OREANDA-NEWS. Uralkali (“the Company”, MICEX: URKA), one of the world’s largest potash producers, today announced its unaudited IFRS key figures for the three months ended 31 March 2016.

Q1 2016 TOP LINE AND OPERATIONAL HIGHLIGHTS:

  • Revenue down 28% y-o-y to US$ 521 million
  • Net revenue1 down 28% y-o-y to US$ 441 million
  • Production down 4% y-o-y to 2.6 million tonnes of potassium chloride (KCl)
  • Sales volumes down 8% y-o-y to 2.3 million tonnes of KCl
  • Average FCA export price down 23% y-o-y to US$ 196 per tonne of KCl

Q1 2016 CORPORATE HIGHLIGHTS:

  • In March, Uralkali’s completed an open market buyback programme, which began on 24 November 2015. The total amount of the programme was limited to 6.5% of the Company’s share capital. Upon completion of the programme, 4.89% of the Company’s share capital had been purchased. As of the beginning of April 2016, Uralkali’s free float (including shares represented by GDRs) constituted 8.96% of the Company’s share capital.
  • In March 2016, Uralkali signed an agreement with PJSC Sberbank to open a credit line for a period of up to ten years in the amount of US$ 3.9 billion for the purpose of refinancing earlier credits received from the bank as well as other general corporate purposes. Together with any related agreements, this credit line is secured by pledge of Uralkali shares and GDRs constituting 20.0% of the Company’s share capital to PJSC Sberbank, and by 1 August 2016 up to 8.6% of additional Company’s shares should be pledged to PJSC Sberbank

SIGNIFICANT EVENTS AFTER THE REPORTING PERIOD:

  • In April, Uralkali signed a US$ 1.2 billion 5-year pre-export facility with 16 international banks
  • In May, the Company’s Board of Directors approved another open market buyback programme. The shares and GDRs to be acquired under the programme will not exceed 4% of the Company’s share capital. The programme will run between 19 May and 19 September 2016
  • In June, Uralkali’s Annual General Meeting decided not to pay dividends for 2015

Dmitry Osipov, Uralkali CEO, commented:

"Although currently there is a significant fall in demand for potash fertilisers, combined with increased competition on the spot market, and the lack of price targets, we are still optimistic about the market in the near future. We continue to monitor the market closely and are ready to respond flexibly to any changes".

The key Q1 2016 figures were as follows:

 

Q1 2016

Q1 2015

FY 2015

Revenue (US$ million)

521

720

3,123

Net revenue (US$ million)

441

612

2,645

Average export potash price, FCA, US$

196

256

245

Production (KCl, million tonnes)

2.6

2.7

11.4

Sales volume (KCl, million tonnes)

TOTAL

— Domestic

— Export

2.3

0.5

1.8

2.5

0.5

2.0

11.2

2.0

9.2

Business and Financial Review

In the first quarter of 2016, market conditions in the potash industry remained challenging. Purchase volumes decreased significantly in almost all key markets due to the absence of long-term contracts with India and China.

Additional negative factors were substantial carry-over stocks held by importers, unfavourable economic conditions, as well as the devaluation of national currencies. The high level of competition seen in 2015 persisted in the first quarter of this year, which resulted in a sharp drop in potash prices, particularly in premium markets. As a result, the average export price in Q1 2016 fell 23% compared to the same period in 2015.

Altogether, this had a negative impact on Uralkali’s key financial indicators, and the Company’s revenue and net revenue both declined by almost a third year-on-year.

Uralkali continues to implement its capacity development programme and carry out comprehensive monitoring of conditions at the Berezniki-1 and Solikamsk-2 mines. All operations are proceeding as usual and are on schedule.

Uralkali  is one of the world’s largest potash producers and exporters. The Company’s assets consist of 5 mines and 7 ore-treatment mills situated in the towns of Berezniki and Solikamsk (Perm Territory, Russia). Uralkali employs ca.11,000 people (in the main production unit). Uralkali’s shares are traded on the Moscow Exchange.