LONDON (ICIS)--Russia-based fertilizer producer PhosAgro on Thursday posted a 70% increase in net profit in the first half of the year.
The Moscow-headquartered phosphate manufacturer - whose products include high-grade phosphate rock, diammonium phosphate (DAP) and monoammonium phosphate (MAP) - said net profit for the six months ended 30 June 2014 was Russian roubles (Rb) 8.1bn ($231m), a 70% increase year on year from Rb4.8bn ($154m).
The company attributed the growth to favourable market conditions and higher prices, in rouble terms, for the main fertilizers PhosAgro produces. The producer’s revenue increased by 6% year on year to Rb56.7bn ($1.62bn).
In its market outlook, PhosAgro said agricultural commodities performance could be a limiting factor for further fertilizer price increases.
“The basket price has decreased around 12% from the beginning of the year following favourable crop prospects. Notwithstanding recent soft commodities trends, DAP FOB [free on board] prices remain around $500/tonne in most ports, while urea is at $310-315/tonne FOB Baltic,” the company said.
“Given expectations of a recovery in activity from Indian and Brazilian buyers, combined with high season in Europe, North America and Russia-CIS, PhosAgro does not see any significant downside risk for phosphate fertilizer prices in the short term,” it added.
PhosAgro added it intends to invest further into both increasing capacity and expanding the number of nitrogen, phosphate and potash (NPK) grades it produces.
PhosAgro chairman and CEO, Andrey Guryev, said: “PhosAgro’s earnings in the first half of 2014 grew very strongly on the back of a significantly improved operating environment combined with our successful cost cutting initiatives.
“Healthy global demand for phosphate fertilizers has pushed prices up to $500/tonne FOB Tampa, substantially higher than the crisis levels seen in 2H 2013, when prices bottomed around $350/tonne FOB Tampa in November.”
Recently, PhosAgro sent a compulsory share purchase notification to OJSC PhosAgro-Cherepovets for the buyout of the ordinary shares belonging to the remaining minority shareholders (2.01%) of OJSC PhosAgro-Cherepovets. The producer plans to complete the squeeze out procedure by the end of 2014.
At the beginning of August, PhosAgro signed a contract for the design engineering and procurement of equipment for the construction of a 500,000 tonne/year granulated urea production unit, which will be commissioned simultaneously with the new ammonia plant in the first half of 2017.