Page 158 - RusRPTSept22

export prices for MAP were between $800-1,245/t and averaged $1,009/t, while urea stood between $390-890/t and averaged $644/t. Input cost for some commodities also surged pushing up operating expenses. Hence, we missed EBITDA and net profit by over Rb20bn, due to cost overruns, as sulphur and sulphuric acid costs, as well as ammonia costs tripled y/y, potash input costs for Phosagro doubled y/y. Results are strong, dividend recommendation is a good development. Ruble depreciation in March further boosted the 1Q22 roble-denominated results, while appreciation in 2Q22 eroded otherwise still solid export prices. On balance, numbers were very strong. The Supervisory Board recommended dividends in the amount of Rb101bn for 4Q21 and 1H22 (Rb780/share, dividend yield 10%), which, we reckon, will be very much liked by the market.
European fertiliser producers halt production due to high gas prices.
Kommersant has reported that over the last several weeks several European fertiliser producers have announced that they would either materially decrease or suspend their production of ammonia- and nitrogen-based fertilisers due to soaring gas prices. These companies include Norway's Yara, the US-based CF Industries Holdings (the company will shut down a UK plant), Poland's Grupa Azoty (the country's largest producer), France's Borealis, Germany's BASF and SKW Stickstoffwerke Piesteritz, and Lithuania's Achema. Kommersant estimates that the companies intending to either decrease or suspend production account for around 70% of Europe's total ammonia and urea production capacity. Our view: The decrease in nitrogen-based fertiliser production should provide a boost for already-high global fertiliser prices. The current environment is particularly favourable for Russian producers, including PhosAgro and Acron, which buy gas at local regulated prices. However, we note that Acron is more focused on ammonia and nitrogen fertilisers than PhosAgro (53% of its 2021 revenues, versus just 17% for PhosAgro
158 RUSSIA Country Report September 2022 www.intellinews.com