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PhosAgro announces 4Q19 and full year 2019 results

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World Fertilizer,

PhosAgro has announced its consolidated IFRS financial results for 4Q19 and full year 2019 (FY19).

PhosAgro's revenue for FY19 increased by 6.3% y/y to RUB 248.1 billion (US$3.8 billion), driven by higher sales volumes of end products. Revenue in 4Q19 decreased by 10.8% y/y to RUB 53.1 billion (US$0.8 billion).

EBITDA for FY19 increased by 0.9% to RUB75.6 billion (US$1.2 billion), while the EBITDA margin remained at a robust 30.5%. EBITDA for 4Q19 decreased by 39.7% y/y to RUB11.2 billion (US$176 million).

Free cash flow for FY19 increased by 37.8% y/y to RUB 28.3 billion (US$437 million), driven by a 7% y/y increase in sales volumes and more efficient management of working capital. Free cash flow in 4Q19 was negative, in line with the seasonal nature of the business.

The net debt/EBITDA ratio improved to 1.7x as of year end (compared with 1.8x as of 31 December 2018), reflecting EBITDA performance and the appreciation of the rouble against the US dollar during the year. Net debt as of 31 December 2019 stood at RUB131.6 billion (US$2.1 billion).

Commenting on the company's financial results, PhosAgro CEO Andrey Guryev said: "2019 was a challenging year for the fertilizer market. Prices for our products came under pressure throughout the year due to adverse weather conditions in key sales markets, as well as increased global supply amid stable demand. As a result, prices for phosphate-based fertilizers reached near-record lows at the end of the year.

"Despite the unfavourable pricing environment, 2019 became a record year for us. PhosAgro, as one of the most efficient producers of phosphate-based fertilizers in the world, was able to increase sales volumes to 9.5 mln t or by 7% y/y. As a result revenue grew by 6.3% y/y. Our strong revenue growth was the result of a balanced approach to investment and maintenance, high levels of self-sufficiency in key inputs, a flexible sales policy and the exceptional quality of our raw materials.

"As a result, the company's EBITDA over the past year exceeded RUB75 billion, with an EBITDA margin of 30.5%. Free cash flow increased by almost 40% from last year to more than RUB28 billion.

"Our improved financial performance meant we were able not only to fully self-finance our annual CAPEX programme but also to improve debt ratios. As of the end of the year, the net debt/EBITDA ratio improved to 1.7x (compared with 1.8x at the end of 2018).

"Our excellent financial performance and comfortable debt level enabled us to pay out respectable dividends. Based on 2019 results, we expect to pay out dividends of RUB24.9 billion, which corresponds to 88% of the company's free cash flow for the year.

"Looking ahead to the rest of 2020, since the beginning of the year we have seen a considerable recovery in prices for phosphate-based fertilizers as a result of the approaching spring season, production cutbacks announced by a number of major players and the relative accessibility of fertilizers. There is also a risk of reduced fertilizer supply from China.

"The recovery in prices, combined with an expected increase in demand in markets where the Company has strong positions - our home market of Russia, as well as Eastern Europe and Latin America - position us well to expect increased sales volumes while maintaining high levels of profitability."

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