Russia’s Uralkali 2019 earnings, sales up on higher selling prices, but output falls

LONDON (ICIS)–Uralkali increased sales and earnings before interest, taxes, depreciation and amortisation (EBITDA) in 2019 due to higher selling prices for potash, but total output actually fell, the Russian producer said on Thursday.

Uralkali ($/’000)	2019	2018	Change
Sales	2,364	2,281	3.6%
EBITDA	1,578	1,459	8.2%
Output (m/tonnes)	11.1	11.5	-3.5%

KEY POINTS:

– “In 2019, the global potash market conditions were relatively challenging across the industry … In the difficult market context, Uralkali announced a decrease in production in Q4 2019,” the company said.

– Uralkali said “insufficient demand” had presented challenges across regions during 2019.

– Among other factors for poor demand, the company mentioned the absence of a Chinese seaborne contract in the second half of the year, the delayed signing of a contract with Indian customers, and low demand in general in southeast Asia.

– “Destocking in key markets during the second half of the year [also] had an adverse impact on global potash demand,” it added.

– According to Uralkali’s figures, global potash demand decreased to 63-64m tonnes in 2019, compared with 66m tonnes in 2018.

OUTLOOK: 

– The Russian producer expects demand for potash to improve in 2020, with global sales expected to recover to 2018 levels.

– “Demand outlook for 2020 is cautiously optimistic … Global sales are expected to increase to 65-66m tonnes compared with 2019, mainly due to expected rebound in the major markets of southeast Asia, the US, and central America, and good demand in Brazil.”