EARNINGS & PERFORMANCE OVERVIEW

Transcription

1 OCP Reports Earnings for Fourth Quarter and Full Year 2016 CASABLANCA - Morocco, 23 rd March, 2017 OCP S.A. ( OCP or the Group ), a global leader in the fertilizer industry, today reported results for the fourth quarter and the full year ending December 31, KEY FIGURES - Full Year 2016 Revenues reached MAD 42,471 million (US$ 4.3 billion), compared to 2015 level of MAD 47,747 million (US$ 4.9 billion). EBITDA amounted to MAD 12,777 million (US$ 1.3 billion), down from MAD 17,659 million (US$ 1.8 billion) for EBITDA margin was 30 % vs. 37 % in Adjusted operating cash flow of MAD 12,152 million (US$ 1.2 billion) comparable to that of 2015 (MAD 12,293 million or US$ 1.3 billion). Capital expenditures were MAD 13,261 million (US$ 1.4 billion). - Fourth Quarter 2016 Revenues amounted to MAD 10,498 million (US$ 1.05 billion) compared to MAD 10,610 million (US$ 1.07 billion) for Q EBITDA was MAD 3,607 million (US$ 363 million) vs. MAD 3,737 million (US$ 377 million) for Q EBITDA margin stable at 34 % vs. 35 % for Q EARNINGS & PERFORMANCE OVERVIEW During 2016, OCP s leadership in terms of scale and cost position, enabled the Group remain resilient in a period of challenging market conditions and to report solid performance and strong financial results. Overall demand remained healthy with higher consumption of fertilizers from farmers underpinned by lower prices. Consequently, OCP s fertilizer export volumes significantly increased, and we further expanded our product diversification and customization. Exports to Africa increased by 70% to 1.7 million tons (Mt) in 2016 compared to 1Mt in The recovery in demand from Latin America, namely Argentina and Brazil, resulted in an increase in volumes of 0.9 Mt.

2 In 2016, OCP s robust performance was also supported by its international footprint and commercial agility. The Group s revenues were diversified across key regions where the Company has significant market share, notably in Africa, Latin America and North America. Sales also benefited from the growth of specialty products, which increased 45% compared to 2015 and accounted for accounted for 25% of total fertilizer exports in 2016.This reflects OCP s efforts in developing and marketing a broad range of specialty products, notably in Africa, through various initiatives including soil fertility maps and public-private partnerships. The continued market over-supply, mainly due to high Chinese exports despite their decline from 2015 levels, as well as the drawdown of stocks built-up in 2015 have weighed on price levels, however, caused fertilizer prices to decline by 23%. As a result, OCP s revenues were MAD 42,471 million (US$ 4.3 billion) in 2016 compared to MAD 47,747 million (US$ 4.9 billion) in The gross profit was MAD 28,942 million (US$ 3.0 billion) compared with MAD 33,674 million (US$ 3.4 billion) in 2015, while the gross margin was sustained at 68% vs. 70% last year, reflecting the positive impact of lower raw material costs. EBITDA amounted to MAD 12,777 million (US$ 1.3 billion) down from MAD 17,659 million (US$ 1.8 billion) in 2015 EBITDA margin was 30 % for 2016 compared to 37% in The 2016 operating profit was MAD 6,594 million (US$ 672 million) compared with MAD 13,965 million (US$ 1.4 billion) in OCP s ability to sustain profitability levels reflect the Group s positive performance within an industry where margins have significantly declined. This demonstrates the success of the Group s cost-saving programs through significant improvements across the value chain, as well as efficient raw material procurement strategy. Therefore, production costs per ton have decreased for all product segments in 2016 rock, phosphoric acid and fertilizer. OCP moved forward with the execution of its industrial development program, and capital expenditures reached MAD 13,261 million (US$ 1.4 million) in 2016, with the first phase of the program having been completed according to plan. Adjusted operating cash flow remained stable at MAD 12,152 million (US$ 1.2 billion) for the full year 2016 versus MAD 12,293 million (US$ 1.3 billion) last year. Available cash (cash and equivalents) totaled MAD 11,009 million (US$ 1.1 billion) up from MAD 9,070 million (US$ 916 million) as of December 31, Net financial debt was MAD 38,019 million (US$ 3.8 billion) and the Net Financial Debt/EBITDA ratio was 2.89 as of December 31, 2016.

3 CORPORATE & FINANCIAL HIGHLIGHTS In 2016, OCP has achieved several corporate and strategic goals including: The mining capacity in Khouribga increased significantly thanks to the ramp up of the El Halassa washing plant. The second Integrated Fertilizer unit in Jorf (JFC-2) with 1 Mt fertilizer capacity became operational in July 2016, following the JFC-1 launch in Operations started at the downstream drying facilities (for the phosphate rock transported through the slurry pipeline) at the Jorf Lasfar platform. The first unit of the desalination plant at Jorf was launched during the first half of A cooperation agreement has been signed with the Ethiopian Government to develop an integrated fertilizer platform project to produce ammonia, urea and fertilizers using local gas and Moroccan phosphate. Production is expected to start in 2022, with an annual capacity of 2.5 Mt of fertilizers. An agreement has been signed with the Dangote Group to enter into a Joint Venture to develop an NPK fertilizer plant and a distribution network in Nigeria. An agreement has been signed with Kribhco, India s second largest cooperative, to enter into a joint venture to develop a large-scale NPK fertilizer plant in Krishnapatnam, Andhra Pradesh, India. An agreement has been signed with Shell to license their Thiogro technology and then produce sulfur-enhanced fertilizers in Morocco. A MAD 5 billion hybrid bond - $500 million equivalent has been issued in local currency, consisting of a triple tranche perpetual subordinated bond. The offering was two times oversubscribed. MANAGEMENT COMMENTARY In 2016, OCP achieved significant operational milestones and remained strongly profitable, confirming the effective implementation of our strategy. The expansion of our range of customized, high-margin products and our leading position across key growth markets have contributed to OCP s resilience despite challenging market conditions. Our rock export capacity was significantly expanded, and our efforts to curtail costs generated very positive results. Importantly, backed by its strategic achievements, OCP captured phosphate demand growth in 2016 through increased capacity across the entire value chain, said Mr. Mostafa Terrab, Chairman and Chief Executive Officer of OCP.

4 SUMMARY AND OUTLOOK We believe that the phosphate market is hitting the bottom of the cycle. At the end of 2016, we saw prices picking up due to higher demand from key import markets combined with lower industry-wide production rates. Looking ahead, we expect the market to remain supply-driven. However, we foresee continued strong demand conditions thanks to stable crop fundamentals and reduced prices for inputs. The implementation of our capital investment program, with the completion of the first phase of investments continues to further consolidate our leadership position. Today, we are leveraging our existing Jorf Lasfar facilities to enhance our fertilizer capacity at a much lower cost than expected. As the industry leader with the largest reserve base, we are ideally positioned to capture a large part of incremental phosphate demand, notably from our unique ability to produce customized fertilizers, and benefit from improved market conditions in the future, concluded Mr. Terrab. CONFERENCE CALL OCP senior management will host a conference call at 10 a.m. EST and 3 p.m. Morocco/London time on March 23 rd 2017, to discuss the financial results. Qualified institutional buyers, bondholders, securities analysts and market makers are invited to participate in the call. Conference call details are available at OCP s Investor Relations portal on the Intralinks website. Eligible parties that have not already registered for access to the Intralinks portal may do so by contacting Mrs. Ghita Laraki, Investors Relations at (g.laraki@ocpgroup.ma). ABOUT OCP OCP is a global leader in the fertilizer industry, backed by almost a century s production history. OCP has exclusive access to the largest phosphate rock reserve base in the world. It is one of the lowest cost producers of phosphate rock in the industry and has become a leading player in production and trade volumes across the phosphate value chain. OCP employs 23,000 people and contributes to regional development through its mining and fertilizer operations, and through its sustainability program. For more information visit :

5 FORWARD LOOKING STATEMENTS This press release has been prepared by OCP S.A. ( OCP ) and contains certain statements that are, or may be deemed to be, forward-looking statements within the meaning of the safe harbor provisions set forth in the U.S. Private Securities Litigation Reform Act of Such statements include, but are not limited to, liabilities, strategic, industrial, commercial plans and expected future financial and operating results such as revenue growth and earnings. They are based on the current beliefs, expectations and assumptions of OCP s management as of the date on which they are made in connection with past and/or future financial results, and are subject to significant uncertainties and risks, which OCP shall not be held liable for. These risks and uncertainties include, but are not limited to, risks and uncertainties arising from the future success of current and strategic plans and future financial and operating results and reserves; changes in such plans and results; any difficulty that OCP may experience with the realization of benefits and anticipated levels of capital expenditures for the given period and beyond; the current and future volatility in the credit markets and future market conditions; OCP s strategy in connection with customer retention, growth, product development and market position; industry trends; volatility in commodity prices; changes in foreign currency, interest and exchange rates; international trade risks; changes in government policy and developments in judicial or administrative proceedings in jurisdictions which OCP is subject to; changes in environmental and other governmental regulation, including regulatory investigations and proceedings; any natural events such as severe weather, fires, floods and earthquakes or man-made or other disruptions of OCP s operating systems, structures or equipment; the effectiveness of OCP s processes for managing its strategic priorities; and OCP s belief that it has sufficient cash and liquidity and/or available debt capacity to fund future financial operations and strategic business investments. Actual results may differ from those set forth in the forward-looking statements contained in this release, and OCP undertakes no obligation to publicly update any of its forward-looking statements, whether written or oral, that may be made from time to time, whether as a result of new information, future developments or otherwise.

6 This press release includes financial information which, for ease of presentation, has been translated into U.S. Dollars, and these translated figures have not been audited. For the purpose of such translated figures, OCP used the following exchange rate table, which sets forth the year average and year-end USD/MAD exchange rates for the following periods: December 2016 December 2015 Period End Average CONTACT Mrs. Ghita LARAKI Head of Investor Relations Phone : (+212) G.laraki@ocpgroup.ma