OREANDA-NEWS. PhosAgro (“PhosAgro” or “the Company”) (Moscow Exchange, LSE: PHOR), a leading global vertically integrated phosphate-based fertilizer producer, today announces its reviewed condensed consolidated IFRS financial results for the three months ended 31 March 2014. PhosAgro earned a net profit for the period of RUB 1.9 billion (USD 55 million), compared to RUB 3.3 billion (USD 108 million) in Q1 2013. Basic and diluted earnings per share came to RUB 14 (USD 0.40) for Q1 2014 compared to RUB 23 (USD 0.76) in Q1 2013.

Production, sales and logistics flexibility:

During the first quarter of 2014, PhosAgro's revenue and sales volumes benefited from the Company's strategy of enhancing production flexibility, with total fertilizer production and sales volumes growing year-on-year by 5% and 1%, respectively. Revenue for the same period increased by 2% year-on-year as result of more than 3% year-on-year increase in average export DAP/MAP realised prices, partially offset by decrease in NPK realised prices;

Strategic development:

In January 2014, the Group signed a USD 440.6 million loan agreement with the Japan Bank for International Cooperation (JBIC) and a group of banks consisting of Bank of Tokyo-Mitsubishi (BTMU), Citibank Japan and Mizuho Bank. The proceeds from the loan are being used to fund construction of the new 760 ths tonnes/year ammonia plant at PhosAgro-Cherepovets.

Consolidation of ownership in production facilities and business development:

In February 2014, the Group launched a voluntary tender offer to acquire ordinary shares of OJSC PhosAgro-Cherepovets. The offer price, which was determined in accordance with Russian law, is RUB 44.0 per ordinary share with a nominal value of RUB 1.10. The offer period expired on 6 May 2014.

In February 2014, PhosAgro launched a new subsidiary, LLC Smart Bulk Terminal. The Company will organize the construction and subsequent operation of the new terminal at the port of Ust-Luga, where it will handle fertilizers produced and sold by PhosAgro. PhosAgro owns 70% of LLC Smart Bulk Terminal.

PhosAgro's Q1 2014 net profit was RUB 1.9 billion (USD 55 million), a decrease of 42% year-on-year from RUB 3.3 billion (USD 108 million) in Q1 2013. The decline in net profit was due to the more than 9% devaluation of the Russian Rouble during the first three months of the year, from RUB/USD 32.73 as of 31 December 2013 to RUB/USD 35.69 as of 31 March 2014. This caused significant increase in unrealised exchange losses in Q1 2014 of RUB 2.7 billion compared to Q1 2013. Revenue for the period increased by 2% year-on-year to RUB 29.4 billion (USD 841 million), compared to RUB 28.9 billion (USD 950 million) for Q1 2013.

Operating profit for Q1 2014 was RUB 6.6 billion (USD 189 million), a 16% increase from RUB 5.7 billion (USD 187 million) in Q1 2013. EBITDA was RUB 8.6 million (USD 246 million) in Q1 2014, up 13% year-on-year. EBITDA margin increased year-on-year to 29%, compared to 26% for Q1 2013.

Cash flows from operating activities increased by 60% and amounted to RUB 6.5 billion (USD 186 million) in Q1 2014, compared to RUB 4.1 billion (USD 134 million) in Q1 2013. The Company's capital expenditure (capex) in cash terms during Q1 2014 was RUB 3.81 billion (USD 109 million), compared to RUB 2.97 billion (USD 98 million) in Q1 2013.

Net debt at 31 March 2014 stood at RUB 45.4 billion (USD 1,272 million), up from RUB 43.8 billion (USD 1,339 million) at 31 December 2013. While net debt decreased in USD terms, it increased in RUB terms during Q1 2014 because of the RUB deprecation, and the fact that most of the Company's debt is denominated in USD. The Company's net debt to annualised EBITDA ratio decreased to 1.3 as of 31 March 2014 from 1.8 as of 31 December 2013.

Commenting on the Q1 2014 results, PhosAgro Management Board Chairman and CEO Andrey Guryev said:

“I am pleased to report very strong results for Q1 2014, which represent our significantly improved operating environment, not just compared to Q4 2013, the worst quarter for the phosphate fertilizer industry since 2009, but also to Q1 2013, when average FOB Tampa DAP prices were actually 5% higher, at USD 487 per tonne vs USD 460 per tonne in Q1 2014. We have managed to increase operating cash flows by 60% compared to last year, which clearly demonstrates the benefits our vertically integrated flexible production, and shows that our cost-cutting initiatives have been successful.

“In Q1 2014 we managed to further increase fertilizer production and sales by 5% and 1%, respectively, and we generated a 29% EBITDA margin.

“We continued with our consolidation programme with the launch of a voluntary tender offer to acquire ordinary shares of PhosAgro-Cherepovets. I am pleased to report that more than 10% of minority shareholders have accepted this offer, which puts us on track to fully consolidate PhosAgro-Cherepovets by the end of this year. This will be a significant achievement, bringing us to 100% ownership of all our production subsidiaries, thus increasing returns for PhosAgro shareholders.”