LONDON (ICIS)--Uralchem saw its net profit for the first three quarters of 2013 fall 46% year on year to Russian rubles (Rb) 10.1bn ($308.6m, €224.2m), with the onset of the global downturn in the fertilizer markets in the second half of the year taking a toll, the Russia-based nitrogen and phosphate fertilizer producer said on Wednesday.
Revenue for the first nine months edged up 1% year on year to Rb56.3bn, while operating profit fell 14% to Rb14.6bn from Rb17.1bn, it added.
Uralchem CEO Dmitry Konyaev said: “In the second half of 2013, the global market situation took a downward turn for fertilizer producers. Despite the difficult market conditions, Uralchem maintained its revenues at the level of 2012.”
The company was actively upgrading facilities, seeking to reduce costs and developing production of high-margin niche products, and, thanks to its chosen strategy was maintaining an earnings before interest, tax, depreciation and amortisation (EBITDA) margin of 32%, Konyaev added.
Looking at its ammonia business, Uralchem said that since the beginning of the year, there has been a decrease in demand from the industrial segment in east Asia and from producers of phosphate fertilizers in India and north Africa, while demand in the US decreased because of the late start of planting.
Average quotes for ammonia in January-September 2013 amounted to $498/tonne (FOB) Yuzhny Port, which was only 4% lower than in the same period of 2012, the company said.
Uralchem's urea business saw prices continue to decline in the third quarter of this year because of massive Chinese exports, the company added.
Average quotes for urea in January-September 2013 amounted to $339/tonne (FOB) Baltic Sea, which was 17% lower than in the same period of last year, it said.
During January-September 2013, quotes for ammonium nitrate averaged $291/tonne (FOB) Baltic Sea, 4.6 % lower than in the same period of 2012, Uralchem added.
“Starting from late September, prices for ammonium nitrate began to recover due to reduced exports from Ukraine, as well as to the beginning of the purchase season in the domestic market of the CIS [Commonwealth of Independent States],” the company added.
In the phosphate fertilizers segment there was a global decline in prices due to a lack of demand.
“The main reason came from India, where high levels of stock, reduction of state subsidies and depreciation of the rupee against the dollar led to a significant reduction in imports,” the company said.
“Importers in other regions changed their procurement tactics to just satisfy the current demand, playing on the falling market,” it added.
Average di-ammonium phosphate (DAP)/monoammonium phosphate (MAP) quotes for the first three quarters of 2013 fell by 14.7% compared with the same period of last year, reaching $481/tonne (FOB) Baltic Sea, the company said.
($1 = €0.73, $1 = Rb32.73, €1 = Rb45.04)