Phosagro · RUS:PHOR
Phosagro — Investor Presentation (December 2018)
38 slides from Phosagro's investor presentation, December 2018
Slide 1: Presentation for 1-on-1 meetings December 2018
Presentation for 1-on-1 meetings December 2018 Pure Minerals for Healthy Lives
Slide 2: Disclaimer
Disclaimer These materials have been prepared by PJSC PhosAgro (PhosAgro) solely for your information and may not be copied, reproduced, retransmitted or further distributed, directly or indirectly, by any recipient to any other person or published, in whole or in part, for any purpose or under any
Slide 3: Operational Excellency & Market Momentum
Operational Excellency & Market Momentum Phosagro | Pure Minerals for Healthy Lives 3 3
Slide 4: Sustainable Advantages in a Changing Environment
Sustainable Advantages in a Changing Environment
Slide 5: Highlights
Highlights World class • PhosAgro is a leading vertically integrated producer of fertilizers with Key metrics integrated phosphate rock grade above 39% phosphate • One of the Top 5 biggest DAP/MAP producers in the World(1) producer • Overall fertilizer capacity is 8.3 mln t as of 2017 Self-sufficien
Slide 6: Market position
Market position Comments Global DAP/MAP producers (1) 1. Top-3 producer of phosphate rock global by capacity and the leader in mln t production of high-grade phosphate rock with P2O5 content of over 35.7% 2. Top-5 global producer of DAP/MAP by capacity 3. The Company is the largest supplier of DAP/M
Slide 7: Vertical integration
Vertical integration Comments 1. Production of phosphate fertilizers is very complex and require 3 types of feedstocks: 1) phosphate rock or acid, 2) sulphur or sulphuric acid and 3) ammonia. In addition, NPK fertilizers production requires potash. 2. PhosAgro is the global leader in production of h
Slide 8: Flexible production model and key products
Flexible production model and key products Comments Production dynamics of P&N fertilizers* 1. PhosAgro developed unique operating cycle, which allows to swap production up to 3 mln t mln t between DAP/MAP/NPK(S) on the same production lines without substantial costs in the shortest time; 2. That gi
Slide 9: Key markets
Key markets Comments PhosAgro customers breakdown in 2017 1. The priority markets for the Company are Russia&CIS, Europe, Latin America, where we % generated circa 90% of our headline revenue in FY2017 2. Up to 90% of all customers are end-customers, the rest are traders 3. PhosAgro is the largest s
Slide 10: Capital Expenditure & Debt Overview
Capital Expenditure & Debt Overview Capex and Capex/EBITDA ratio Debt structure as of 30 September 2018 % 5 88 6 Total debt and net debt/LTM EBITDA ratio Maturity profile x RUB bln Source: PhosAgro Phosagro | Pure Minerals for Healthy Lives 10
Slide 11: Financial review
Financial review
Slide 12: Revenue Analysis
Revenue Analysis Revenue dynamics FX rates RUB bln RUB/USD 3Q18 Revenue was up 35% y-o-y supported by strong sales of nitrogen-based products and overall price increase Sales breakdown Revenue by region, % Revenue by product, % Mln tonnes 3Q18 3Q18 10 38 14 34 10 41 15 35 9.0 5 8.1 12 3Q17 3Q17 29 9
Slide 13: Revenue Analysis
Revenue Analysis Average revenue by products – export Average revenue by key products USD/t USD/t Domestic Export 3Q18 2Q18 3Q17 Average revenue by products – domestic USD/t Source: PhosAgro Phosagro | Pure Minerals for Healthy Lives 13
Slide 14: Cost Analysis
Cost Analysis Cost of goods sold structure Ammonia expenses Sulphur expenses % 3Q18 =R32.6 bln RUB bln 6 32 RUB bln 3 6 32 7 4 8 10 3Q17=R27.0 bln 10 8 7 10 10 9 14 8 16 Materials and services Salaries Natural gas expenses Potash expenses RUB bln RUB bln RUB bln RUB bln Source: PhosAgro Phosagro | P
Slide 15: Segment Profitability
Segment Profitability Phosphate segment gross profit and margin Phosphate sales (export + domestic) RUB bln and % kt 878 kt 861 kt 836 kt 877 kt Nitrogen segment gross profit and margin Nitrogen sales (export + domestic) RUB bln and % kt 23 kt 435 kt 26 kt 283 kt Source: PhosAgro Phosagro | Pure Min
Slide 16: EBITDA Analysis
EBITDA Analysis EBITDA and EBITDA margin Comments RUB bln and % • EBITDA in 3Q 2018 amounted to RUB 23.4 billion (USD 357 million), up by 72% year-on-year, while EBITDA margin nearly reached a three-year high of 37% • Major upward factors were solid sales in the nitrogen segment (up by 48% year-on-y
Slide 17: FCF Analysis
FCF Analysis Comments 3Q18 EBITDA to FCF conversion • Net operating cash flow in 3Q 2018 increased by 124% year-on-year RUB bln to RUB 22.9 billion (USD 350 million) primarily driven by profitability growth coupled with working capital release • Capital expenditure in 3Q 2018 totaled around RUB 10.0
Slide 18: Debt Overview
Debt Overview Comments Debt structure as of 30 September 2018 • Debt (incl. finance lease liabilities) increased by 8% over 9M18 to % RUB 133 billion (USD 2.0 billion) driven by Russian Rouble depreciation, as most debt is denominated in US Dollars • As of the end of September 2018, net debt totaled
Slide 19: Fertilizer Industry
Fertilizer Industry <2 PHOSAGRO'
Slide 20: Phosphate fertilizers: demand
Phosphate fertilizers: demand Comments Regional breakdown of phosphates consumption in 2017 • Total demand for phosphate-based products was almost flat growing by circa 1% y-o-y to % 45,2 mln tonnes in P2O5. The growth was restrained by India, Europe and other regions. 35 • As of 2017, E.Asia (incl.
Slide 21: Phosphate fertilizers: supply
Phosphate fertilizers: supply Comments Regional breakdown of phosphates production • Recent rally in the main feedstock prices, ammonia and sulphur, has lead to significant inflation in the industry cash costs, especially for Chinese producers. 35 • China: 9M18 export of DAP totaled ca. 4.9 mln tone
Slide 22: Phosphates Price Performance
Phosphates Price Performance DAP FOB Baltic price performance Dynamics in “pure” P USD/t DAP net of N component(1) dynamics, USD/t NPK price Premium/Discount to Nutrients % Source: PhosAgro, CRU Phosagro | Pure Minerals for Healthy Lives
Slide 23: Feedstocks Inflation
Feedstocks Inflation Ammonia price Phosphoric Acid prices USD/t, FOB Baltics USD/t, CFR India Phosphate Rock prices Sulphur prices USD/t, FOB Morocco USD/t, CFR China Source: PhosAgro, CRU Phosagro | Pure Minerals for Healthy Lives
Slide 24: Fertilizer industry – India
Fertilizer industry – India DAP import to India Seasonal DAP import in India Mln t Mln t 9mo 5.3 3.8 3.1 4.7 DAP cash cost vs MRP (incl. GST) Seasonal DAP production in India $/t Mln t Source: CRU, Fertecon, PhosAgro estimates Phosagro | Pure Minerals for Healthy Lives 24
Slide 25: Fertilizer industry – India
Fertilizer industry – India Nutrient-based subsidy rates for DAP INR performance vs USD, $/t week 1 2015 = 0 71.3 Dynamics in DAP inventories Sowing progress during Rabi season (November) kt % Source: CRU, Fertecon, PhosAgro estimates Phosagro | Pure Minerals for Healthy Lives 25
Slide 26: Fertilizer industry – Latin America
Fertilizer industry – Latin America Main focus on soybean production Import to Brazil slid by 7% y-o-y in 9mo18, Soybean prod. (mln t, lhs) and P2O5 demand (mln t, rhs) mln t P2O5 Product structure of phosphates import Key Importers of phosphates to Brazil % in P2O5, FY2017 % in P2O5, FY2017 25 53 2
Slide 27: Fertilizer industry – Latin America
Fertilizer industry – Latin America Map barter ratio, Export prices (FOB) for soybeans, Number of soy bags/1 t of MAP $/t Export of soybeans, Brazil harvested area forecast, Mln tones Mln ha Source: CRU, Agrolink.com.br, USDA, IFA, ANDA Phosagro | Pure Minerals for Healthy Lives 27
Slide 28: China – focus on cash costs
China – focus on cash costs Export of DAP from China Sulphur price in China moves upward mln t, YTD Sulphur price, USD/t, CFR China (Granular) Sulphur prices put extra pressure on DAP cash cost Coal price pushes ammonia and DAP cash costs up Ammonia market price in China Anthracite price (USD/t Mid-
Slide 29: China – environmental issues in the spotlight
China – environmental issues in the spotlight China’s environmental efforts Assessment of Chinese phosphate production, % 15 12 • A new federal bureau of environmental investigation has been 10 set up in China to look into industrial pollution. • 260 inspectors have been specifically trained to moni
Slide 30: Domestic market – more space for growth
Domestic market – more space for growth Fertilizer application rate and average grain yield, Kg/Ha and 00 kg/Ha 15 12 Source: CRU, PhosAgro Phosagro | Pure Minerals for Healthy Lives 30
Slide 31: DAP Price Performance
DAP Price Performance DAP price performance USD/t Source: CRU, PhosAgro Phosagro | Pure Minerals for Healthy Lives 31
Slide 32: Appendix
Appendix
Slide 33: Our production assets
Our production assets Kirovsk Branch of Apatit Resources(1) 15 12 Apatite-nepheline ore: 2.07 bln t Al2O3: over 280 mln t REO(2): 7.5 mn t Capacity by product Phosphate rock: 9.5 mln t • Largest standalone global producer of high grade • Largest standalone phosphate fertilizers producer phosphate ro
Slide 34: Growing return for shareholders
Growing return for shareholders Operating cash flow and free cash flow Mln USD USD/GDR and % Source: CRU, PhosAgro Phosagro | Pure Minerals for Healthy Lives 34
Slide 35: Cash cost performance in 2011-2018
Cash cost performance in 2011-2018 DAP cash costs at FOB USD/t USD/t Source: CRU, PhosAgro Phosagro | Pure Minerals for Healthy Lives 35
Slide 36: Key feedstocks production
Key feedstocks production Phosphate rock production Ammonia production mln t mln t Sulphuric acid production Ore mining mln t mln t Source: CRU, PhosAgro Phosagro | Pure Minerals for Healthy Lives 36
Slide 37: Sustainability against market headwinds
Sustainability against market headwinds DAP price and EBITDA margin USD/t FOB Tampa and % Source: CRU, PhosAgro Phosagro | Pure Minerals for Healthy Lives 37
Slide 38: Thank you!
Thank you! PhosAgro IR contact Address: 55/1, Leninsky prospect, Bldg.1. Moscow, 119333, Russia IR E-mail: ir@phosagro.ru Phone number: +7 495 232 96 89 www.phosagro.ru