OCI N.V. has reported 1H17 adjusted EBITDA of US$316 million and adjusted net income of US$47 million.
Operational 1H17 highlights:
- Own-produced volumes sold at record levels of up 10.4%.
- Egypt urea utilisation rate of c.100% and record production at OCI Nitrogen in the Netherlands.
- Unplanned shutdown at Sorfert, with business interruption expected to be covered by insurance.
- 1H17 nitrogen fertilizer selling prices remained volatile, methanol and melamine prices were higher year-on-year.
- Egypt ammonia exports resumed in July, EBIC currently running near nameplate capacity.
- Iowa Fertilizer Co. commenced production and sales in April, ramping up to full capacity.
- Natgasoline was 89% complete at the end of July 2017, and is expected to start commissioning in December 2017.
- BioMCN refurbishment of second line progressing, with commissioning expected in 4Q18.
Statement from the CEO
Nassef Sawiris, CEO of OCI, commented: “We achieved, once again, record production volumes during 1H17, despite some unplanned shutdowns in the 2Q17. Going forward, we expect another step-up in volumes and anticipate all our operations to reach normalised run-rates in the 4Q17, now that Iowa is up and running and our ammonia operations in Egypt have resumed production at high utilisation. Natgasoline will give a further boost in 2018. With these additions, our portfolio is becoming increasingly diversified, both product-wise and geographically.
“Our end markets for commodity fertilizers continued to be volatile during the 1H17, with urea and ammonia prices dropping to unsustainably multi-year low levels in June. A tighter supply and demand balance and lower inventories across the globe than the same time last year have resulted in a partial rebound in urea prices since June despite the usual seasonal summer slowdown. In 3Q17 so far, urea prices are at higher levels than the same time last year and ammonia prices have also started to recover in recent weeks.
“Prices for our other products have been less volatile. Prices for CAN, our main nitrates business in Europe, have moved upwards in the past few months to levels higher than last summer. Our methanol business in both the US and Europe is benefitting from significantly higher prices than last year. Melamine prices have continued an upwards path in 2017, increasing for the second year in a row.
“Irrespective of our underlying end markets, our expanded portfolio is capable of superior cash conversion and weathering trough conditions. OCI is one of the lowest-cost producers globally and we have become more efficient with the first benefits from our cost savings programme, launched in 4Q17, starting to positively impact our results. Furthermore, OCI has no further commitments for growth CAPEX, other than for the doubling of our methanol capacity at BioMCN. Preliminary estimates for the project costs are approximately €100 million and we expect to start commissioning in the fourth quarter of 2018. We remain focused on achieving rapid deleveraging, buoyed by a significant step-up in capacity, low CAPEX and operational cash flows.
“Last week’s Hurricane Harvey had a devastating effect on Texas. The storms passed over both OCI Beaumont and the Natgasoline site. The safety of our staff and our community is our number one priority and I would like to thank all our employees for their commitment during this difficult period, some of whom suffered flooding at their homes. We are fortunate that the storm caused only minor disruptions, except for a few days shutdown. Our thoughts and prayers are with all those affected and we have made a donation to the Southeast Texas Emergency Relief Fund to help in the relief and recovery efforts for local families. We will continue to monitor the situation and provide our support in any way that we can, including several initiatives currently underway to help our local staff with housing and supplies.”