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PhosAgro's Q3 profit plummets 46% YOY on strong ruble, weak phosphate prices

Sluggish phosphate prices and a stronger Russian ruble weighed on PJSC PhosAgro's financials in the third quarter, knocking net profit down to 5.77 billion rubles, a 46% drop on the previous year.

In a Nov. 22 release, the company reported that EDITDA plummeted by 22% year over year to 13.62 billion rubles and cash flow from operating activities decreased by 50% to 10.2 billion rubles, related primarily to lower profitability and less favorable changes in working capital.

PhosAgro posted a slight increase in revenue of 2% to 46.45 billion rubles as year-over-year fertilizer sales climbed by 10%. The growth in sales had a limited impact, however, as it was offset by an appreciation of the ruble against the dollar by 9% and a 17% decrease in the average realized price for phosphate rock in U.S. dollars.

The company explained that the strengthening of the ruble had a particularly negative impact on its third quarter, as prices for most of the company's products are denominated in U.S. dollars, while costs are primarily ruble-based.

Higher import duties, a 16% increase in freight, port and stevedoring expenses, and an increase in transportation and storage expenses drove up selling expenses by 19% to 4.99 billion rubles in the third quarter.

The company noted that CapEx fell by 25% year over year to 8.4 billion rubles. PhosAgro plans to step up CapEx over the next two years to 25 billion rubles, as it pushes ahead with plans to boost production capacity by 25% to 9.2 million tonnes of fertilizer in 2020.

PhosAgro also reported that production of phosphate-based fertilizer increased by about 16% during the quarter, while production of nitrogen-based fertilizer increased by 32%, both on an annual basis.

As of Nov. 21, US$1 was equivalent to 59.16 Russian rubles.