Russian potash major Uralkali posts $875m net profits for 2017

LONDON (ICIS)–Russian muriate of potash (MOP) major Uralkali on Tuesday posted full-year net profits of $875m, down from $1.43bn in 2016.

The fertilizer producer’s net revenue for 2017 was $2.18bn – an increase from 2016’s $1.85bn. Earnings before interest, tax, depreciation and amortisation (EBITDA) came in at $1.34bn, up from $1.18bn in 2016.

An increase in production volumes and export sales supported the company’s improved net revenue, although foreign exchange differences and a “revaluation of derivative financial instruments” hit Uralkali’s profits, according to a press release.

Uralkali CEO Dmitry Osipov said: “The global potash market recovery in 2017 led to an increase in both the [year-on-year] production and sales [for] Uralkali.”

The producer predicts global demand for (muriate of potash) MOP will exceed 67m tonnes this year.

Alexander Terletsky, CEO of Uralkali’s trading arm, added: “Prices for potash fertilisers are growing on almost all key consumption markets. In March, the price of granular MOP in Brazil, one of the largest spot markets, exceeded $300/tonne CFR.

“We project the price of the forthcoming long-term [supply] contract with the Chinese consortium may show double-digit growth in percentage terms compared to previous year’s price.”

Negotiations for the next Chinese annual contract price are yet to begin in earnest, although there is talk producers are considering an increase of up to $70/tonne CFR (cost and freight).

Previous proposed increases included plus $30/tonne and plus $50/tonne CFR.

Buyers, meanwhile, are heard bidding as low as a $5/tonne CFR increase.

Negotiations are expected to be “extremely difficult”, according to a source at a rival producer.