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PhosAgro releases 9M19 financial results

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World Fertilizer,

PhosAgro has announced its interim consolidated IFRS financial results for 3Q19 and 9M19.

Revenue in 3Q19 rose by 3% y/y to RUB64.6 billion (US$1.0 billion) mainly due to higher sales in priority markets. Revenue for 9M19 increased by 12% y/y to RUB195.0 billion (US$3.0 billion).

EBITDA for 3Q19 decreased by 9% y/y to RUB21.3 billion (US$330 million) due to a correction in global fertilizer prices. EBITDA margin remained at a comfortable level of 33% due to lower purchase prices for key raw materials. EBITDA for 9M19 increased by 14% y/y to RUB64.4 billion (US$989 million), while EBITDA margin also remained at 33%.

Free cash flow in the third quarter decreased by 71% y/y to RUB3.6 billion (US$56 million) as a result of a correction in global fertilizer prices and seasonal outflows related to accumulation of working capital. Free cash flow reached RUB32.6 billion for 9M 2019, an increase of 48% y/y.

Net debt/EBITDA decreased to 1.5x as of 30 September 2019, from 1.8x as of 31 December 2018, reflecting strong EBITDA performance and the gradual appreciation of the rouble against the US dollar over 9M19. Net debt as of 30 September 2019 amounted to RUB122.9 billion (US$1.9 billion).

Commenting on the 3Q19 financial results, PhosAgro CEO, Andrey Guryev, said: “PhosAgro delivered a robust performance in the third quarter thanks to ongoing efforts to improve efficiency. Exceptional flexibility in both production and sales enabled the Company to increase revenue during the quarter, while also achieving lower cash cost of production for DAP.

“Despite a decrease in average fertilizer prices in the third quarter, our EBITDA margin of 33% was one of the highest in the sector. We were able to achieve this thanks to the completion of upgrades to a number of production facilities at the end of last year and higher levels of self-sufficiency in key inputs. This has further strengthened the Company's global competitive edge.

“Our decision to postpone a significant part of planned overhauls until the fourth quarter also contributed to PhosAgro’s excellent results in the third quarter. This made it possible to take advantage of solid demand in our priority markets and to significantly ramp up production. At the same time, overhauls in the fourth quarter should not affect sales on account of the traditional seasonal decrease in fertilizer demand.

“Our flexible sales policy and robust distribution network, in turn, enabled us to increase sales to our priority markets of Russia and the CIS, Europe and Latin America, where there was a favourable pricing environment.

“We believe current pricing environment continues to present challenges to global markets. At the same time we also believe that demand in markets, where company is positioned strongly, i.e. domestic Russian market, Eastern Europe and Latin America will allow the Company to outperform global markets.”

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