Slide 1: Investor Presentation February 2022
INVESTOR PRESENTATION FEBRUARY 2022
Slide 2: Disclaimer
DISCLAIMER THIS PRESENTATION IS FURNISHED TO YOU SOLELY FOR YOUR INFORMATION AND SHOULD NOT BE TREATED AS GIVING INVESTMENT ADVICE AND MAY NOT BE REPRODUCED OR REDISTRIBUTED, IN WHOLE OR IN PART, TO ANY OTHER PERSON. THIS PRESENTATION IS NOT FOR DISTRIBUTION, DIRECTLY OR INDIRECTLY IN THE UNITED STA
Slide 3: Recent Developments
RECENT DEVELOPMENTS • Aсron Group completed the upgrades to the Urea-6 unit, which increased capacity by 520 ktpa. • In August 2021, following the BoD’s resolution on the buyback of its outstanding shares, Acron repurchased 9.3% of the charter capital, including quasi-treasury shares (8.3% of the ch
Slide 4: Contents
CONTENTS Acron at a glance • 4 Market overview • 7 Company overview • 10 Development programme • 18 Financial standing • 24 Appendices • 28 4
Slide 5: Company Profile
COMPANY PROFILE USD mn 09.02.22 OUR KEY PRODUCT Mcap 8,340 Free-float 4.7% ACRON GROUP Net debt (30/09/21) 1,017 N P • Leading low-cost producer of NPK and nitrogen Greenhouse gas emissions Total, kt of CO2 equivalent 2020 5,538 fertilisers K Per tonne of commercial 0.69 • In Top 3 NPK producers in
Slide 6: Investment Case
INVESTMENT CASE GROWING BUSINESS • Sustainable increase in demand for mineral fertilisers (page 8) • Efficient management with a proven track record of successful projects (page 19) • 5-year average EBITDA margin of 32% (page 25) • Cost control based on nitrogen and phosphate vertical integration an
Slide 7: Contents
CONTENTS Acron at a glance • 4 Market overview • 7 Company overview • 10 Development programme • 18 Financial standing • 24 Appendices • 28 7
Slide 8: Importance of Mineral Fertilisers
IMPORTANCE OF MINERAL FERTILISERS Population tripled over 70 years Food consumption is rising while crop lands barely expand 9 3 000 1 800 8 2 500 1 500 7 6 2 000 1 200 bn people 5 mn ha mn t 1 500 900 4 3 1 000 600 2 500 300 1 0 0 0 1950 1960 1970 1980 1990 2000 2010 2020 1960 1970 1980 1990 2000 2
Slide 9: Global Prices
GLOBAL PRICES 900 USD/t, FOB BALTIC/BLACK SEA 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 YTD Ammonia 519 544 479 499 390 237 267 288 235 204 547 1,115 Urea 416 400 327 311 267 194 218 251 240 222 480 615 800 AN 313 306 287 282 223 166 193 188 189 167 355 740 UAN 308 288 256 243 198
Slide 10: Contents
CONTENTS Acron at a glance • 4 Market overview • 7 Company overview • 10 Development programme • 18 Financial standing • 24 Appendices • 28 10
Slide 11: Global Footprint & Vertical Integration
GLOBAL FOOTPRINT & VERTICAL INTEGRATION 3 8 5 6 1 9 4 7 2 11 12 10 Countries to which the Group supplies its products 13 14 MINING PRODUCTION LOGISTICS DISTRIBUTION 3 NWPC, Oleniy Ruchey mine 1 Acron 6 Two AS DBT port terminal facilities 9 Agronova 2021 output: 1.3 mn t of apatite concentrate 2021 c
Slide 12: Production Facilities
PRODUCTION FACILITIES CHEMICAL PRODUCTION MINING ACRON DOROGOBUZH OLENIY RUCHEY MINE, NWPC Main production capacity, ktpa Main production capacity, ktpa Production capacity, ktpa Ammonia: 2,190 Urea: 1,970 Ammonia: 740 Apatite concentrate: 1,300 Ammonium nitrate: 2,210 Formalin: 240 39% P2O5 content
Slide 13: Revenue Breakdown
REVENUE BREAKDOWN Sales 3,0 2019 2020 Other: 11% 2,0 kt 1,0 2,1 2,3 2,4 1,7 1,7 Apatite concentrate: 3% 1,2 0,6 0,8 0,0 NPK + Bulk Ammonium UAN Urea* Urea*: 12% Blends nitrate* NPK + Bulk Blends: 36% UAN: 13% Ammonium nitrate*: 25% UAN premium/discount AN premium/discount NPK premium to Urea by nutr
Slide 14: Production Chart
PRODUCTION CHART RAW MATERIALS AND SEMI-FINISHED GOODS VALUE-ADDED PRODUCTS OWN PRODUCTION AN* 3.6 mn t N Ammonia 2.9 mn t 2020 sales: 2.4 mn t UAN 1.7 mn t P Phosphates 1.3 mn t 1,8 Urea* 2.0 mn t 2020 sales: 1.2 mn t +0.2 mn t 2020 sales: 0.8 mn t K Potash developing NPK 2.4 mn t +2.6 mn t 2020 sa
Slide 15: Diversified Sales Markets
DIVERSIFIED SALES MARKETS Acron Group • #1 AN exporter to Brazil (65% of AN imports) • #2 NPK exporter to Brazil (31% of NPK imports) • #2 UAN exporter to US (27% of UAN imports) • #2 NPK exporter to China (23% of NPK imports) • #2 NPK supplier to Russia (19% of NPK sales) Europe: 13% • #2 AN suppli
Slide 16: Cost Breakdown
COST BREAKDOWN Transportation expenses Other Staff costs Handling 7% 8% of goods Potash 5% 7% Ocean freight and container transportation D&A 10% 13% Other COGS 4% SG&A Staff costs 6% Fuel and energy 9% Other 11% Repairs and Natural gas maintenance 17% 4% Vertical integration in nitrogen and phosphat
Slide 17: Our Strengths
OUR STRENGTHS NITROGEN & COMPLEX • Focus on premium products FERTILISERS • Diversified product range VERTICAL INTEGRATION • Nitrogen and phosphate vertical integration • Gas prices in Russia are below world prices. With their further growth limited by the LOW-COST PRODUCER inflation rate, the Compan
Slide 18: Contents
CONTENTS Acron at a glance • 4 Market overview • 7 Company overview • 10 Development programme • 18 Financial standing • 24 Appendices • 28 18
Slide 19: Our Record of Success
OUR RECORD OF SUCCESS mn t COMMERCIAL OUTPUT UREA UNITS 9 2008-2012, 2017-2018, 2019-2021 Construction of 2 new urea units and upgrade of the existing 8 facilities with total capacity increase of 1.35 mtpa 7 UAN PRODUCTION 6 2006-2008, 2013-2014, 2017-2019 8,5 8,0 Construction of a new UAN unit with
Slide 20: Investment Programme
INVESTMENT PROGRAMME 2017 – 2025 INVESTMENT PROGRAMME • Several highly effective projects at Acron and Dorogobuzh • Development of the Oleniy Ruchey underground phosphate mine • Construction of the Talitsky potash mine MAIN CAPACITY COMMERCIAL OUTPUT 10 mn t 9.3 NPK 2 300 140 8 + 27% AN* 2 920 710 1
Slide 21: Projects at Acron and Dorogobuzh
PROJECTS AT ACRON AND DOROGOBUZH Several projects with relatively small Capex and short payback period. 20%+ The list of such projects is reviewed annually to control the Group’s debt burden. weighted average IRR Timeline, Output increase, Capex, Main projects Status years ktpa USD mn Site: Acron In
Slide 22: Oleniy Ruchey Mine: Phosphate Rock
OLENIY RUCHEY MINE: PHOSPHATE ROCK • Location: Oleniy Ruchey deposit, Murmansk region • Company: NWPC (100% subsidiary of Acron) • Launch: 2012 • Current capacity: 1.3 mtpa of apatite concentrate (39% P2O5 content) • Prospects: expand capacity to 1.5 mtpa by 2023, with further increase to 2 mtpa • R
Slide 23: Talitsky Mine: Potash
TALITSKY MINE: POTASH PROJECT DATA CURRENT STATUS • Location: Verkhnekamsk deposit, Perm Krai • Special Investment Contract, Investment Protection • Developer: Verkhnekamsk Potash Company (VPC) and Promotion Agreement, and Corporate (Acron – 50%+1share, Sberbank Investments – 29.9%, Competitiveness
Slide 24: Contents
CONTENTS Acron at a glance • 4 Market overview • 7 Company overview • 10 Development programme • 18 Financial standing • 24 Appendices • 28 24
Slide 25: Efficient Business
EFFICIENT BUSINESS 1 915 1 931 1 813 1 723 1 774 REVENUE 1 579 1 307 1 671 1 510 1 333 1 617 1 661 1 008 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 900 60% 50% 800 45% EBITDA 50% 700 32% 30% 33% 34% 31% 600 35% 32% 40% MARGIN 500 26% 29% 25% 24% 30% 400 789 677 623 672 591 EBIT
Slide 26: Debt Position
DEBT POSITION DEBT BY CURRENCY AS OF 30 SEPTEMBER 2021 RUB loans • Total debt: USD 1,241 mn and bonds • Net debt: USD 1,017 mn 28% • Average interest rate: 3.2% • Net debt / LTM EBITDA: 0.9 • Credit Ratings: Moody’s Ba3/Stable, Fitch BB-/Stable USD loans EUR loans 71% 1% DEBT MATURITY SCHEDULE** 400
Slide 27: Dividends
DIVIDENDS DIVIDENDS PAID IN CALENDAR YEAR 400 300 USD mn 200 Not less than $200 mn 394 paid annually as dividends 100 224 212 221 228 115 0 2017 2018 2019 2020 2021 YTD DIVIDEND YIELD 16% 12% 9,4% 10,5% 7,5% 7,4% 8.4% 8% 7,1% 5-year average 4% dividend yield 1,8% 0% 2017 2018 2019 2020 2021 YTD 27
Slide 28: Appendices
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Slide 29: Special Situation
SPECIAL SITUATION How does a weaker rouble impact the company’s financials? Total cash costs structure, Revenue structure, EBITDA gain in 2021 2020 2020 if exchange rate depreciates for RUB 1 20 USD mn per RUB 1 of rate FX Russia 30% 20% 15 10 5 Rouble Export 70% 80% 0 55 60 65 70 75 80 85 USD/RUB N
Slide 30: Quarterly Highlights
QUARTERLY HIGHLIGHTS REVENUE ($ mn) EBITDA ($ mn) PRODUCTION & SALES (kt) 800 600 2,3 697 500 2,2 2,2 700 2,1 2,1 2,1 Not published yet Not published yet 634 393 2,1 400 600 330 2,0 2,0 2,0 524 300 2,0 500 212 445 200 1,9 149 400 100 Production Sales 300 0 1,7 4Q 1Q 2Q 3Q 4Q 4Q 1Q 2Q 3Q 4Q 4Q 1Q 2Q
Slide 31: Financial Highlights
FINANCIAL HIGHLIGHTS RUB mn USD mn 9M 2021 9M 2020 9M 2021 9M 2020 Revenue 137,215 86,088 1,854 1,216 EBITDA 69,185 24,116 935 341 EBITDA margin 50% 28% 50% 28% Net profit 50,934 -4,161 688 -60 Net profit margin 37% -5% 37% -5% Net operating cash flow 41,241 8,949 557 126 Capex 14,107 11,667 191 165
Slide 32: Financial Highlights
FINANCIAL HIGHLIGHTS RUB mn USD mn 2020 2019 2020 2019 Revenue 119,864 114,835 1,661 1,774 EBITDA 35,311 35,749 489 552 EBITDA margin 29% 31% 29% 31% Net profit 3,836 24,786 53 383 Net profit margin 3% 22% 3% 22% Net operating cash flow 26,190 28,278 363 437 Capex 17,946 19,030 249 294 Leveraged fre
Slide 33: History of Company
HISTORY OF COMPANY 2017-2025 2005-2017 LEVERAGING EXISTING CAPACITY • 2017: Adoption of new 1992-2005 VERTICAL development strategy INTEGRATION • Construction of new 2006-2008: Acquisition of processing facilities 1961-1992 PRIVATISATION AND phosphate and potash • Construction of potash INDUSTRY lic
Slide 34: Group Structure
GROUP STRUCTURE 96.7% Acron Dorogobuzh Mining Logistics Distribution & Agriculture Portfolio Marketing 100% investments 19.8% Balttrans Plodorodie Grupa Azoty, Poland NWPC Agronova (agribusiness holding) (fertiliser producer) (phosphate (Russian 100% rock producer) AS DBT distribution 100% (2 port t
Slide 35: Corporate Governance Overview
CORPORATE GOVERNANCE OVERVIEW BOARD OF DIRECTORS BOARD COMMITTEES MANAGEMENT BOARD • Seven members, including three INEDs • Audit Committee consists of three • Six members, who are responsible for the • The Board is responsible for determining members key areas of Acron’s business which ensures the
Slide 36: Contacts
CONTACTS Strategy and Investor Relations Ilya POPOV Tel.: +7 (495) 745 77 45 ext. 5252 E-mail: ipopov@acron.ru JSC Acron www.acron.ru World Trade Centre, 12, Krasnopresnenskaya Naberezhnaya, Moscow 123610, Russia Tel.: +7 (495) 745 77 45 36