Phosagro · RUS:PHOR
Phosagro — Investor Presentation (December 2019)
39 slides from Phosagro's investor presentation, December 2019
Slide 1: Presentation for 1-on-1 meetings December 2019
Presentation for meeting December 2019 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: PhosAgro at glance
PhosAgro at glance
Slide 4: Overview
OVERVIEW Deposits lifetime Investment rating Company stocks Financial highlights 50+ BBB- Baa3 S&P global ratings Moody’s LSE MOEX Since 2011 Since 2011 RUB bln Revenue 3Q18 3Q19 Δ yoy 9M18 9M19 Δ yoy 64.7 64.6 3% 173.8 195.0 12% years BBB- Fitch ratings Incl. in MSCI Russia EBITDA 23.4 21.3 -9% 56.
Slide 5: PhosAgro assets in 2019
PHOSAGRO ASSETS IN 2019 Mining Sales Kirovsk Branch of Apatit (Kirovsk) Infrustructure hubs 38 Ore mining 10.5 phosphate rock mln t mln t production Murmansk port 2.3 Total resources 39% Content of P2O5 bln t Production Metachem (Volkhov) St. Petersburg 0.3 NPK(S) 0.2m Sulphuric acid Kotka port mln
Slide 6: Vertical integration as a key advantage
VERTICAL INTEGRATION AS A KEY ADVANTAGE Key Facts Operational structure PhosAgro perimeter • There are 4 core raw materials for P-fertilizer production… Phosphate ore Sulphur Potash Natural gas • And 3 key feedstocks, in which PhosAgro is almost self-sufficient: Beneficiation plant Sulphuric acid pl
Slide 7: Global footprint with diversified product portfolio
GLOBAL FOOTPRINT WITH DIVERSIFIED PRODUCT PORTFOLIO Russia fertilizer sales, mln t Export fertilizer sales, mln t + 95% growth + 55% growth + 15% CAGR + 7% CAGR 4Q 4Q 4Q 4Q 9mo 9mo 9mo 9mo Access to markets Global footprint Fertilizer grades 39 40+ 25 PhosAgro sales Other regions Net fertilizer expo
Slide 8: Corporate governance
CORPORATE GOVERNANCE BOARD OF DIRECTORS EXPERIENCE HIGHLIGHTS Independent Directors Xavier Robert Rolet KBE Chairman Irina Bokova Chairman of the Sustainable Development Committee Sven Ombudstvedt 10 7 Chairman of the Strategy Committee// Chairman of the Risk management Committee DIRECTORS INED Jame
Slide 9: ESG & UN principles - part of our strategy
ESG & UN PRINCIPLES - PART OF OUR STRATEGY ZERO HUNGER GOOD HEALTH AND WELL-BEING PARTNERSHIP FOR THE GOALS QUALITY EDUCATION PhosAgro has been recognized as a Global LIFE ON LAND Compact LEAD MSCI – BB CLEAN WATER AND SANITATION SUSTAINALYTICS – 51* RESPONSIBLE CONSUMPTION AND PRODUCTION DECENT WOR
Slide 10: Fertilizer Industry
—= ea ee Fertilizer In <2PHOSAGRO:
Slide 11: Fertilizer price performance, FOB Baltics
FERTILIZER PRICE PERFORMANCE, FOB BALTICS (USD/T) India accelerated import amid slow ramp up of new capacities at Ma’aden Ramp up of new capacities at Low demand in India/China/Brazil High demand for imported Closure of Mosaic Ma’aden and OCP sites/ flood in the and OCP amid high export from Morocco
Slide 12: Feedstock prices
FEEDSTOCK PRICES Ammonia FOB Baltics price, USD/t Phosphoric acid CFR India contract price, USD/t Phosphate rock FOB Morocco prices, USD/t Sulphur CFR China prices, USD/t Effect on DAP cash cost: ~USD 49/t - USD 79/t 2019 Average: USD 112/t Source: CRU, PhosAgro
Slide 13: Global DAP/MAP cash cost
GLOBAL DAP/MAP CASH COST, USD/t, FOB Cash cost production in 3Q18 Cash cost production in 3Q19 Cash cost production in China, 3Q19 USD/t, FOB September 2019: High FOB September 2019: Low FOB DAP/MAP production, kt Source: CRU/FW, Fertecon, Argus, Green Markets, Prophecy, PhosAgro 13
Slide 14: Global P-fertilizer market: demand is growing faster than supply
GLOBAL P-FERTILIZER MARKET: DEMAND IS GROWING FASTER THAN SUPPLY P-fertilizers demand, mln t P-fertilizers supply growth vs demand growth, mln t up 10% or 17.5 million Target markets Other markets Firm projects Probable/ speculative Closures projects Most additions are expected from Morocco, Russia,
Slide 15: Global urea market: long-term balance expected
GLOBAL UREA MARKET: LONG-TERM BALANCE EXPECTED Urea demand, mln t Urea supply growth vs demand growth, mln t Target markets Other markets Firm projects Probable/ speculative Closures up 15% or 23.6 million projects Russia&CIS Europe Urea market will be Target markets: + 9,3 mln.t balanced in long-te
Slide 16: Premium market expansion
PREMIUM MARKET EXPANSION Sales breakdown¹ Premium to Indian netback prices (USD/t, FOB, Baltic) N&S America Europe Russia & CIS Other 2018 3.1 mln t 2.0 mln t 2.6 mln t 1.2 mln t 2025 3.5 mln t 3.1 mln t 3.7 mln t 1.4 mln t 2018 2025 Profitability of phosphate fertilizers, 2019E N&S America Europe R
Slide 17: Strategic Developments
Strategic Developments
Slide 18: Investment program 2019-2025
INVESTMENT PROGRAM 2019-2025 CapEx allocation*, USD mln Investment projects Investment projects • Investment projects CapEx 2019-2025: USD 1.1 bln Stay-in-business projects • Stay-in-business CapEx 2019-2025: USD 1.7 bln • Effect on EBITDA***: USD 450+ mln • Projected IRR**: 20%+ at WACC 11% Potenti
Slide 19: Production guidance 2019-2025
PRODUCTION GUIDANCE 2019-2025 Fertilizer production outlook, mln t Phosphate fertilizer production, mln t + 25% growth NPK share will grow to 55% + 5% CAGR + 25% growth + 5% CAGR Phosphate rock output, mln t Processing margin*, USD/ t of Ph-rock + 5% growth Source: PhosAgro *additional margin, that
Slide 20: Asset development pipeline
ASSET DEVELOPMENT PIPELINE PROJECT MAP CAPACITES NPK/NPS LINE CHEREPOVETS CAPACITIES NPK(S) for domestic and TARGET MAP for export markets European markets Debottlenecking initiatives SITE Metachem Balakovo Cherepovets COMMISSIONING 2021 2022 2019-20 DESIGNED CAPACITY 0.86 mtpa 1.7 mtpa Various targ
Slide 21: Financial review
Fin E a ancial review <2PHOSAGRO:
Slide 22: Revenue breakdown
REVENUE BREAKDOWN Sales breakdown, mln tonnes FX rates, RUB/USD Revenue dynamics, RUB bln Revenue by region, % Revenue by product, % Source: PhosAgro 22
Slide 23: The most efficient company amid market headwinds
THE MOST EFFICIENT COMPANY AMID MARKET HEADWINDS EBITDA and EBITDA margin for the last 6 years EBITDA margin comparison in 1H19 EBITDA margin comparison in 2018 EBITDA margin comparison in 2017 PhosAgro has a proven track record as a sustainably profitable company in the industry, delivering leading
Slide 24: Financial performance
FINANCIAL PERFORMANCE EBITDA and EBITDA margin, mln USD DAP cash cost, USD/t 13 2 85 FCF, mln USD Net debt/EBITDA, x +USD 50 mln adjustment due to inventory build up Source: CRU, PhosAgro 24
Slide 25: Available credit lines
MATURITY PROFILE, USD MLN Liquidity position Debt repayment schedule USD 1 267 mln 17 Current credit rating: BBB- S&P global ratings Available credit lines 2 Baa3 Moody’s 81 BBB- Fitch ratings USD 757 mln USD 660 mln Cash Debt maturity Debt currency Debt type LT ST RUB EUR USD Floating rate Fixed ra
Slide 26: New dividend policy
NEW DIVIDEND POLICY Board of Directors approved new dividend policy Historical dividend payments, USD bln on 24 September 2019 Dividend FREE CASH FLOW base Frequency Quarterly ND/EBITDA ND/EBITDA ND/EBITDA Threshold <1.0x 1-1.5x >1.5x Dividends per GDR and dividend yield, USD/GDR Payout >75% 50-75%
Slide 27: Appendix
—~Appendix. _ <2PHOSAGRO:
Slide 28: Strategy 2020 results: integration into feedstocks
STRATEGY 2020 RESULTS: INTEGRATION INTO FEEDSTOCKS Phosphate rock internal consumption, mln t Ammonia, mln t Sulphuric acid, mln t Global industry breakdown by scale of integration* % of integrated players Other: 15% Phosphate Rock and Phosphate Rock: Ammonia: 25% 60% Source: PhosAgro * Excluding Ch
Slide 29: Russia: fertilizer market
RUSSIA: FERTILIZER MARKET Fertilizer consumption CAGR by region, % Fertilizer consumption in Russia, mln t CAGR 2013/2018 Main markets up 70% or 3.5 million + 10% CAGR Fertilizer supply in Russia, mln t PhosAgro up 95% + 15% CAGR Source: RAPU, Companies Data, PhosAgro 29
Slide 30: Russia: more space for growth
RUSSIA : MORE SPACE FOR GROWTH Total fertilizer consumption 83 80 USA Grain average yield, 00 kg/ha 60 55 44 EU-28 40 EASTERN EUROPE 30 22 RUSSIA, 2018 20 RUSSIA, 2013 0 50 100 150 200 250 300 Fertilizer application, kg P2O5/ha Source: Rosstat, RAPU, IFA, FAO, PhosAgro 30
Slide 31: Europe: P-fertilizer market
EUROPE: P-FERTILIZER MARKET P-fertilizer consumption, mln t Breakdown by product in 2018 P-fertilizers consumption by country >400 Kt P2O5 200-400 Kt P2O5 100-200 Kt P2O5 <100 Kt P2O5 NP/NPKs to remain an important component of demand accounting for 50-60% of regional fertilizer demand across the EU
Slide 32: Fertilizer industry – India
Fertilizer industry – India DAP import to India, Mln t Seasonal DAP import in India, kt DAP cash cost vs MRP (incl. GST), $/t Seasonal DAP production in India, kt Source: CRU, Fertecon, PhosAgro estimates 32 PhosAgro at glance Fertilizer Industry Financial review Appendix
Slide 33: Fertilizer industry – India
Fertilizer industry – India Nutrient-based subsidy rates for DAP, $/t INR performance vs USD, week 1 2015 = 0 Dynamics in DAP inventories, kt Source: CRU, Fertecon, PhosAgro estimates 33 PhosAgro at glance Fertilizer Industry Financial review Appendix
Slide 34: Fertilizer industry – Latin America
Fertilizer industry – Latin America MAP/NP import to Brazil, mln t P2O5 P-fertilizer import split by products in 2018, % 50 3.2 mln t in P2O5 27 6 5 12 MAP barter ratio, 1t of MAP/60kg of soy price Brazil agricultural production, mln t 25 53 166 181 162 212 200 208 19 12 6 17 5 14 Source: CRU, Agrol
Slide 35: China: fertilizer market
CHINA: FERTILIZER MARKET DAP cash cost vs production China phosphate fertilizers: Application Rates, kg P2O5/Ha down 17% DAP Cash Cost vs Price, $/t, FOB, China DAP production, kT China DAP/MAP production, mln tonnes down 15% Source: CRU/FW, Fertecon, Argus, Green Markets, Prophecy, PhosAgro 35
Slide 36: ESG priorities
ESG PRIORITIES Environment 1. Air emissions reduction by 10% to 1.45 kg/ton 2. Water pollution reduction by 20% to 7.4 m3/ton 3. Reduction of CO2 emissions by 10% to 218 kg in СО2/ton 4. Increase waste recycling and disposal processes to 40% from 27% in 2018 Health & Safety 1. Zero fatal injuries 2.
Slide 37: Cash cost performance
Cash cost performance DAP cash costs at FOB, USD/t Av. DAP cash cost, % 13 46 16 13 12 Urea cash costs at FOB, USD/t Av. Urea cash cost, % 24 52 24 Source: CRU, PhosAgro 37 PhosAgro at glance Fertilizer Industry Financial review Appendix
Slide 38: Debt portfolio
DEBT PORTFOLIO Total debt and net debt/LTM EBITDA ratio, USD bln and x Cost of debt USD (% p.a.) vs 3M Libor 17 2 81 PhosAgro carefully manages its balance sheet and cost of Comfortable net debt/EBITDA level is in the range at financing for all current initiatives, including investment 1-1.5x, mitig
Slide 39: 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