21 November 2013 15:26 [Source: ICIS news]
LONDON (ICIS)--Europe's largest phosphate-based fertilizer producer, Russia's PhosAgro, on Thursday posted a sharp year-on-year fall in nine-month net profit that it blamed on falling phosphate prices and the potash price collapse triggered by the July break-up of potash marketing cartel Belarusian Potash Company (BPC), but added it is upbeat about the market's prospects for 2014.
The company said net profit for the January to September period fell 52% to Russian roubles (Rb) 9.09bn ($275.3m, €204.6m) compared to the same period of last year, although revenue edged up 3% year on year to Rb81.3bn.
The Moscow-based firm did not provide separate third-quarter profit and revenue figures.
"PhosAgro sees very high global demand for complex fertilizers and nitrogen phosphate and sulphur (NPS); the company intends to further invest into both increasing capacity and expanding the number of nitrogen phosphorus potassium (NPK) grades it produces," it said.
"All major development projects are on track: the new ammonia plant designed to increase cost efficiency and support expansion of complex fertilizer capacity, as well as new phosphorous potassium (PK), NPK and nitrogen phosphorus potassium and sulphur (NPKS) production projects."
Turning to its outlook for 2014, PhosAgro said it expects potash prices to settle after the market was thrown into turmoil this summer by the surprise break-up of BPC which triggered a slump in prices.
"Stabilisation of potash prices is expected to revive demand for NPK fertilizers and push purchases of all nutrients. Despite lower prices, global agricultural commodities market trends remain positive," PhosAgro added.
"Record accessibility of phosphate-based fertilizers should support greater seasonal demand from North America and Western Europe in early 2014, and may also push advance purchases by other markets.
"India's low import volumes this year combined with favourable weather conditions and higher demand in the current Rabi season will draw down stockpiles and help restart import demand for diammonium phosphate (DAP) and NPK earlier."
Looking back on the nine month period ended 30 September, PhosAgro chairman and CEO, Andrey Guryev, said: "DAP prices remain under significant pressure for the third year in a row, with Tampa prices dropping another 21% from $493/tonne FOB [free on board] at the beginning of the year to $390/tonne FOB as of the end of September 2013, and with a further decrease to just around $350/tonne FOB today. This has brought most of our industry to below break-even levels."
"Despite challenging market conditions, we have achieved several strategic goals with respect to consolidation of our production subsidiaries during the period: we completed the Apatit minority squeeze out and now own 100% of this unique mining asset," the executive added.
"We also made progress on further organic growth with the launch of construction of a new modern ammonia plant. This plant will help to sustain our low cost advantage in the future and establish a base for the development of further downstream fertilizer capacity aimed at delivering any type of phosphate-based fertilizer to farmers in either concentrated, or complex, triple NPK and even quadruple NPKS nutrient form."
($1 = €0.75, €1 = Rb44.42, $1 = Rb33.01)
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