LONDON (ICIS)--Uralchem’s net profit shrank in 2013 61% to Russian roubles (Rb) 8.2bn (€166.4m) on the back of lower product prices and “adverse” market conditions, while sales suffered a slighter fall of 4% to Rb72bn, the Russia-based fertilizer producer said on Wednesday.
2013 also saw operating profit fall 27% to Rb16.5bn and earnings before interest, taxes, appreciation and depreciation (EBITDA) fall to Rb20bn compared to Rb26bn in 2012.
Dmitry Konyaev, Uralchem’s CEO, blamed the poor results on the decline of fertilizer prices and “adverse market developments”, but praised the company’s strategy to reduce costs and increase productivity.
“We managed to strengthen our leadership in the nitrogen segment, by showing an increase in production and sales of key products. Thanks to its chosen strategy, Uralchem has continued to maintain a leading position among Russian producers in terms of margins, with the EBITDA margin at 28% in 2013,” Konyaev said.
Uralchem also attributed the weaker 2013 results to the end of fertilizers subsidies in India and the depreciation of currencies in Asia, as well as that of the Brazilian real and the Turkish lira, two countries which are main buyers of Uralchem’s products.
Uralchem’s ammonium nitrate and its derivatives division sales grew 7% year on year to Rb2.2bn, while urea segment revenues fell 5% over the same period to Rb1.1bn as a result of cheaper exports from China.
Sales of ammonia increased 1% in 2013 compared to 2012 at Rb678m, while phosphate fertilizers took the biggest hit with revenue decreasing 12% to Rb448m on the back of lower global prices and lower imports to India, Uralchem said.
Nitrogen phosphorus potassium (NPK) fertilizers sales grew 2% year on year in 2013 to Rb598m
Uralchem said its debt had increased in 2013 to Rb149bn on the back of a Rb126bn loan to acquire a 20% stake at OJSC Uralkali in December 2013.
Uralchem predicted that conditions in 2014 will remain challenging due to more competition from other countries, citing China and the US.
“China’s increasing role as a supplier of fertilizers, coupled with the expectation that the country’s costs will remain stable (or even reduce slightly) will significantly constrain other producers’ opportunities to increase prices, even seasonally,” Uralchem’s forecast.
“The US move away from the import of nitrogen products to domestic production will increase competition in other regions and will also put additional pressure on prices,” it added.
(€1 = Rb49.27)