REG-PJSC PhosAgro: PhosAgro 1H18 Fertilizer Output Increases 14% y-o-y

PhosAgro PAOAnnouncement

30/07/2018 13:00

For Immediate Release   30 July 2018 

PhosAgro 1H18 Fertilizer Output Increases 14% y-o-y

Moscow – PhosAgro (Moscow Exchange, LSE: PHOR), one of the world’s leading
vertically integrated phosphate-based fertilizer producers, announces its
operational results for the three months (2Q) and first half of the year (1H)
ended 30 June 2018. Total fertilizer production for 2Q 2018 grew by more than
9% to 2.2 million tonnes. Production for 1H 2018 increased by nearly 14%
year-on-year to more than 4.5 million tonnes.

PhosAgro’s production and sales volumes are summarised in the tables below.

                          Production volumes by type                          
 (‘000 mt)              2Q 2018  2Q 2017  Chg y/y  1H 2018  1H 2017  Chg y/y  
 Phosphate-based & MCP  1,674.9  1,654.0    1.3%   3,432.1  3,227.6    6.3%   
 Nitrogen-based          552.7    385.0    43.6%   1,113.5   767.6    45.1%   
 Total fertilizers      2,227.6  2,039.0    9.2%   4,545.6  3,995.2   13.8%   
 PhosRock & nepheline   2,774.2  2,727.0    1.7%   5,563.9  5,229.3    6.4%   
 Other products           53.5     28.3    89.0%     96.4     57.1    68.8%   

   

                            Sales volumes by type                             
 (‘000 mt)              2Q 2018  2Q 2017  Chg y/y  1H 2018  1H 2017  Chg y/y  
 Phosphate-based & MCP  1,646.0  1,636.7    0.6%   3,399.0  3,169.9    7.2%   
 Nitrogen-based          600.0    435.2    37.9%   1,267.0   895.7    41.5%   
 Total fertilizers      2,246.0  2,071.9    8.4%   4,666.0  4,065.6   14.8%   
 PhosRock & nepheline    968.0    921.8     5.0%   1,924.0  1,832.4    5.0%   
 Other products           69.0     43.2    59.7%    125.0     79.2    57.8%   

Commenting on the 2Q 2018 operational results, PhosAgro CEO Andrey Guryev
said:

“I am very pleased that PhosAgro has continued growing fertilizer production
by nearly 10% year-on-year in the second quarter thanks to solid contributions
from the newly launched urea and ammonia lines. With solid operating
performance of more than 4.5 million tonnes of fertilizers produced in the
first half of the year, we feel comfortable confirming our annual production
guidance of nearly 9 million tonnes of finished products. Our long-term
production and sales strategy aimed at maximising net-backs encouraged the
company to focus in 2Q 2018 on producing DAP and concentrated NPK blends,
which were more profitable due to robust import demand in India, the US and
Europe. However, this focus on producing higher-margin, phosphorous-rich
fertilizers led to a slight decrease in annual rates of production growth.  

“In terms of our key products, in 2Q 2018 the Company almost doubled DAP
production and increased output of concentrated NPK(S) by almost 10%
year-on-year. This was offset by a 36% year-on-year cut in MAP output due to
lower consumption in Brazil (where MAP is the key product) as farmers focused
on more affortable NPK and NPS. In the mid-stream segment, we increased
ammonia output by 60% after the launch of our new ammonia line in July 2017,
while sulphuric acid output was up by 7% thanks to upgrades of existing units.

“The flexibility of our sales policy, which is a cornerstone of our
long-term strategy, helped to minimise the impact of lower levels of activity
on the Brazilian market (which we believe to be temporary) and trade
restrictions in Ukraine. In 1H 2018 we boosted sales to Europe by 60%
year-on-year to almost 1.2 million tonnes, which is vindication of our
strategy to go deeper into the distribution chain and establish a presence on
the ground with new local offices. Sales to North America and Asia increased
by almost 50% and 30% year-on-year, respectively. On the Russian market,
volumes remained virtually unchanged at 1.2 million tonnes.

“Looking ahead to market conditions in August through October, we remain
upbeat on prices. Although we believe that the effect of strong demand in
India for DAP imports is probably already priced in, we may see some
additional upside to current price levels due to: a) the onset of the main
autumn season for markets including Russia, Europe and North America; b) the
first signs of seasonal recovery in imports to Brazil – MAP imports
collapsed by almost 40% year-on-year in 1H18, meaning additional demand is
likely to appear in August-September; and c) the beginning of the high season
in China, with local producers focusing on the domestic market. On the other
hand, the continued ramp-up of new units in Saudi Arabia and Morocco may put
some pressure on prices through November and December, which are the
seasonally weak off-season for the market.”

The table below provides a breakdown of production volumes by major product:

                              Production volumes                              
 ('000 MT)              2Q 2018  2Q 2017  Chg y/y  1H 2018  1H 2017  Chg y/y  
 Apatit mine and beneficiation plant                                          
 Phosphate rock         2,537.8  2,456.5    3.3%   5,061.7  4,746.9    6.6%   
 Nepheline concentrate   236.4    270.5   (12.6%)   502.2    482.4     4.1%   
 Phosphate-based fertilizers                                                  
 DAP/MAP                 721.7    775.6    (6.9%)  1,519.8  1,527.5   (0.5%)  
 NPK                     687.4    664.8     3.4%   1,334.0  1,197.3   11.4%   
 NPS                     101.0     37.7    167.9%   233.7    153.5    52.2%   
 APP                      58.3     42.0    38.8%    110.0     85.2    29.1%   
 MCP                      92.0     97.2    (5.3%)   180.2    193.6    (6.9%)  
 PKS                      14.5     36.7   (60.5%)    54.4     70.5   (22.8%)  
 Nitrogen-based fertilizers                                                   
 AN                      135.7    132.4     2.5%    279.2    262.2     6.5%   
 Urea                    417.0    252.6    65.1%    834.3    505.4    65.1%   
 Other products                                                               
 STPP                     26.5     16.1    64.6%     51.3     31.4    63.4%   
 Other                    27.0     12.2    121.3%    45.1     25.7    75.5%   
 Feed stock                                                                   
 Ammonia                 493.0    308.1    60.0%    989.1    587.4    68.4%   
 Phosphoric acid         638.5    640.2    (0.3%)  1,294.6  1,236.6    4.7%   
 Sulphuric acid         1,459.5  1,364.5    7.0%   2,943.4  2,648.8   11.1%   

The table below provides a breakdown of sales volumes by major product:

                                Sales volumes                                 
 ('000 mt)              2Q 2018  2Q 2017  Chg y/y  1H 2018  1H 2017  Chg y/y  
 Apatit mine and beneficiation plant                                          
 Phosphate rock          733.0    657.2    11.5%   1,424.0  1,344.2    5.9%   
 Nepheline concentrate   235.0    264.6   (11.2%)   500.0    488.2     2.4%   
 Phosphate-based fertilizers                                                  
 DAP/MAP                 726.0    765.2    (5.1%)  1,535.0  1,499.1    2.4%   
 NPK                     663.0    667.0    (0.6%)  1,310.0  1,169.1   12.1%   
 NPS                      91.0     38.5    136.4%   227.0    157.4    44.2%   
 APP                      50.0     44.5    12.4%     97.0    101.4    (4.3%)  
 MCP                      92.0     85.9     7.1%    177.0    175.4     0.9%   
 PKS                      24.0     35.6   (32.6%)    53.0     67.5   (21.5%)  
 Nitrogen-based fertilizers                                                   
 AN                      124.0    140.7   (11.9%)   373.0    369.0     1.1%   
 Urea                    476.0    294.5    61.6%    894.0    526.7    69.7%   
 Other products                                                               
 STPP                     26.0     22.0    18.2%     50.0     38.2     31%    
 Other                    43.0     21.2    102.8%    75.0     41.0     83%    

* Excluding intra-group sales 

** Excluding feedstock

For further information please contact: 

PJSC PhosAgro
Alexander Seleznev, Head of Investor Relations
ir@phosagro.ru
+7 495 232 96 89 ex 21 87

Timur Belov, Press Officer
Anastacia Basos, Deputy Press Secretary
+7 495 232 9689

EM
Sam VanDerlip
vanderlip@em-comms.com
+44 7554 993 032
+7 499 918 3134

Notes to Editors

PhosAgro (www.phosagro.ru) 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 P(2)O(5)
content of not less than 39% (according to IFA, Fertecon and CRU).

PhosAgro’s main products include phosphate rock, over 35 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.



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