Russian fertilizer giant PJSC PhosAgro posted a 44% year over year drop in first-quarter net profit to 6.88 billion Russian rubles amid an appreciation of the ruble against the U.S. dollar and higher costs.
The company said May 30 that the Russian currency strengthened 3% against the dollar during the quarter relative to the year-ago period. This had a negative impact as prices for most of the company's products are denominated in dollars, while costs are primarily ruble-based. Cost of sales jumped 31% from the year-ago period to 32.05 billion rubles.
The company also said a 13% reduction in realized dollar prices for phosphate rock weighed on its financial performance.
A 20% increase in sales volumes boosted Phosagro's revenue to 54.62 billion rubles, from 44.40 billion in the first quarter of 2017. EBITDA grew 13% to 14.29 billion rubles.
Net debt at the end of the first quarter amounted to 120.11 billion rubles, up from 119.99 billion rubles. CapEx totaled 8.9 billion rubles, flat year-over-year.
Nitrogen-based fertilizers booked the biggest growth in sales, jumping to 652,000 tonnes from 461,000 tonnes, while phosphate-based fertilizers and phosphate rocks sales amounted to 1.8 million tonnes and 956,000 tonnes, respectively, up 14% and 5% year on year.
CEO Andrey Guryev described the company's outlook on pricing for the second half as "constructive."
"Our view is based on exceptionally firm import demand from India after two consecutive increases in phosphoric acid prices, and weak import numbers in 1Q 2018 in Brazil [MAP imports were down by half year-on-year], which means additional demand is likely to appear during the summer ahead of the high season," he said in a statement.
As of May 29, US$1 was equivalent to 62.57 Russian rubles.
