Acron reports 2018 financial results

Highlights

• Revenue was RUB 108 062 million, up 15% y/y (2017: RUB 94 342 million). In dollar equivalent, revenue was up 7% to US$1.7 million from US$ 1.6 million.
• EBITDA was up 24% y/y to RUB 37 053 million (2017: RUB 29 817 million). In dollar equivalent, EBITDA was up 16% to US$591 million from US$511 million.
• EBITDA margin was 34%, against 32% y/y.
• Net profit was RUB 13 318 million (US$212 million), down 7% y/y (2017: RUB 14 260 million) because of a one-off event: a net exchange loss of RUB 7043 million due to a revaluation of assets, loans and liabilities.
• Net debt was up 23% to RUB 74 025 million, against RUB 60 221 million as of 2017 year-end. In dollar equivalent, net debt was up 2% to US$1066 million from US$1045 million.
• Net debt/ EBITDA was 2.0, unchanged compared to the end of 2017. In dollar equivalent, the ratio was 1.8, down from 2.0.

Operating results

• Output of key products was 7.5 million t, up 2.5% y/y.
• Sales of key products totalled 7.2 million t, almost unchanged year-on-year.

Alexander Popov, Chair of Acron’s Board of Directors, said: “The sustainable growth in Acron Group’s financial performance contributes to our development efforts. In 2018, the Group’s EBITDA was up 16% to US$591 million. EBITDA margin reached 34%. Our flexible investment programme is already delivering results. At the Veliky Novgorod site in 2018, the Group commissioned a new 200-ktpa urea unit and upgraded and expanded current UAN, urea and NPK capacity, which promptly resulted in a 5% increase in commercial output at this site and a 2.5% increase for the Group. In the Murmansk region, we commissioned a rail link from the Oleniy Ruchey mine to the Titan station, which cut apatite concentrate transportation costs. As we see the potash market upward trend, we have commenced active construction of the Talitsky mine in Perm Krai, as potash remains one of our key inputs for NPK production. Shaft sinking has been in progress, and as of today a total of over 280 metres have been sunk for two shafts, which is one-third of the required depth. Total CAPEX was US$232 million, up 20% y/y.

In 2018, in pursuance of shareholders’ interests, Acron Group remained focused on paying dividends and allocated a total of US$212 million for that purpose. Following the best global practices, payments were made in three instalments. At the same time, the Group’s debt burden decreased. At the end of the reporting period, net debt/ EBITDA in dollar equivalent was down to 1.8 from 2.0 at the beginning of the period.

In 2019, we proceeded to implement investment projects at Acron and Dorogobuzh as part of our Development Strategy for 2017 – 2025 and furthered construction of the underground mine at the Oleniy Ruchey phosphate mining and processing facility and of the Talitsky potash mine. We believe that the Strategy will bring the Group’s commercial output to more than 10 million t in 2026, up 40% from the 2017 level. The Group will also reach complete potash self-sufficiency, the last key component to produce complex NPK fertilisers, our crucial product, which, in turn, will boost the Group’s margin.

In the context of the Strategy, we can also adjust CAPEX by reviewing and reconsidering the list of projects at Acron and Dorogobuzh, which makes it possible for us to remain focused on dividends while keeping the debt burden under control. On 11 March 2019, Acron’s extraordinary general meeting approved dividends at the rate of RUB 130 per share. Following its 2018 practice, this year the Board of Directors intends to recommend two more dividend payments”.

Read the article online at: https://www.worldfertilizer.com/nitrogen/26032019/acron-reports-2018-financial-results/