 103,606 | 109,666 | |||
Trade and other payables | 22,803 | 17,011 | |||
Current income tax payable | 237 | 491 | |||
Loans and borrowings | 14,137 | 28,947 | |||
Derivative financial liabilities | - | 189 | |||
Current liabilities | 37,177 | 46,63 8 | |||
Total equity and liabilities | 229,204 | 216,502 |
PJSC �PhosAgro� - Consolidated Statement of Cash Flows for 2016
2016 | 2015 | ||||
RUB million | RUB million | ||||
Cash flows from operating activities | |||||
Profit before tax | 74,927 | 46,223 | |||
Adjustments for: | |||||
Depreciation and amortisation | 10,767 | 9,133 | |||
Loss on disposal of property, plant and equipment and intangible assets | 614 | 915 | |||
Finance income | (909) | (1,222) | |||
Finance costs | 4,682 | 6,093 | |||
Share of (profit)/loss of associates | (140) | 59 | |||
Foreign exchange (gain)/loss, net | (18,040) | 23,663 | |||
Operating profit before changes in working capital and provisions | 71,901 | 84,864 | |||
Increase in inventories | (2,120) | (5,287) | |||
Increase in trade and other receivables | (4,023) | (6,116) | |||
Increase in trade and other payables | 3,019 | 2,741 | |||
Cash flows from operations before income taxes and interest paid | 68,777 | 76,202 | |||
Income tax paid | (13,451) | (7,488) | |||
Finance costs paid | (4,965) | (5,453) | |||
Cash flows from operating activities | 50, 361 | 63,261 | |||
Cash flows from investing activities | |||||
Loans repaid/(issued), net | 253 | (151) | |||
Acquisition of property, plant and equipment and intangible assets | (40,246) | (42,668) | |||
Proceeds from disposal of property, plant and equipment | 270 | 170 | |||
Proceeds from disposal of investments | 1,277 | - | |||
Finance income received | 432 | 1,008 | |||
Cash of Phosint Group at the date of acquisition | - | 10,178 | |||
Cash flows used in investing activities | (38,014) | (31,463) | |||
Cash flows from financing activities | |||||
Proceeds from borrowings | 34,149 | 46,376 | |||
Repayment of borrowings | (33,727) | (62,041) | |||
Dividends paid to shareholders of the Parent | (27,974) | (18,130) | |||
Dividends paid to non-controlling interests | (9) | - | |||
Payment of finance lease liabilities | (1,951) | (1,905) | |||
Proceeds from/(payments for) settlement of derivatives, net | 127 | (1,590) | |||
Acquisition of non-controlling interests | (218) | - | |||
Other payments | (243) | (154) | |||
Proceeds from contribution to charter capital of subsidiaries by non-controlling interests | - | 71 | |||
Cash flows used in financing activities | (29,846) | (37,373) | |||
Net decrease in cash and cash equivalents | (17,499) | (5,575) | |||
Cash and cash equivalents at 1 January | 29,347 | 30,687 | |||
Effect of exchange rates fluctuations | (4,587) | 4,235 | |||
Cash and cash equivalents at 31 December | 7,261 | 29,347 |