AKRN.L Regulatory News (AKRN)

25 Oct 2018 09:48

25 October 2018

Acron Group’s Fertiliser Output Up 3% in 9M 2018

The Group’s Consolidated Output (including operating results for Acron, Dorogobuzh and North-Western Phosphorous Company)

Note:Commercial output is output less in-house consumption.*Updated**9M 2017 data is adjusted taking into account that part of urea was reclassified as industrial urea

Chairman of Acron’s Board of Directors Alexander Popov commented on the results:

“In 9M 2018, commercial products output increased 3% year-on-year to 5.6 million tonnes, setting yet another record. Mineral fertiliser output was up 3% as well to 4.6 million tonnes.

“The Group’s facilities increased ammonia output 3% to 2 million tonnes. Output at the new Ammonia-4 unit was 625,000 tonnes, up 7% year-on-year. Further upgrades to the unit are underway to increase its capacity to 2,500 tonnes per day. The increased ammonia output will make it possible to ramp up production of nitrogen and complex fertilisers.

“In 2017 and 1H 2018, Acron’s site in Veliky Novgorod implemented measures to upgrade its urea units, and that boosted output in 9M 2018 to 724,000 tonnes, up 14% year-on-year. There was also a significant increase in high-quality industrial urea production (including for AdBlue®), which was up 53% to 86,000 tonnes. In the end of this September, start-up and commissioning of the new Urea-6 unit started at the Veliky Novgorod site. Once it is launched, total urea capacity will increase to 3,800 tonnes per day and 1.3 million tonnes per year. Output of UAN, which is produced from urea solution, increases together with production of urea solution. Due to favourable UAN market environment and expansion of UAN capacity the output of this liquid fertiliser was up 40% year-on-year, setting a new record.

“Acron Group’s complex fertiliser production was down 10% year-on-year to 1.880 million tonnes. In the reporting period, blends output decreased significantly due to lower regional demand. However, it did not affect utilisation rate at the key process lines and merely led to a shift in production by increasing UAN and NPK output.

“In 9M 2018, apatite concentrate output was up 4% year-on-year to record high 907,000 tonnes, due to start of ore extraction from the underground mine last September. In the reporting period, underground mine produced 18% of the total ore output”.

Market Trends

Following a hike in June, urea price continued to climb and reached USD 280 FOB Baltics in late September. This increase was supported by deficient global supply, mainly due to the decrease in Chinese exports. In 9M 2018, urea exports from China were down 68% year-on-year to 1.1 million tonnes against 3.5 million tonnes in the previous year. The high price of coal, which is the main feedstock for urea production in China, forced Chinese producers to maintain prices over USD 300 FOB China and focus on the domestic market. However, Chinese export tonnage is still in demand in the international market, strongly supporting global prices.

In October, increase in the global urea price accelerated because during the Indian urea tender in November, the Indian agency excluded Iranian urea from being offered for fear of U.S. sanctions. As a result, the tender price reached USD 350 CFR. For the first time since the beginning of 2015, the Baltic prices exceeded USD 300 FOB.

Industry experts forecast a further increase in urea price by the end of 2018 on the back of traditionally strong demand ahead of the spring sowing season in the Northern Hemisphere and limited supply. Urea prices are also expected to remain high in the beginning of 2019.

This dramatic increase in urea price contributed to higher prices for other nitrogen fertilisers. The average AN price in Q3 2018 was up 28% against Q2 2018. UAN price started growing later and the average price in Q3 2018 was up just 13% against Q2 2018. It is expected that AN and UAN prices will be supported by growing urea price, which serves as a benchmark for them.

In Q3 2018, NPK prices continued to grow due to an upward trend in nitrogen, potash and phosphate feedstock prices. The premium over the product basket remained high.

Average Indicative Prices, USD/t, FOB Baltic/Black Sea

Media contacts:

Sergey DorofeevAnastasiya GromovaTatiana SmirnovaPublic RelationsPhone: +7 (495) 777-08-65 (ext. 5196)

Investor contacts:Ilya PopovInvestor RelationsPhone: +7 (495) 745-77-45 (ext. 5252)

Background Information

Acron Group is a leading vertically integrated mineral fertiliser producer in Russia and globally, with chemical production facilities in Veliky Novgorod (Acron) and the Smolensk region (Dorogobuzh). The Group owns and operates a phosphate mine in Murmansk region (North-Western Phosphorous Company, NWPC) and is implementing a potash development project in Perm Krai (Verkhnekamsk Potash Company, VPC). It has a wholly owned transportation and logistics infrastructure, including three Baltic port terminals and distribution networks in Russia and China. Acron’s subsidiary, North Atlantic Potash Inc. (NAP), holds mining licenses for 13 parcels of the potassium salt deposit at Prairie Evaporite, Saskatchewan, Canada. Acron also holds a minority stake (19.8%) in Polish Grupa Azoty S.A., one of the largest chemical producers in Europe.

In 2017, the Group sold 7.3 million tonnes of various products to 65 countries, with Russia, Brazil, Europe and the United States as key markets.

In 2017, the Group posted consolidated IFRS revenue of RUB 94,342 million (USD 1,617 million) and net profit of RUB 14,260 million (USD 244 million). Acron’s shares are on the Level 1 quotation list of the Moscow Exchange and its global depositary receipts are traded at the London Stock Exchange (ticker AKRN). Acron employs approximately 11,000 people.

For more information about Acron Group, please visit www.acron.ru/en.