9M 2016 IFRS Results

Transcription

1 9M 216 IFRS Results

2 1. Market context

3 Market context The average price of DAP (FOB Tampa) in 3Q 216 was USD 339 per tonne, representing a 27% decrease year-on-year. For 9M 216 the average DAP price (FOB Tampa) stood at USD 354 per tonne, down 25% year-on-year. The decrease in global DAP prices was triggered by weak market conditions in the main commodity markets, higher supply of fertilizers following the launch of new capacities in Morocco (2 million tonnes of DAP/MAP/NPS/NPK in 1Q 216 and 3Q 216), and tougher competition. A weak price environment for ammonia, sulphur and phosphoric acid triggered a spike in India s domestic DAP production, which lowered import volumes. Based on FAI numbers, DAP import into India for 9M 216 stood at 3.8 million tonnes, which implies a 28% (or 1.5 million tonne) year-on-year reduction. On top of growing domestic production, import volumes were also limited by high inventories, which stood at 2.3 million tonnes at the end of September 216. Liberalisation of agricultural export rules in Argentina and high prices for the main crops in Brazil triggered higher demand for phosphate-based fertilizers in the region. Imports of MAP/DAP to Argentina in 9M 216 amounted to.9 million tonnes, up by 71% compared to 9M 215. Imports of phosphate-based fertilizers to Brazil (DAP/MAP/NP/NPK/TSP) grew by 15% year-on-year and amounted to 4.9 million tonnes. Export of phosphate-based fertilizers from China continues to decline from last year's record levels as a result of lower imports to India and weak global fertilizer prices. DAP exports in 9M 216 decreased by 27% year-on-year, or 1.5 million tonnes, and amounted to 4.1 million tonnes. The overall export of phosphate-based fertilizers (DAP/MAP/NP/TSP) was down by 3% year-on-year to 2.96 million tonnes of P2O5 (based on CFMW numbers) From autumn 216, low season for the main markets, combined with overcapacity, put additional pressure on urea prices. The average urea price (FOB Baltic) in 3Q 216 stood at USD 181 per tonne vs. USD 265 per tonne in 3Q 215. The average urea price (FOB Baltic) for 9M 216 was USD 191 per tonne, down by 31% year-on-year. 11 2

4 Jan-14 Feb-14 Mar-14 Apr-14 May-14 Jun-14 Jul-14 Aug-14 Sep-14 Oct-14 Nov-14 Dec-14 Jan-15 Feb-15 Mar-15 Apr-15 May-15 Jun-15 Jul-15 Aug-15 Sep-15 Oct-15 Nov-15 Dec-15 Jan-16 Feb-16 Mar-16 Apr-16 May-16 Jun-16 Jul-16 Aug-16 Sep-16 Oct-16 Nov-16 Local currencies rebased to 1 USD Fertilizer price developments 12 Price changes in Q3 216 (y-o-y) Commodity Currency DAP -27% RUB/USD -2% Urea -32% BRL/USD 9% MOP -27% INR/USD -3% Q15 2Q16 3Q INR/USD BRL/USD RUB/USD DAP, FOB Tampa Potash, FOB Vancouver Urea, FOB Yuzhny Source: Argus-FMB, S&P Capital Q2, PhosAgro analysis Note:(*) rebased at 1 January Q3 215 Prices are as of 16 November 216 3

5 Jan-11 Apr-11 Jul-11 Oct-11 Jan-12 Apr-12 Jul-12 Oct-12 Jan-13 Apr-13 Jul-13 Oct-13 Jan-14 Apr-14 Jul-14 Oct-14 Jan-15 Apr-15 Jul-15 Oct-15 Jan-16 Apr-16 Jul-16 Oct-16 USD per tonne Rebased Performance % to 1 Jan /12 212/13 213/14 214/15 215/16 216/17 211/12 212/13 213/14 214/15 215/16 216/17 211/12 212/13 213/14 214/15 215/16 216/17 211/12 212/13 213/14 214/15 215/16 216/17 Market context supportive for fertilizer use Cereal basket (1) /Fertilizers basket ratio World grain stocks-to-use ratios, % 1,4 1,3 Cheap Fertilizers 35% 3% 25% 2 year average 2 year average 2 year average 2 year average 1,2 2% 15% 1,1 1% 1,,9 5% % Wheat Corn Rice Soybean Crop prices,8,7 Expensive Fertilizers Grain basket/npk basket Average over Wheat Corn Soybean Rice Average Average 216 Nov 216 Source: Argus-FMB, USDA, FAO, PhosAgro Note: (1) agricultural commodity prices are represented by a grain index calculated as follows: (wheat price*7+ corn price *8 rice price*4.5+soybeans price*2.5)/22 4

6 2. Financial performance

7 9M 216 highlights Revenue for the period grew by 4% year-on-year, as higher volumes and further RUB depreciation were offset by lower global fertilizer prices. EBITDA decreased to RUB 58.9 billion in 9M 216 from RUB 62.8 billion in 9M 215 EBITDA margin decreased to 4% for 9M 216, compared to 44% in 9M 215 Operating profit for the period was RUB 51.3 billion, down 9% from RUB 56.2 billion in 9M 215 Net profit for 9M 216 increased by 54% to RUB 48.5 billion, compared to RUB 31.6 billion in 9M 215 Earnings per share increased by 54% to RUB 375 for 9M 216 from RUB 244 in 9M 215 Net debt at 3 September 216 stood at RUB 95.1 billion, down from 15.2 billion at 31 December 215 The Company s net debt to EBITDA ratio decreased to 1.21 as of 3 September 216, from 1.28 as of 31 December 215 Cash spent on capex in 9M 216 amounted to RUB 29.5 billion, an decrease of 3% compared to RUB 3.6 billion in 9M 215 In 15 November 216, PhosAgro s Board of Directors recommended a dividend of RUB 5,51 million, which represents RUB 39 per share (RUB 13 per Global Depositary Receipt) If approved, this would bring total dividend payouts for 216 to RUB 135 per share (RUB 45 per GDR) 11 Source: PhosAgro 6

8 Q3 216 performance highlights (RUB million, except EPS) Key financial highlights Q3 216 Q2 216 % change q-o-q Q3 215 % change y- o-y Revenue 45,558 45,976 (1%) 49,68 (7%) Cost of sales (22,629) (22,125) 2% (21,739) 4% Gross profit 22,929 23,851 (4%) 27,329 (16%) Gross profit margin 5% 52% (2) 56% (6) EBITDA 17,368 16,36 7% 21,39 (18%) EBITDA margin 38% 35% 3 43% (5) Net profit / (Loss) 12,41 13,483 (8%) 3, % Net profit margin 27% 29% (2) 8% 19 Earning/(Loss) per share, RUB (8%) 3 22% Free cash flow (1) 9,73 1,889 38% 3, % At its meeting on 24 May 216, PhosAgro s Board of Directors recommended that shareholders approve a dividend of RUB 8,159 million, which represents RUB 63 per share (RUB 21 per Global Depositary Receipt). At its meeting on 16 August 216, PhosAgro s Board of Directors recommended that shareholders approve a dividend of RUB 4,274 million, which represents RUB 33 per share (RUB 11 per Global Depositary Receipt). At its meeting on 15 November 216, PhosAgro s Board of Directors recommended that shareholders approve a dividend of RUB 5,51 million, which represents RUB 39 per share (RUB 13 per Global Depositary Receipt). Source: PhosAgro (1) Calculated as cash flows from operating activities minus cash flows from investing activities 7

9 Q3 216 revenue breakdown Revenue by geography Q3 216 (%) Asia 2% Africa 2% Europe 18% CIS 12% North and South America 14% Russia 45% Revenue by segment Q3 216 (%) Other operations 1% Nitrogen fertilizers 7% India 7% Asia 9% Africa 1% Revenue by geography Q2 216 (%) Europe 21% Other operations - Nitrogen fertilizers 11% CIS 6% India 1% Russia 34% North and South America 19% Revenue by segment Q2 216 (%) Revenue by geography Q3 215 (%) Asia 2% Africa 6% CIS 1% Europe 17% India 1% Russia 38% North and South America 17% Revenue by segment Q3 215 (%) Other operations 1% Nitrogen fertilizers 1% Phosphatebased products 92% Phosphatebased products 89% Phosphatebased products 89% Source: PhosAgro 8

10 ' RUB/t ' RUB/t Revenue per tonne for key products (RUB) Average revenue per tonne - export 6 5 3Q 216 2Q 216 3Q Phosphate rock DAP MAP NPK NPS APP MCP PKS SOP AN Urea STPP Average revenue per tonne - domestic Q 216 2Q 216 3Q Phosphate rock DAP MAP NPK NPS APP MCP PKS SOP AN Urea STPP Source: PhosAgro 9

11 USD/t USD/t Revenue per tonne for key products (USD) Average revenue per tonne - export 1 8 3Q 216 2Q 216 3Q Phosphate rock DAP MAP NPK NPS APP MCP PKS SOP AN Urea STPP Average revenue per tonne - domestic Q 216 2Q Q Phosphate rock DAP MAP NPK NPS APP MCP PKS SOP AN Urea STPP Source: PhosAgro RUB/USD rates: Q ; Q2 216: ; Q3 215:

12 ' tonnes ' tonnes ' tonnes ' tonnes Sales volume developments for key products Sales volumes - export Sales volumes - domestic Q 216 2Q 216 3Q Q 216 2Q 216 3Q DAP MAP NPK NPS APP MCP PKS AN Urea Other fertilizers DAP MAP NPK NPS APP MCP PKS SOP AN Urea STPP STPP Phosphate rock 168 Phosphate rock Source: PhosAgro 11

13 ' tonnes Phosphate segment performance Key financial highlights (RUB million) Q3 216 Q2 216 % change q-o-q Q3 215 % change y-o-y Revenue 42,54 41,3 2% 43,926 (4%) Export 22,236 26,535 (16%) 25,819 (14%) Domestic 19,818 14,495 37% 18,17 9% CoGS (2,2) (19,418) 4% (18,864) 7% Gross profit 21,854 21,612 1% 25,62 (13%) % margin 52% 53% (1) 57% (5) Sales volumes (1) v Phosphate-based products 3Q 216 2Q 216 3Q 215 Phosphate rock Source: PhosAgro (1) Phosphate-based products: Phosphate-based fertilizers, MCP and STPP 12

14 ' tonnes Nitrogen segment performance Key financial highlights (RUB million) Q3 216 Q2 216 % change q-o-q Q3 215 % change y-o-y External Revenue 3,33 4,785 (3%) 4,789 (3%) Export 2,786 3,766 (26%) 4,54 (39%) Domestic 544 1,19 (47%) % CoGS (2,271) (2,563) (11%) (3,29) (25%) Gross profit 1,59 2,222 (52%) 1,76 (4%) % margin 32% 46% (14) 37% (5) Sales volumes Nitrogen fertilisers Source: PhosAgro 3Q 216 2Q 216 3Q

15 Q3 216 Cost of goods sold Cost of Goods Sold CoGS drivers Q3 216 vs Q2 216 RUB 22,629 mln USD 35 mln RUB 22,125 mln USD 336 mln RUB 21,457 mln USD 341 mln CoGS increased slightly, from RUB 22,125 mln in Q2 216 to RUB 22,629 mln in Q3 216, while overall fertilizers sales volumes increased by 2% q-o-q. Changes in stock of WIP and finished goods Cost of goods for resale Am. Sulphate Heating energy Sulphur and sulphuric acid Fuel Ammonia Electricity Potash Natural Gas Depreciation Salaries and social contributions Materials and services A q-o-q increase in the cost of materials and services of RUB 1,164 mln was mainly due to an increase in maintenance costs by RUB 676 mln. A q-o-q decrease in personnel costs of RUB 538 mln was due to an accrual for bonus payments in Q Ammonium sulphate costs decreased by 11%, from RUB 515 mln in Q2 216 to RUB 459 mln in Q3 216 as a result of a 24% decrease in the purchase price, which was partially offset by higher consumption following an increase in the share of NPK/NPS with high nitrogen content in PhosAgro s overall production mix. Sulphur costs decreased by 19%, to RUB 1,182 mln in Q3 216 from RUB 1,457 mln in Q2 216, mainly due to a 21% decrease in the purchase price. A decrease in expenditure on heating energy by 37%, from RUB 121 mln in Q2 216 to RUB 76 mln in Q3 216, was due to the onset of the warm season. A decrease in expenditure on purchased ammonia of RUB 312 mln, or 22%, from RUB 1,415 mln in Q2 216 to RUB 1,13 mln in Q3 216, was mainly due to a 18% decline in the purchase price. A decrease in expenditure on natural gas by 8%, from RUB 1,996 mln in Q2 216 to RUB 1,831 mln in Q3 216, was due to an 11% decrease in ammonia production where natural gas is consumed primarily. Q3 216 Q2 216 Q3 215 Source: PhosAgro RUB/USD rates: Q ; Q2 216: ; Q3 215:

16 Capital expenditure Capex / EBITDA Comment RUB mln Capex is defined as all additions to PP&E additions to PP&E do not necessarily match cash flow in the same period Main projects: Construction of a new 76 kt per annum ammonia plant Construction of a new 5 kt per annumurea plant M216 EBITDA CAPEX as cash flows CAPEX as additions to PP&E Source: PhosAgro Capex by segment (RUB m) Q3 216 Q2 216 Q3 215 Phosphate mining and beneficiation 2,556 2,864 1,73 Phosphate-based products - downstream 2,857 2,681 2,476 Nitrogen fertilizers 5,89 6,471 1,279 Other Total capital expenditure 11,555 12,65 14,898 15

17 Overview of debt 3,5х 2,5х 1,5х,5х -,5х Total debt and net debt / annualised EBITDA 3,29х 2,48х 2,2х 1,63х 1,83х 1,51х,91х 1,5х 1,28х 1,21х,77х,44х,32х,13х,43х,18х -,18х -,11х M 216 Total debt / EBITDA Net debt / EBITDA Comment PhosAgro carefully manages its balance sheet and cost of financing for all current initiatives, including both the consolidation of subsidiaries and growth projects The Company s net debt to LTM EBITDA ratio decreased to 1.21 as of 3 September 216, from 1.28 as of 31 December 215. Net debt at 3 September 216 stood at RUB 95.1 billion, down from 15.2 billion at 31 December 215, as a result of rouble appreciation vs USD as of 3 September 216. Most of the Company s debt is denominated in US dollars as a natural hedge against primarily USD-denominated sales. Fitch Ratings affirmed the Company s long-term foreign currency Issuer Default Rating of BB+/Stable in February 216. Eurobonds issued on February 213 (LPN) Issue size Corporate ratings Tenor Dividends Coupon frequency Spread Public debt Ba1 Moody s BBB- S&P $US 5 mln BB+ Fitch 5 years Semi annually mid swaps+ 32 bps; UST bps Coupon rate 4.24% Maturity Date 2/13/218 Moody s Investor Service affirmed the Company s long-term Issuer Rating of Ba1/Negative in April 216. Standard & Poor s left PhosAgro s BBB-/Negative rating unchanged after negative rating actions on global fertilizer companies in April 216. Source: PhosAgro 16

18 3. Conclusion

19 Market outlook Expectations of a record harvest for grains and soybeans for the third year in a row have put pressure on soft commodities prices. However, high yields of corn and soybean (particularly in the USA) and wheat (in Canada and Russia) resulted in higher soil depletion. This, combined with increased affordability of fertilizers due to very low prices for all three major nutrients, should support demand for the upcoming spring season. In China, growth of coal prices of more than 3% over the last two months has pushed up the cash costs for ammonia and therefore fertilizer production, both in urea and DAP/MAP even further. As a result, very low utilisation rates in urea production in China are being reported. The urea price has already recovered from its minimum levels this year of around USD 19/tonne FOB China, up to USD 235/tonne at the moment, which has led to price increases across other regions as well. In the phosphate segment, at the beginning of November Chinese phosphate producers agreed on further significant production curtailments, from already low utilisation rates of just around 6% this autumn, by an additional 3% for the biggest producers, and additional 2% for producers with annual capacities between 1-2 million tonnes, and by 1% for smaller producers. On the back of these factors PhosAgro believes that the upcoming planting season in Europe, the USA, Central and South America holds much more upside pricing risk and should demonstrate more normalised seasonality in terms of price behaviour compared to 216. At the same time, new capacity being added in North Africa and the Middle East may put additional pressure on prices in the second half of

20 Company outlook All major development projects are on track, including the new ammonia plant designed to increase cost efficiency and support further expansion of PhosAgro s complex fertilizer production capacity

21 Thank you! 2

22 21 Q&A