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Acron Group 2020 IFRS revenue increases by 4%

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World Fertilizer,

Acron Group has released its audited consolidated IFRS financial statements for 2020.

Revenue was up 4% year-on-year (y/y) to RUB119 864 million (US$1661 million) from RUB114 835 million (US$1774 million).

EBITDA was down 1% y/y to RUB35 311 million (US$489 million) from RUB35 749 million (US$552 million). EBITDA margin was 29%, against 31% a year before.

Net profit was down to RUB3836 million (US$53 million) from RUB24 786 million (US$383 million) a year before.

Net debt in dollar terms was up 11% to US$1348 million from US$1215 million as of 2019 year-end. Net debt/EBITDA ratio in dollar terms increased to 2.8 from 2.2 as of 2019 year-end.

Output of key products stood at 7.97 million t, up 7% y/y. Sales of key products totalled 7.8 million t, up 3% y/y.

Alexander Popov, Chairman of Acron’s Board of Directors, commented: ‘Early 2020 was challenging as global prices for mineral fertilizers dropped to multi-year lows, and the situation was aggravated by the COVID-19 pandemic in spring. However, most countries made agriculture and related industries a priority, which prevented significant lockdowns and suspended production. Acron Group took all necessary measures to protect the health of its employees, and there have been no outbreaks at any of the Group’s facilities.

‘In 2020, Acron Group’s sales continued to grow and reached 7.8 million t. In response to weak UAN prices, the Group shifted its production structure towards products with a greater margin, including granulated urea and AN. The sales geography covered 74 countries. We increased sales to growing markets in Latin America and our priority Russian market, retaining our leading market position in both regions.

‘The Group's 2020 financial results demonstrated quarterly growth driven by increased sales, rouble depreciation, and price recovery. In 2020, rouble-denominated revenue was up 4% year-on-year, EBITDA decreased 1%. Net income was down due to non-monetary items such as exchange rate differences and is therefore not representative.

‘In 2020, Acron Group continued to pursue its investment programme, with capital investments totalling US$249 million. We have successfully implemented three investment projects: construction of a new nitric acid unit and a new urea granulation unit, and upgrades to the Ammonia-4 unit. The Group also continued its Urea 6+ project, which is expected to come on stream in 2Q21. We have launched three additional projects to support future growth. At our Novgorod site, we are building a calcium nitrate production facility with a capacity of 100 000 tpy and upgrading the Ammonia-3 unit to increase its capacity by 200 000 tpy. These projects are scheduled for commissioning in 2022 and 2023, respectively. At our Dorogobuzh site, we are building a nitric acid unit and increasing capacity at the existing AN units to boost AN output by 180 000 tpy. This project is expected to come on stream in late this year. The Group’s planned CAPEX for 2021 is approximately US$210 million.

‘The COVID-19 pandemic affected the implementation of our Talitsky potash project, and we postponed the execution of project financing due to increased uncertainty. That said, in 2020 we completed the construction of two vertical shafts and plan to resume raising the project financing in the near future.

‘In early 2021, the mineral fertilizer markets showed significant improvement, with global prices actively recovering from multi-year lows amid strong demand in various regions. However, we remain cautiously optimistic and focused on controlling the Group’s debt burden.

‘In line with the interests of our shareholders, Acron Group remains committed to a stable dividend pay-out, with a total of US$228 million allocated as dividends in 2020. We still have the goal of paying out at least US$200 million per calendar year in dividends, but in 2021 we expect the Board of Directors to issue its recommendations regarding allocation of the major portion of the amount towards the end of the year. We believe that this measure, combined with limiting CAPEX, will allow us to reduce the Group’s debt burden’.

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