As of 31 March 2021, the net debt/EBITDA ratio was 1.45x. PhosAgro was able to decrease its debt burden to less than 1.5x thanks to higher profits along with effective cost controls. Net debt as of 31 March 2021 was RUB 145.4 billion (USD 1.9 billion).
Cost of sales RUB million 1Q 2021 1Q 2020 Chng,% Amortisation 6,760 6,226 8.6% Materials and services 12,144 10,810 12.3% Phosphate rock transport 2,284 2,260 1.1% Repair expenses 2,889 2,416 19.6% Drilling and blasting costs 985 769 28.1% Other materials and services 5,986 5,365 11.6% Raw materials 11,791 10,036 17.5% Ammonia 2,081 1,191 74.7% Sulphur and sulph. acid 2,046 1,195 71.2% Potassium 3,261 3,206 1.7% Natural gas 3,990 3,797 5.1% Ammonium sulphate 413 647 -36.2% Salaries and social contributions 4,234 3,587 18.0% Electricity 1,801 1,706 5.6% Fuel 1,506 1,144 31.6% Products for resale 3,313 3,089 7.3% Logistics costs 10,659 8,064 32.2% Customs duties 742 360 106.1% Freight, port and stevedoring expenses 6,490 4,500 44.2% Russian Railways' tariffs and operators' fees 3,124 2,982 4.8% Other 303 222 36.5% Total 52,208 44,662 16.9%
Cost of sales increased by 16.9% year-on-year in 1Q 2021 to RUB 52.2 billion (USD 702 million): ? Expenses for materials and services increased by 12.3% year-on-year to RUB 12.1 billion (USD 163 million) due to an
increase in the amount of planned repairs and a slight increase in costs associated with the extraction of
phosphorus ore. ? Expenses for raw materials increased by 17.5% year-on-year to RUB 11.8 billion (USD 159 million) due to:
? a 74.7% increase in ammonia costs to RUB 2.1 billion (USD 28 million) as a result of higher prices for this
feedstock and an increase in ammonia consumption;
? a 71.2% increase in expenses for sulphur and sulphuric acid to RUB 2.0 billion (USD 28 million) as a result of
higher global prices for sulphur; however, the increase was constrained thanks to a decrease in purchases of
sulphuric acid from third parties once the Company's new sulphuric acid production line in Cherepovets was
launched for production in early 2020;
? a 5.1% increase in natural gas costs to RUB 4.0 billion (USD 54 million) due to annual price indexation; at the
same time, consumption remained unchanged from 1Q 2020;
? a 36.2% decrease in expenses for ammonium sulphate to RUB 0.4 billion (USD 6 million) once the Company's
ammonium sulphate production line reached design capacity. ? Salaries and social contributions increased by 18.0% to RUB 4.2 billion (USD 57 million) as a result of an increase
in the headcount at new production facilities, salary indexation and bonuses payments. ? Spending on customs duties increased by RUB 0.4 billion (USD 5 million), or by 106.1%, year-on-year, due to an
increase in export sales volumes amid the recovery in global fertilizer prices. ? Freight, port and stevedoring expenses increased by 44.2% to RUB 6.5 billion (USD 87 million) as a result of higher
transportation tariffs and the devaluation of the rouble against the dollar.
Administrative and selling expenses RUB million 1Q 2021 1Q 2020 Chng, % Administrative expenses 4,892 4,652 5.2% Salaries and social contributions 3,161 3,082 2.6% Professional services 424 419 1.2% Amortisation 356 336 6.0% Other 951 815 16.7% Selling and marketing expenses 1,600 1,618 -1.1% Salaries and social contributions 974 869 12.1% Materials and services 235 357 -34.2% Amortisation 391 392 -0.3% Total 6,492 6,270 3.5%
In 1Q 2021, administrative and selling expenses increased by 3.5% year-on-year to RUB 6.5 billion (USD 87.3 million). SG&A growth was kept to a minimum as a result of successful cost control initiatives.
Market outlook
In early April 2021, a slight price correction was noted in fertilizer markets that was associated with the end of the main seasonal demand in markets in the northern hemisphere (Europe, China, the United States).
At the same time, prices for agricultural products remained at their highest levels in recent years, thereby keeping fertilizers affordable despite the noticeable increase in prices. In addition, 2Q and 3Q have traditionally seen peak seasonal demand in the primary global markets (India and Brazil), which, combined with low stocks and continued demand in the United States, will keep prices high.
Risk factors in the short term will include an increase in fertilizer exports from China and a possible decrease in import demand from India due to higher global prices while subsidies for fertilizer purchases remain unchanged from the previous year.
Conference call and webcast:
PhosAgro will hold a conference call and webcast today at 14:00 London time (16:00 in Moscow; 09:00 in New York).
The call will be held in English, with simultaneous translation into Russian on a separate line.
Webcast link:
https://www.webcast-eqs.com/phosagro20210519
Participant dial-in numbers:
Russia:
+7 495 213 1767 / 8 800 500 9283
United Kingdom:
+44 (0) 330 336 9126 / 0800 358 6377
United States:
+1 323-994-2082 /888-254-3590
Conference ID numbers:
In English: 4480063
In Russian: 1505879
Contacts
PJSC PhosAgro
Andrey Serov, Head of the Investor Relations Department
+7 495 231 2747 ext. 2183
ir@phosagro.ru
Timur Belov, Press Officer
+7 495 231 2747 ext. 2652
pr@phosagro.ru
EM
Sam VanDerlip
vanderlip@em-comms.com
+44 207 002 7859
About PhosAgro
PhosAgro (www.phosagro.com) is one of the world's leading vertically integrated phosphate-based fertilizer producers in terms of production volumes of phosphate-based fertilizers and high-grade phosphate rock with a P2O5 content of 39% and higher. PhosAgro's environmentally friendly fertilizers stand out for their high efficiency, and they do not lead to the contamination of soils with heavy metals.
The Company is the largest phosphate-based fertilizer producer in Europe (by total combined capacity for DAP/MAP/NP/ NPK/NPS), the largest producer of high-grade phosphate rock with a P2O5 content of 39%, a top-three producer of MAP/DAP globally, one of the leading producers of feed phosphates (MCP) in Europe, and the only producer in Russia, and Russia's only producer of nepheline concentrate (according to the RAFP).
PhosAgro's main products include phosphate rock, more than 50 grades of fertilizers, feed phosphates, ammonia, and sodium tripolyphosphate, which are used by customers in over 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.
Three months ended 31 March
RUB million 2021 2020
Revenues 87,579 64,058
Cost of Group products sold (48,895) (41,573)
Cost of products for resale (3,313) (3,089)
Gross profit 35,371 19,396
Administrative and selling overhead expenses (6,492) (6,270)
Taxes, other than income tax, net (1,518) (874)
Other income and expenses, net (657) (704)
Foreign exchange gain from operating activities, net 98 2,236
Operating profit 26,802 13,784
Finance income 100 301
Finance costs (1,298) (1,474)
Foreign exchange loss from financing activities, net (2,885) (32,179)
COVID-19 related expenses (119) -
Profit/(loss) before tax 22,600 (19,568)
Income tax (expense)/benefit (4,256) 3,980
Profit/(loss) for the period 18,344 (15,588)
Attributable to:
Non-controlling interests* (9) (1)
Shareholders of the Parent 18,353 (15,587)
Basic and diluted earnings/(loss) per share (in RUB) 142 (120)
Other comprehensive income
Items that may be reclassified subsequently to profit or loss
Foreign currency translation difference 214 2,586
Other comprehensive income for the period 214 2,586
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