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PhosAgro CEO shares company update and forecast

Published by , Assistant Editor
World Fertilizer,

PhosAgro’s Andrey Guryev has shared a report about the results of his four years as CEO of the company. The PhosAgro board of directors also received information about the development of the company’s strategy to 2025, and its implementation of the strategy to 2020.

Andrey Guryev noted: “The team and I have achieved good results thanks to a comprehensive approach to improving the efficiency of our operations, investment in the modernisation of existing facilities, and the construction of new high-tech production lines. We have strengthened our reputation and confirmed our status as a reliable and profitable company for our shareholders, employees, customers and other stakeholders.

Key investment project under PhosAgro’s strategy to 2020 is the construction of a high-tech ammonia production facility with a capacity of 760 000 tpy that will be commissioned this year. This new production line is an integral part of the Russian Federation’s strategy for the development of the chemical and petrochemical industry through 2030. PhosAgro-Cherepovets will also commission a new 500 000 tpy urea shop. Completion of these two large projects may enable PhosAgro to increase its production capacity from 2016 levels by nearly 24%, to 9.2 million t, by 2020.

Other facilities that were constructed and commissioned in the last four years include:

  • An aluminium fluoride facility, the production capacity of which increased from 23 000 tpy to 43 000 tpy at PhosAgro’s Cherepovets production site.
  • A complex PKS fertilizers line with a capacity of up to 100 000 tpy at the company’s Volkhov production site.
  • A liquid ammonia storage facility with a capacity of 8 000 t at the Balakovo production site.
  • The second Yuksporsky tunnel, main shaft No. 2 and expansion of the ANOF-3 beneficiation plant from 6.5 million t to 7.7 million t at Apatit, with the mid-term possibility of increasing capacity to 9 million t.
  • The new Smart Bulk Terminal at the Ust-Luga port, which has helped PhosAgro achieve sustainable cost savings on export sales compared to third-party terminals.

Investments into efficiency and modernisation of production lines have enabled the company to increase fertilizer output by 5 – 10% per year. The company expects fertilizer production to have increased by 40% by the end of 2017, from 5.9 million t in 2013 to 8.3 million t this year. Phosphate rock production is expected to have increased by 22%, from 7.7 million t in 2014 to 9.4 million t for 2017.

The number of fertilizer grades that PhosAgro produces has increased from 19 to 35 and, and by 2020, this number is expected to grow to 40 – 50. The greatest demand is expected to be for NPK/NPS fertilizers, which will account for up to 37% of total consumption, while demand for DAP and MAP will account for around 36%.

The company remains the leading fertilizer supplier for its priority domestic market. In the past four years, PhosAgro has nearly doubled domestic fertilizer and feed phosphates sales, reaching 2.1 million in 2016. Its sales network is active in 60 regions of Russia.

Trading companies established by PhosAgro in Brazil, Switzerland, Germany, Poland, France and Singapore have given the company a presence in all of its priority export markets, enabling it to respond quickly to changes in demand and customer needs. PhosAgro now sells 80% of its fertilizers directly to customers, without intermediaries.

PhosAgro has paid dividends representing from 39% to 50% of net income. Thanks to its robust cash flows and ability to maintain a solid balance sheet, the company has provided investors with dividend income of US$3.1 per share since 2013. Total dividends paid out during the period amounted to around US$1.2 billion, and the average daily trading volume of PhosAgro GDRs on the London Stock Exchange has increased from US$2 million in 2013 to US$7 million in 2017.

The PhosAgro board of directors gave positive marks to Andrey Guryev’s performance as the CEO of PhosAgro during the past four years noting that his appointment opened a new chapter in the company’s history, and that implementation of the strategy to 2020 under his management has enabled PhosAgro to significantly increase its competitive advantages and strengthen its position on the global fertilizer market. The directors expressed confidence that the legacy of the strategy to 2020 will be continued in the strategy to 2025, which will bring about further development PhosAgro’s production assets and even greater efficiency improvements.

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