April 25, 2012
PhosAgro prolongs aspirations for increasing fertiliser sales
As it shrugged off the threat from Saudi Arabia's massive Ma'aden project, PhosAgro extended hopes for a rise in fertiliser sales, in contrast with caution from Credit Suisse analysts.
PhosAgro said it "plans an overall increase in fertiliser production and sales in 2012", despite the slowdown in world nutrient demand sparked by economic uncertainty and, late in 2011, a weakening in crop prices.
"Record planting average and historically high prices for key grains will drive demand for fertilisers," the Russia-based group said.
The forecast of higher production and sales builds on a PhosAgro forecast last month that it would raise its output during the first half of the year.
The company on Monday (Apr 23) stressed that this year's fertiliser growth would be driven by combined NPK products - a mixture of nitrogen, phosphate and potash, the three main nutrients - rather than its core phosphate lines.
PhosAgro downplayed the impact of the ongoing build-up of the Ma'aden phosphate project, saying markets had "already priced in" the site's - delayed - launch.
Even with other new projects in the pipeline too, such as the Tunisian Tifert site and Venezuelan Perquiven sites due to open this year, "capacity additions due in [the] near future will not be sufficient to meet growing demand".
However, PhosAgro has cut its output of phosphate fertilisers themselves by 22% in the January-March period and 15% in the current quarter, compared with production a year before.
And, separately, Credit Suisse analysts portrayed a more upbeat view of supplies, saying that the outlook "looks plentiful, with the Ma'aden facility continuing to ramp up and Chinese exports available in the June-August period".
"Improving demand in 2012 will be balanced by the Ma'aden project ramp-up," the bank said, trimming by , to nine a tonne, its forecast for average prices of diammonium phosphate (Dap), a major phosphate fertiliser form, this year.
PhosAgro's comments came as it unveiled earnings up 88% to RUB22.5 billion (US$767 million) for 2011, on revenues 31% higher at a record RUB100.5 billion (US$3.4 billion).
The results, "combined with a generous dividend policy as well as continued successful development of more efficient and more flexible production capacity, underscore PhosAgro's unique position as the world's only publicly-traded pure phosphates play," Maxim Volkov, the group's chief executive, said.
While the company receives most of its takings from phosphates, it does boast a smaller nitrogen arm, which it is intending to expand through an ammonia plant set to come online in May or June, and a with an ammonia site planned for 2016.
PhosAgro depositary receipts, a proxy for shares, closed 1.4% lower at US$10.30 in London.