• Revenue
decreased to 72.15 bln RUB, compared to 75.33 bln RUB in 2012.
• Operating
profit amounted to 16.5 bln RUB, compared with 22.73 bln RUB in 2012.
• Adjusted
EBITDA comprised 20.12 bln RUB, compared to 25.99 bln RUB in 2012.
Moscow,
Russia (April 24, 2014) -- URALCHEM,
OJSC (hereinafter URALCHEM or the Company), the Russian holding
company of the URALCHEM Group, one of the largest producers of
nitrogen and phosphate fertilizers in Russia, announced its audited
IFRS financial results for the year 2013.
The Group’s Key Financial Figures for 2013 and 2012 (million
RUB)
Year 2013
|
Year
2012
|
Year-on-year change, %
|
|
Revenue
|
72,149
|
75,327
|
-4%
|
Gross profit
|
38,643
|
43,521
|
-11%
|
Gross profit margin
|
54%
|
58%
|
|
Operating profit
|
16,495
|
22,730
|
-27%
|
Operating profit margin
|
23%
|
30%
|
|
Net profit
|
8,196
|
20,929
|
-61%
|
Net profit margin
|
11%
|
28%
|
|
Adjusted EBITDA
|
20,124
|
25,986
|
-23%
|
Adjusted EBITDA margin
|
28%
|
34%
|
|
Cash generated from operating activities
|
14,467
|
20,633
|
-30%
|
Dmitry
Konyaev, CEO of URALCHEM, OJSC, commented on the Company's results
for the year 2013, "2013 proved to be a difficult year for
fertilizer manufacturers. The decline in world prices affected the
financial results of all the major players in the industry and
URALCHEM was no exception. Against the background of adverse market
developments, we worked actively to improve the efficiency of
business processes, to increase productivity, profitability and to
reduce operating costs. We managed to strengthen our leadership in
the nitrogen segment, by showing an increase in production and sales
of key products. Thanks to its chosen strategy, URALCHEM has
continued to maintain a leading position among Russian producers in
terms of margins, with the EBITDA margin at 28% in 2013."
Financial
Results
Revenue
for 2013 decreased by 4% to 72.15 bln RUB, compared to 73.33 bln RUB
in 2012. Operating profit amounted to 16.5 bln RUB (23% of revenue)
compared with the operating profit of 22.73 bln RUB (30% of revenue)
in 2012.
Adjusted
EBITDA reached 20.12 bln RUB, compared to 25.99 bln RUB in 2012, a
decrease of 23%.
The
adjusted EBITDA margin for 2013 comprised 28% of revenue, compared
with 34% of revenue for 2012.
Markets
In
2013, the global fertilizer market was affected by a number of
unfavourable factors. Among them were the reduction of fertilizer
subsidies in India and the depreciation of regional currencies in the
countries of South and Southeast Asia, the leading importers of
mineral fertilizers. During the year Thai baht and Indian rupee lost
10% against the US dollar. On the Brazilian and Turkish markets
(traditionally important for the Russian fertilizer exports), the
real and the lira decreased by 15% and 19% against the US dollar,
respectively. Restructuring of potash sales and a deficiency of
natural gas for the nitrogen sector in Egypt, South-East and South
Asia, and Latin America also added to the uncertainty.
As
a result, continuing high demand for fertilizers under worsening
general macroeconomic conditions was not supported by solvency of the
major importers. This was reflected in falling prices of the major
fertilizers and created the prerequisites for a general decline in
prices in the short and medium terms. China's increasing role as a
supplier of fertilizers, coupled with the expectation that the
country's costs will remain stable (or even reduce slightly) will
significantly constrain other producers' opportunities to increase
prices, even seasonally. The US move away from the import of nitrogen
products to domestic production will increase competition in other
regions and will also put additional pressure on prices.
The
price of ammonia FOB Yuzhny Port during 2013 decreased from US
$600 per tonne in January to US $385 to US $425 per tonne in
December. The main factors influencing the negative trend in world
prices for ammonia were: a drop in demand from Indian manufacturers
of fertilizers, moderate demand from industrialized countries in
Asia, the weakening of phosphate fertilizer market and lower prices
for urea. During the same period, ammonia deficit increased in the
countries of Southeast Asia, Europe and Latin America, which gave
rise to the need for additional purchases of fertilizers from other
regions. Also in 2013, industrial demand for ammonia remained high.
The
price of urea FOB Yuzhny Port decreased by 24% during the
reporting period to US $312 per tonne compared with US $408 per tonne
in 2012. The most significant factor in the reduction in prices was
the rise of China in the export markets, while the cost of production
of urea in China significantly decreased due to the decrease in coal
prices.
Steady
growth of quotations of ammonium nitrate at the beginning of
the year was replaced by a fall in mid-March. In late May prices
stabilized, helped by repair works at plants in the CIS. By the end
of the 2nd quarter, prices in the CIS received support from the
industrial segment. Since the end of September, prices for ammonium
nitrate started to restore due to the reduction of exports from
Ukraine and the early-season purchases in the domestic markets of the
CIS. During 2013 quotes for ammonium nitrate averaged $287 tonne,
which was 6% lower than a year earlier (FOB Baltic).
In
the phosphate fertilizers segment there was global decline in
prices due to a lack of current demand. The main factor for the price
reduction was a sharp drop in import demand in India due to the
accumulation of significant reserves of phosphate and compound
fertilizers in the country. Increased stocks were the result of low
phosphorus usage in 2012 due to the drought that hit the country
during the application season. Also, a significant reduction in
imports was brought about by lower government subsidies and
depreciation of the rupee against the dollar. At the same time, on
the expectation of falling prices, importers in other regions adopted
a policy of procurement to meet current needs only. The price of
phosphate fertilizers on the basis of FOB Tampa averaged US $443 per
tonne in 2013, which was 17.4 % lower than in 2012.
Sales
Comparative sales
figures of the URALCHEM Group for the
years 2013-2012 (thousand tonnes):
Name of product
|
Year
2013
|
Year
2012
|
Year-on-year change,%
|
Ammonium nitrate and its derivatives
|
2,181
|
2,043
|
7%
|
Urea
|
1,132
|
1,188
|
-5%
|
Ammonia
|
678
|
673
|
1%
|
Phosphate fertilizers
|
448
|
508
|
-12%
|
NPK fertilizers
|
598
|
587
|
2%
|
Other chemicals, including ammonium nitrate for
industrial use
|
757
|
797
|
-5%
|
Total
|
5,794
|
5,796
|
-0,03%
|
Financial
Situation
Cash
generated from operating activities in 2013 amounted to 14.47 bln
RUB, compared to 20.63 bln RUB in 2012.
As
at 31 December 2013, the Company's net debt amounted to 148.997 bln
RUB. The increased size of the debt is largely due to a loan of
126.27 bln RUB which the Company obtained from VTB Capital to finance
the purchase of 19.99% of shares in OJSC "Uralkali" in
December 2013.
The
Company's US dollar-denominated loan portfolio amounts to more than
140.89 bln RUB. The weighted average interest rate of the loan
portfolio in dollars equals 3.7% annually.
For
more information, please visit the Company web site
http://www.uralchem.com
or use the following contact information:
Public
Relations Department
URALCHEM,
OJSC
Tel:
+7 (495) 721 89 89
Email:
pr@uralchem.com
URALCHEM,
OJSC is one of the largest producers of nitrogen and phosphate
fertilizers in Russia and the CIS with production capacities of over
2.8 million tonnes of ammonia, 2.5 million tonnes of ammonium
nitrate, 1.2 million tonnes of urea and 0.8 million tonnes of
phosphate and compound fertilizers per year. URALCHEM, OJSC ranks
first in Russia for production of ammonia and ammonium nitrate, and
second for the production of urea. Key production assets of URALCHEM,
OJSC include Azot Branch of URALCHEM, OJSC in Berezniki, Perm Region;
OJSC Minudobrenia, Perm; MFP Kirovo-Chepetsk Chemical Works, OJSC
Branch in Kirovo-Chepetsk, Kirov region; Voskresensk Mineral
Fertilisers, OJSC in Voskresensk, Moscow region.
Some
of the information in this press release may contain projections or
other forward-looking statements regarding future events or the
future financial performance of URALCHEM. We wish to caution you that
these statements are only predictions. We do not intend to update
these statements and our actual results may differ materially from
those contained in our projections or forward-looking statements,
including, among others, the achievement of anticipated levels of
profitability, growth, cost and synergy of our recent acquisitions,
the impact of competitive pricing, the ability to obtain necessary
regulatory approvals and licenses, the impact of developments in the
Russian economic, political and legal environment, financial risk
management and the impact of general business and global economic
conditions.
Annex
to the press release about the financial results for 2013
EBITDA is a profit / loss from financial and economic
activities during the reporting period, before deduction of income
tax on profits, income and interest costs, depreciation and
amortization. "Adjusted EBITDA" is EBITDA for the reporting
period before goodwill, profit / loss from associates, profit / loss
on foreign exchange differences arising on financial performance and
profit / loss on operations with derivative financial instruments.
Adjusted EBITDA is operating profit before depreciation and
amortization and financial results of operations with derivative
financial instruments. In accordance with International Financial
Reporting Standards ("IFRS"), depreciation and amortization
are included in cost structure, and in the selling, general and
administrative expenses. IFRS does not require the disclosure and
does not describe the calculation of EBITDA and adjusted EBITDA,
among other financial indicators, so they can not substitute for net
profit for the period when evaluating the results of operations or
the measure of cash provided by operating activities when evaluating
liquidity. Approach to the calculation of EBITDA and adjusted EBITDA,
as described earlier, may not coincide with the approaches used by
other companies, therefore, comparability may be limited. We believe
that EBITDA and adjusted EBITDA provide useful information to
investors because they are indicators of the stability and efficiency
of our business and our ability to fund discretionary spending such
as capital expenditures, the acquisition of subsidiaries and other
investments, as well as indicators of our ability to incur and
service debt. IFRS classifies depreciation and amortization to
operating costs, while in fact they are distributed to the current
period non-cash expenses for the acquisition or creation of fixed
assets, incurred in previous periods, and are not affiliated with the
movement of funds.
Calculation
of EBITDA for year 2013 and year
2012 (mln RUB)
Year 2013
|
Year 2012
|
||
Net profit
|
8,196
|
20,929
|
|
Add:
Income tax
Interest and other financial income
Interest and other financial costs
Amortisation
|
|||
1,795
|
3,916
|
||
(633)
|
(393)
|
||
2,424
|
2,446
|
||
3,629
|
3,256
|
||
Gain of associates
|
(12)
|
(9)
|
|
Loss on impairment of fixed assets
|
3,277
|
2,538
|
|
Gain on change in fair value of the share in the associate
|
-
|
(4,41)
|
|
Foreign exchange loss (gain) from financing activities
|
1,448
|
(1,756)
|
|
Adjusted EBITDA
|
20,124 |
25,986
|
|
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