Phosagro · RUS:PHOR

Phosagro — Debt Investor Presentation (February 2013)

36 slides from Phosagro's debt investor presentation, February 2013

  1. Slide 1: Roadshow Presentation

    ROADSHOW PRESENTATION February 2013 0

  2. Slide 2: Disclaimer

    Disclaimer This presentation does not constitute an offer or invitation to sell, or any solicitation of any offer to subscribe for or purchase any securities, and nothing contained herein shall form the basis of any contract or commitment whatsoever. No reliance may be placed for any purposes whatso

  3. Slide 3: Transaction Overview

    Transaction Overview Borrower • Open Joint Stock Company “PhosAgro” Issuer • PhosAgro Bond Funding Limited Corporate Ratings • Baa3 (stable) – Moody’s / BB+ (stable) – Fitch Preliminary Issue Ratings • Baa3 (stable) – Moody’s / BB+ (stable) – Fitch • Limited Liability Company "Balakovo Mineral Ferti

  4. Slide 4: Table of Contents

    Table of Contents Slide Number 1. PhosAgro at a Glance 4 2. Phosphates – An Essential Industry 8 3. PhosAgro – A Leading Global Fertilizer Company 14 4. Superior Financial Performance 24 5. Appendix 31 3

  5. Slide 5: PhosAgro at a Glance

    PhosAgro at a Glance Key Credit Highlights Overview of Key Metrics Consistently Low Leverage DAP Price Dynamics  #1 global producer of high-grade phosphate rock (FY 2009-9M 2012) 700 vs EBITDA margin 50% (P2O5>35.7%) with 7.8 mln tons capacity World class 0.9x 1.0x 650 integrated  #2 global DAP/MA

  6. Slide 6: Company History: Success Story

    Company History: Success Story Technical modernisation at Ammophos Key Corporate Events Sulphuric acid Phosphoric acid NPK  Purchase of a further 20% stake in formerly state owned OJSC Apatit, mln t mln t of P2O5 mln t securing the majority stake. Approximately 11.1% of the remaining shareholders h

  7. Slide 7: Company Production Asset Map

    Company Production Asset Map Apatit Resources(1) Murmansk Cherepovets production complex - largest in Europe Apatite-nepheline ore: 2 060 mt Kirovsk PhosAgro Cherepovets Al2O3: 283 mln t Capacity by product REO(2): 7.5 mln t MAP/DAP/NPK/NPS: 3.0 mln t Ammonia: 1,100 kt St. Petersburg Capacity by pro

  8. Slide 8: Phosphates – An Essential Industry

    Slide Number 1. PhosAgro At A Glance 4 2. Phosphates – An Essential Industry 8 3. PhosAgro – A Leading Global Fertilizer Company 14 4. Superior Financial Performance 24 5. Appendix 31

  9. Slide 9: Global Trends

    Global Trends Macroeconomic drivers support long-term fertilisers demand Total Phosphorus Consumption: Fertilisers – 85%, Technical phosphates – 9%, Animal feed – 6%. PhosAgro is present in all 3 product segments World’s fast-growing population and arable land per capita World GDP and GDP per Capita

  10. Slide 10: Phosphorus in a Global Context

    Phosphorus in a Global Context Dynamics of Global Fertilizer Consumption Structure of Global Fertilizer Consumption 2012E Calendar Year 2010 2011 2012E 2012E vs. 2011 Potash N 102.9 107.4 109.5 2.0% 16% P2O5 39.6 40.9 41.9 2.4% Nitrogen (N) K2O 27.3 28.5 28.4 (0.4%) 61% Total 169.8 176.8 179.8 1.7%

  11. Slide 11: Rarity of Phosphate Assets: Barriers to Entry

    Rarity of Phosphate Assets: Need for a combination of feedstocks and complexity of production process act as barriers to entry Overview of integrated phosphate-based production model based on PhosAgro’s consumption ratios PHOSPHATE ORE BENEFICIATION MINE PLANT 15.1 mln t 4.38 mln t (39% P2O5) (12.9%

  12. Slide 12: Growth in phosphate rock production capacities 2000-2011

    Growth in phosphate rock production capacities 2000-2011 Net addition to feedstock production capacities (excl. China) of 14 mn t with 0.8% CAGR RUSSIA +1 MLN T 1.3 bln FINLAND +0.5 MLN T SYRIA +1.8 MLN T USA -10 MLN T JORDAN +1.5 MLN T 1.4 1.8 MOROCCO +5.9MLN T 1.5 3.7 bln bln bln bln 50 CHINA +50

  13. Slide 13: Significant Cost Advantage for Integrated Producers

    Significant Cost Advantage for Integrated Producers Estimated DAP production cash costs1 Raw material integration in the Global Phosphate Industry1,2 FOB, US$ per tonne DAP 600 Phosphate 500 DAP FOB tampa: US$ 496/t rock+ammonia+local sulphur 15% = Full integrated 400 Phosphate rock and 300 25% ammo

  14. Slide 14: PhosAgro – A Leading Global Fertilizer Company

    Slide Number 1. PhosAgro At A Glance 4 2. Phosphates – An Essential Industry 8 3. PhosAgro – A Leading Global Fertilizer Company 14 4. Superior Financial Performance 24 5. Appendix 31

  15. Slide 15: Pure Play Phosphate Strategy

    Pure Play Phosphate Strategy A leading global phosphate rock producer with over 2.1 bln t of apatite-nepheline ore resources (over 75 years of production) 2011, mln t, excluding Chinese producers 27.8 #1 producer of high-grade phosphate rock (>35.7% P2O5) 12.1 7.7 7.6 7.3 3.5 3.5 2.5 1.1 OCP Mosaic

  16. Slide 16: High Quality Reserve Base

    High Quality Reserve Base: Control of world’s premium phosphate resource base 100 Higher cadmium Phosphate rock with content in 100 GCT MER > 0.10 29% sedimentary rocks Mosaic significantly increases OCP 32% costs for production of 28.5% DAP PCS Average Cadmium content in ppm 29.5% CF Industries 10

  17. Slide 17: Self-sufficiency in Key Feedstocks

    Self-sufficiency in Key Feedstocks PhosAgro DAP Production Cash Costs 1. Phosphate Rock: 100% self-sufficient 2011, ExW, US$ 2011, kt Other 17% 1 4,604 Phosphate rock 51% 2 Sulphur 7,757 18% 2,478 3,153 675 Total phosphate Internal sales External sales Domestic Export Ammonia 3 14% rock sales 2. Amm

  18. Slide 18: Leadership In Cost Position

    Leadership In Cost Position PhoAgro benefits from low raw materials, logistics and transportation costs vs. competitors Global Cash Cost Benchmarking DAP 700 Transport to FOB Other Sulphur Ammonia Rock 600 DAP FOB Tampa: US$ 496/t 500 400 300 200 100 0 Maaden Jordan Maroc China USA (Int) Eurochem -L

  19. Slide 19: Flexible Production Capacity

    Flexible Production Capacity PhosAgro Production Capacities Capacity Growth 2012(1), mln t MAP/DAP 2011 – 2012, mln t(2) DAP/MAP/NPK/NPS 2.4 1.8 4.2 2012 1.8 NPK capacities +6% 2011 1.7 Urea 0.98 MAP/DAP/NPK: fully flexible production lines with NPK production 2011 – 2012, mln t(2) AN/AN-based ferti

  20. Slide 20: Margin Driven Sales with Global Reach

    Margin Driven Sales with Global Reach Breakdown of Sales Revenue by Region in 2011 - Group’s fertilisers and feed phosphate exported to more than 60 countries 30% Russia 14% Other regions 16%  Globally diversified sales and Europe established presence through traders in 28% key global markets North

  21. Slide 21: PhosAgro’s Flexible Model Meets Global Demand for NPK

    PhosAgro’s Flexible Model Meets Global Demand for NPK World NPK Imports: ~2 mln t of P2O5 per annum(1) PhosAgro NPK Exports Others kt FSU 4% South 800 5% Asia 4% Africa 8% Europe 600 36% CAGR: +107% China 400 8% Lat. Other 200 America East 16% Asia 19% 0 2006 2007 2008 2009 2010 2011 World DAP/MAP I

  22. Slide 22: NPK High Margin Demand Drives Production Mix

    NPK High Margin Demand Drives PhosAgro’s production mix 6000 k t 9 Downstream 21 Downstream 4X Products in 2012 Products in 2008 NPK/NPKS/NPS/PKS grades from 4 up to 16 APP 5000 in 4 years Overall AN CAGR:9% Urea 4000 APP AN DAP NPS: 20:20:0:14 Urea 16:20:0:14 3000 14:34:0:8 15:36:0:8 DAP MAP NPK/NP

  23. Slide 23: Growth Strategy

    Growth Strategy Strategic objectives Key initiatives  Construction of shaft No. 2 at Kirovsky Underground Mine, which is expected to increase 1 Improve efficiency annual apatite-nepheline ore production from 12 to 14 mln t by 2016  Construction of a new ammonia plant with 760 k tonnes per annum ca

  24. Slide 24: Superior Financial Performance

    Slide Number 1. PhosAgro At A Glance 4 2. Phosphates – An Essential Industry 8 3. PhosAgro – A Leading Global Fertilizer Company 14 4. Superior Financial Performance 24 5. Appendix 31

  25. Slide 25: Key Financial Highlights

    Key Financial Highlights Revenue (9M 2011/2012) EBITDA (9M 2011/2012) Net Income (9M 2011/2012) 2,561 2,548 DAP FOB Tampa: DAP FOB Tampa: 112 99 US$ 624/t US$ 539/t 50 32 36% 19 18 34% 374 445 22% 24% US$ mn US$ mn 916 874 US$ mn 615 556 2,006 1,954 9M2011 9M2012 9M2011 9M2012 9M2011 9M2012 Chemical

  26. Slide 26: Strong Financial Position: Benchmarking Against Key Peers

    Strong Financial Position Globally: Favourable Benchmarking Against Key Peers With Outstanding Eurobonds 9M 2012 LTM  PhosAgro strongly 1.4 Net Debt / EBITDA 1 outperformed majority 0.9 of global peers with 0.4 0.2 0.3 0.3 outstanding Net Cash Net Cash Phosagro 2009 Phosagro 2010 Phosagro 2011 Mosa

  27. Slide 27: Strong Position vs. Russian Peers

    Strong Position vs. Russian Peers Phosagro Uralkali Eurochem Ratings Baa3/ --/ BB+ Baa3 /BBB-/ BBB- --/BB/ BB Russia (Kirovsk, Cherepovets, Geographic location of assets Russia (Verkhnekamskoye) Russia and Europe Balakovo, Volkhov) Posphate rock – 100% Self-sufficiency Ammonia – 92%1 Potash – 100% P

  28. Slide 28: Debt Overview

    Debt Overview Comments Total Debt / EBITDA and Net Debt (1) / EBITDA 1.0x  Net debt / annualised EBITDA remains at very 1.0x 0.9x comfortable level of 0.3x 0.4x 0.5x 0.3x  PhosAgro is well positioned to access debt 0.4x financing for planned acquisitions of additional 0.3x 0.2x 0.0x stakes in its

  29. Slide 29: Capex Policy

    Capex Policy Operating Cash Flow vs Capex¹ 1,400 1,315 1,200 1,146 1,000 871 800 US$ m 605 572 600 347 384 400 349 344 293 200 0 2009 2010 2011 9M2011 9M2012 4 Operating Cash Flow Capex Key development projects in the pipeline² CAPEX Entity Project type Completion Description (USD, mln) New ammonia

  30. Slide 30: Summary of PhosAgro’s Financial Policies

    Summary of PhosAgro’s Financial Policies Superior Financial Performance  Organic growth and superior profitability  Commitment to best corporate governance practice  One of the lowest cost producer  Transparent disclosure and regular quarterly  Significant and sustainable cash generation report

  31. Slide 31: Appendix

    Appendix

  32. Slide 32: Key Historical Financial Metrics

    Key Historical Financial Metrics Units: USD mln1,2 FY2009 FY2010 FY2011 9M20117 9M2012 Key Metrics Revenue 1 916 2 534 3 420 2 561 2 548 EBITDA 415 674 1 204 916 874 Funds From Operations (FFO)3 421 572 989 738 699 Free Operating Cash Flow (FOCF)4 -110 69 662 637 387 Gross Debt 138 293 999 -- 1 156

  33. Slide 33: Debt Portfolio Structure

    Debt Portfolio Structure Company's Borrowings Structure (as of 30-Sep-2012) Original Loan Lender Amount (mln) Average Interest Rate Type of Debt Covenants Currency 84 417 1.5%-2.15% Sberbank ¹ RUR Partially Secured None 199 836 EURIBOR(6M)+0.9% Promsvyazbank² RUR 1 500 1% Unsecured None VTB RUR 632

  34. Slide 34: Debt Maturity Profile

    Debt Maturity Profile as of 30-Sep-2012 Payment Schedule Outstanding Debt 600 1 200 Repayment of principle Debt Outstanding US$ mn US$ mn 997 500 476 1 000 905 400 800 300 600 226 429 406 200 400 375 366 84 92 100 200 140 140 50 55 115 31 26 64 23 8 0 9 0 0 2015 2015 Af ter 2015 Af ter 2015 Q4 2012

  35. Slide 35: Commitment to high corporate governance standards

    Commitment to high corporate governance standards General Shareholder Meeting Board of Directors Audit Committee  Corporate governance  Marcus Rhodes (Chairman) at PhosAgro complies Sven Ombudstvedt (Chairman)  Sven Ombudstvedt  Ivan Rodionov with the requirements Chairman - Independent Non-exec

  36. Slide 36: Rarity of Phosphate Assets

    Rarity of Phosphate Assets: Only few countries have domestic resource base which is significant enough to produce phosphate fertilisers Production/resources of phosphate rock, natural gas and sulphur Phosphate Rock, mln t Natural Gas, bln cm Sulphur, k t Region Production Resources Production Resour

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