Fertiglobe Plc · ADX:FERTIGLB
Fertiglobe — Q3 2023 Earnings Presentation
43 slides from Fertiglobe's earnings presentation, Nov 7, 2023
Slide 1: Q3 2023 Results Presentation
Q3 2023 Results Presentation 7 November 2023 1
Slide 2: Disclaimer
Disclaimer The information contained in this presentation is for background purposes only and does not purport to be full or complete. No reliance may or should be placed by any person for any purposes whatsoever on the information contained in this presentation or on its completeness, accuracy or f
Slide 3: Table of Contents
Table of Contents Highlights Q3 2023 Financial Performance & Updates Market Outlook Appendix 3
Slide 4: Safety First
Safety First Commitment to Zero Injuries Target Zero Injuries at All Facilities 12-month rolling recordable incident rate to 30 September • Achieve leadership in safety and occupational standards 2023 0.13 incidents per 200,000 manhours across the operations • Fostering a culture of zero injuries at
Slide 5: Fertiglobe at a Glance
Fertiglobe at a Glance 50% Leading Nitrogen Fertilizer Exporter Globally 4 World-class Strategically of Assets Younger Located Production Facilities and Unique Ammonia Platform than 10 years Global In-House Distribution Early Mover in 50.0% Capabilities Sustainable including ~1,000kt Storage Capacit
Slide 6: Fertiglobe: A Strategic Partnership With Strong Shareholder Support
Fertiglobe: A Strategic Partnership With Strong Shareholder Support Partnership Geared Towards Growth and Value Creation, Supported by Shareholders with a Strong Track Record OCI Global 50%(1) 36%(1) ADNOC #3 global producer of nitrogen products(2) Leading integrated O&G company, entrusted to manage
Slide 7: Executive Summary
Executive Summary ► Q3 2023 results: Revenues and adjusted EBITDA were $525 million and $199 million, respectively. Adjusted net profit was $41 million in Q3 2023 and free cash flows were $126 million in Q3 2023. ► 9M 2023 results: Revenues and adjusted EBITDA were $1,770 million and $715 million, r
Slide 8: Turning Point with Strong Rebound in Nitrogen Prices & Demand
Turning Point with Strong Rebound in Nitrogen Prices & Demand Urea prices increased by +$100/t from <$300/t levels in June towards ≈$400/t in Q3 and at the start of Q4 Drivers Rebound in nitrogen fertilizer prices Tightening supply balance • Demand recovery: Urea granular, FOB Egypt: recent price mo
Slide 9: Fertiglobe's Key Investment Highlights
Fertiglobe’s Key Investment Highlights 1 Leading nitrogen fertilizer exporter globally and unique ammonia platform Strategically located asset base and global distribution capabilities driving structurally higher 2 realized prices High quality asset base at attractive cost curve position underpinned
Slide 10: Table of Contents
Table of Contents Highlights Q3 2023 Financial Performance & Updates Market Outlook Appendix 10
Slide 11: Q3 2023 Results Summary
Q3 2023 Results Summary Summary Key Financials1 and KPIs $ million unless otherwise stated Q3 2023 Q3 2022 %Δ 9M 2023 9M 2022 %Δ Revenue 525.1 1,317.9 (60%) 1,770.3 3,974.0 (55%) • Own-produced volumes up 8% in Q3 2023 vs. Q3 2022 Gross Profit 153.8 583.9 (74%) 597.3 1,919.5 (69%) Gross profit margi
Slide 12: Q3 2023 Financial Summary
Q3 2023 Financial Summary Own-produced sales volumes (MT) Key Product Benchmark Prices, $/t Revenue ($m) 1,4 00 -60% Urea Egypt Ammonia Middle East 1.47 1.36 -66% 1,2 00 -46% 1.6 0 1.6 0 100 0 0% 1.4 0 1.4 0 0.32 900 1,0 00-20% 1.2 0 0.32 800 1.2 0 800 -40% 700 -60% 1,318 1.0 0 1.0 0 600 -80% 600 92
Slide 13: Q3 2023 Free Cash Flow and Net Debt Build-Up
Q3 2023 Free Cash Flow and Net Debt Build-Up Reconciliation of Q3 2023 EBITDA to Free cash flow ($ million) Dividends paid to NCI & WHT Change in Net (Cash) Debt from 31 Dec 2022 to 30 September 2023 ($ million) 30 September 2023 in FX 13
Slide 14: Strong Revenue Profile Translating Into Robust EBITDA and Cash Flow Generation
Strong Revenue Profile Translating Into Robust EBITDA and Cash Flow Generation Through Low Capex EBITDA Margin and FCF Conversion Advantages Result in Ample Dividend Capacity Revenue Favourable geographical positioning and centralized commercial strategy ~$1,770m leveraging on unique distribution pl
Slide 15: Table of Contents
Table of Contents Highlights Q3 2023 Financial Performance & Updates Market Outlook Appendix 15
Slide 16: Nitrogen Markets Continued their Recovery in Q3 and Are Tightening
Nitrogen Markets Continued their Recovery in Q3 and Are Tightening Prior cycle Drivers Support Demand Driven Environment Current cycle (last 5-6 years) 30% 26% Corn stocks-to-use ratio 2022 corn stocks-to-use ratio $3.7/bushel $5.2/bushel HIGH CROP PRICES and AFFORDABILITY SUPPORT NITROGEN DEMAND RE
Slide 17: Robust Agricultural Fundamentals at least until 2025
Robust Agricultural Fundamentals at least until 2025 Crop prices supported by stocks: use ratio below 10-year average Urea affordability +26% since Q3 2022, supporting demand recovery Crop price index, Jan 2006 = 100 Global grain and oilseed stocks: use ratio (ex-China), % Affordability Index, Jan 2
Slide 18: Constrained Chinese Exports & Robust Indian Imports Supportive Of Nitrogen Prices
Constrained Chinese Exports & Robust Indian Imports Supportive Of Nitrogen Prices Chinese Exports Curtailed on Domestic Demand and Closures Indian Imports Robust Despite New Capacity Commissioning China urea exports, Mt India imports, Mt 13.8 India remains among top 3 13.6 urea importers globally 10
Slide 19: Limited New Nitrogen Capacity, Offset by Higher Demand
Limited New Nitrogen Capacity, Offset by Higher Demand Slowdown of new urea capacity additions, with good visibility given ~5- Merchant ammonia market expected to be underpinned by cost curve year project lead time economics & impact of CBAM post-2026 Global ammonia net capacity additions and demand
Slide 20: Incremental Ammonia Demand From New Clean Energy Applications
Incremental Ammonia Demand From New Clean Energy Applications Accelerated demand growth potential post-2026 from new uses in power generation and marine fuels Outlook for incremental low-carbon ammonia demand by end-use to 2035, Million Mt Key Demand Drivers Emissions & carbon markets ~40 Mt 1 Devel
Slide 21: Ammonia Demand Snapshot
Ammonia Demand Snapshot Blue ammonia to dominate low-carbon NH3 market until 2030 due to higher cost for green / lack of concrete demand Market readiness = demand Blue Demand size (2030) Regulation technology readiness, economic Market readiness Green competitiveness High Existing uses - blue (EU)
Slide 22: Low Carbon Ammonia Supply Will Be Slow To Commission
Low Carbon Ammonia Supply Will Be Slow To Commission Only <15% of announcements get built given hurdles, and <30% of announced projects realized on time Low carbon ammonia supply bottlenecks Firm nitrogen projects in 2008 pipeline, ex-China, Million Mt Similar trend in the US in 2014 – 2019: 35 9 pr
Slide 23: Elevated Costs for Marginal Producers Supportive of Nitrogen Prices
Elevated Costs for Marginal Producers Supportive of Nitrogen Prices Global Feedstock Prices 2017-2023F, $/MMBtu Cash Costs per ton of Ammonia 2017-2023F, $/t Arbitrage between international ammonia pricing & domestic EU costs remains volatile and further Global differentials between US, North 3,000
Slide 24: Fertiglobe Positioned on First Quartile of Nitrogen Cost Curves
Fertiglobe Positioned on First Quartile of Nitrogen Cost Curves Benefit from attractively priced, long-term gas contracts and low conversion costs Long-term attractive gas supply agreements with EGPC in Egypt, Sonatrach in Algeria, and ADNOC in Abu Dhabi supporting advantageous cost position You
Slide 25: Table of Contents
Table of Contents Highlights Q3 2023 Financial Performance & Updates Market Outlook Appendix 25
Slide 26: Appendix Q3 2023 Results
Appendix Q3 2023 Results
Slide 27: 30 September 2023 Leverage Position
30 September 2023 Leverage Position Fertiglobe Ends Sep 2023 with Net Cash of $28 million $ million 30-Sep-23 31-Dec-22 Cash and bank balances 1,599.3 1,442.0 Loans and borrowings - current 63.6 89.6 Loans and borrowings - non-current 1,507.7 1,065.6 Total borrowings 1,571.3 1,155.2 Net debt / (cash
Slide 28: Reconciliation of Adjusted EBITDA and Adjusted Net Profit
Reconciliation of Adjusted EBITDA and Adjusted Net Profit Reconciliation of reported operating profit to adjusted EBITDA $ million Q3 2023 Q3 2022 9M 2023 9M 2022 Adjustment in P&L Operating profit as reported 119.3 549.2 495.5 1,814.0 Depreciation and amortization 72.5 60.1 208.8 184.9 EBITDA 191.8
Slide 29: Reconciliation of EBITDA to Free Cash Flow and Change in Net Debt
Reconciliation of EBITDA to Free Cash Flow and Change in Net Debt Reconciliation of EBITDA to Free Cash Flow and Change in Net Debt/(Cash) $ million Q3 2023 Q3 2022 9M 2023 9M 2022 EBITDA 191.8 609.3 704.3 1,998.9 Working capital 5.1 (50.2) (1.7) (36.6) Maintenance capital expenditure (28.8) (18.4)
Slide 30: Appendix Hydrogen and Clean Ammonia Potential
Appendix Hydrogen and Clean Ammonia Potential
Slide 31: Ammonia is Well Positioned to Capture the Hydrogen Opportunity
Ammonia is Well Positioned to Capture the Hydrogen Opportunity With >40% of Grey Hydrogen Use Today, Ammonia is a Building Block in the Emerging H2 Economy Acting As Its Best Carrier Hydrogen Production Conversion to Ammonia Ammonia End Uses Conventional Uses Conventional Grey Fertilizer Natural Gas
Slide 32: Significant Incremental Ammonia Demand From New Clean Energy Applications
Significant Incremental Ammonia Demand From New Clean Energy Applications Clean Hydrogen is strongly positioned to lead the world’s energy transition, and ammonia is the key enabler Clean hydrogen use in energy applications will be a major contributor to emission reduction across industries where
Slide 33: Fertiglobe is Very Well Positioned to Capture the Hydrogen Potential
Fertiglobe is Very Well Positioned to Capture the Hydrogen Potential Located in Proximity to Renewable Energy Sources and Shipping Hubs Asset Base with Existing Access to the Entire Hydrogen Supply Chain Optimal solar/wind resources Upstream 3rd party providers Least Most Merchant Blue CO2 sequestra
Slide 34: Green Hydrogen and Ammonia Project in Egypt
Green Hydrogen and Ammonia Project in Egypt Milestones Africa’s first integrated green hydrogen plant Project started commissioning of the first phase during COP27 in November 2022 On-spec green ammonia production started in Q1 2023 Evaluating engineering and technology choices for the full-sc
Slide 35: Ta'ziz Low Carbon Ammonia project in the UAE
Ta’ziz Low Carbon Ammonia project in the UAE World-scale 1mpa low-carbon ammonia production Milestones capacity 2021: Announced world scale 1 million tons low-carbon ammonia facility in partnership with ADNOC and ADQ (Ta'ziz), GS Energy Corporation and Mitsui & Co., Ltd Signing of Shareholders’
Slide 36: Appendix Fertiglobe: Strategic Positioning
Appendix Fertiglobe: Strategic Positioning
Slide 37: 4 World-Scale Assets Leveraging a Global Centralised Commercial Platform
4 World-Scale Assets Leveraging a Global Centralised Commercial Platform Total Fertiglobe Capacity (mtpa) (1) Gross ammonia 4.4 Urea 5.1 Net ammonia 1.6 DEF 0.5(3) UAE Egypt Algeria UAE Fertiglobe Distribution Fertil Egyptian Fertilizer Company Egypt Basic Industries Sorfert Distribution Business (1
Slide 38: Strategically Located Asset Base and Global Distribution Platform
Strategically Located Asset Base and Global Distribution Platform Diversified Production Footprint in Geographically Advantaged Positions Sorfert Fertil (51%) (100%) Egyptian Egypt Basic Fertilizer Industries Company Corporation (100%) (75%) Unique production platform in export-focused locations wit
Slide 39: Global In-House Commercial Capabilities in Ammonia & Urea
Global In-House Commercial Capabilities in Ammonia & Urea Strategy Focused on Selling Downstream to Customers and Limiting Role for Traders/Intermediaries, Leading to Structurally Higher Netbacks GCC Baltic Black Sea Producer Producer Producer 10% global market share of combined No import duties int
Slide 40: Leading Nitrogen Fertilizer and Ammonia Exporter Globally
Leading Nitrogen Fertilizer and Ammonia Exporter Globally ~10% of Combined Ammonia and Urea Global Seaborne Exports Ammonia and Urea Combined Export Production Capacity(1) Significant Scale Advantages Mtpa 1 Large scale strategically located platform 6.7 with ability to direct volumes to highest 6.3
Slide 41: Fertiglobe Gas Contracts Overview
Fertiglobe Gas Contracts Overview Attractively Priced Fixed Gas Contracts Ensure Fertiglobe is Competitive Through the Nitrogen Cycle (1) Gas Supplier ADNOC GASCO(2) EGPC(2) Sonatrach Contract Start Date 2019 2005 - 2006 2008 2013 Contract End Date 2044 2030 - 2031 2028 2033 Annual Contract Volume 5
Slide 42: Fertiglobe Diversifies Product Offering via DEF
Fertiglobe Diversifies Product Offering via DEF • Diesel Exhaust Fuel (DEF), also known as AdBlue® in Europe, is a urea solution used to reduce NOx and particulate emissions from diesel combustion • DEF has demonstrated a ~5% improvement in fuel economy • Demand is supported by increasingly stricter
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