2018 IFRS RESULTS 26 MARCH 2019 DISCLAIMER THIS PRESENTATION IS - - PowerPoint PPT Presentation
2018 IFRS RESULTS 26 MARCH 2019 DISCLAIMER THIS PRESENTATION IS - - PowerPoint PPT Presentation
2018 IFRS RESULTS 26 MARCH 2019 DISCLAIMER THIS PRESENTATION IS FURNISHED TO YOU SOLELY FOR YOUR INFORMATION AND SHOULD NOT BE TREATED AS GIVING INVESTMENT ADVICE AND MAY NOT BE REPRODUCED OR REDISTRIBUTED, IN WHOLE OR IN PART, TO ANY OTHER
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DISCLAIMER
THIS PRESENTATION IS FURNISHED TO YOU SOLELY FOR YOUR INFORMATION AND SHOULD NOT BE TREATED AS GIVING INVESTMENT ADVICE AND MAY NOT BE REPRODUCED OR REDISTRIBUTED, IN WHOLE OR IN PART, TO ANY OTHER PERSON. THIS PRESENTATION IS NOT FOR DISTRIBUTION, DIRECTLY OR INDIRECTLY IN THE UNITED STATES OF AMERICA, CANADA, AUSTRALIA OR JAPAN. This Presentation has been prepared by JSC Acron (“Company”). Information contained in this document is not an offer, or an invitation to make offers, sell, purchase, exchange or transfer any securities of the Company in Russia, and does not constitute an advertisement of the securities and must not be passed on to third parties or otherwise be made publicly available. This information is being provided to you solely for your information on the basis that you will keep confidential any information contained herein or otherwise made available. This information may not be reproduced, retransmitted, further distributed to any other person (excluding an investment professional’s advisers) or published, in whole or in part, for any purpose. No representation or warranty, express or implied, is made or given by or on behalf of the Company or any of its shareholders, directors, officers, employees, agents or advisers or any other person as to, nor may any reliance be placed upon, the accuracy, completeness or fairness of the information or opinions contained in this presentation. By accepting this Presentation you acknowledge that you will be solely responsible for your
- wn assessment of the market and the market position of the Company and that you will conduct your own analysis and be solely responsible for forming your own
view of the potential future performance of the Company’s business. This publication constitutes neither an offer to sell nor an invitation to buy securities, nor does it constitute an inducement to engage in investment activity. To the extent this presentation contains forward-looking statements, including, without limitation, statements containing the words “projected”, “planned”, “expected” and similar expressions (including the negative of such expressions, these statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, financial condition, performance or achievements of the Company, or industry results, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Given these uncertainties, no undue reliance should be placed on such forward-looking statements should be placed. Neither the Company nor any of its shareholders, directors, officers, employees, agents or advisers nor any other person accepts any liability whatsoever for any loss howsoever arising from any use of this document
- r its contents or otherwise arising in connection therewith. These forward-looking statements speak only as of the date of this document and the Company and its
shareholders, directors, officers, employees, agents or advisers disclaim any obligation to update any such forward-looking statements in this document to reflect future events or developments. The distribution of this document in the Russian Federation and in overseas jurisdictions may be restricted by law, and persons into whose possession this document comes should inform themselves about and observe any such restrictions. Any failure to comply with these restrictions may constitute a violation of the laws of any such jurisdiction. In particular, this document should not be distributed, published or reproduced in whole or in part in or into the United States (in particular to any US Person (as defined in regulation S promulgated under the US Securities Act), Canada, Japan or Australia or to any residents, corporations, citizens or nationals of any such jurisdictions or in any other country where such distribution may lead to a breach of any law or regulatory requirement. Distribution of this document in the United States in the absence of such an applicable exemption may constitute a violation of United States securities law. The information contained in this document is not an offer of securities for sale or a solicitation of an offer to purchase securities in the United States. The Company’s shares will have not been nor will they be registered under the US Securities Act of 1933, as amended (the “Securities Act”), or with any securities regulatory authority of any state or other jurisdiction of the United States and may not be offered, sold or delivered within the United States or to US persons (as defined in Regulation S under the Securities Act) except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and applicable state securities laws.
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1. 2018 Highlights 2. Financial Performance 3. Debt Position 4. 2019 Outlook 5. Q&A
CONTENTS
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200 300 400 500 600 700 100 150 200 250 300 350 Urea Potash DAP, rhs Source: Fertecon, FMB
Indicative Prices
2018: MARKET
Source: IFA, February 2019
Consumption, mn t 2017 2018 YoY Nitrogen fertilisers, N 105.3 105.7 +0.4% Phosphate fertilisers, P2O5 44.9 45.3 +1.0% Potash fertilisers, K2O 36.1 36.9 +2.2% Total 186.3 187.9 +0.9%
FOB Baltic/Black Sea, USD/t
Market Overview
- Global mineral fertiliser consumption continued to grow.
- Prices kept recovering in all three basic segments.
Nitrogen Fertilisers
- China remained a marginal producer of urea due to high prices for coal, which
is a key input for urea production in that country, and environmental measures implemented by the government. Despite high costs, urea exports from China remained in demand in the global market, and the need to attract them supported global prices.
Phosphate Fertilisers
- Higher prices for key DAP inputs – ammonia and sulphur – contributed to
increased costs for non-integrated producers, particularly, in India. Since this country is the largest DAP importer and accounts for a third of the world’s imports, global DAP prices surged.
Potash Fertilisers
- Strong demand and producer discipline drove up global potash prices. Annual
contracts with India and China were secured at USD 290, up USD 50 and USD 60 year-on-year, respectively.
Complex Fertilisers
- NPK prices continued to rise, following the lead of prices for nitrogen,
phosphate and potash fertilisers.
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2018: COMPANY
Acron Group continued to implement its Development Strategy:
- The Company expanded its existing UAN, urea and NPK production capacity by 200, 50 and 50 ktpa, respectively.
- A new 200 ktpa urea unit was commissioned.
- A railroad connecting the Oleniy Ruchey mine and Titan station was put into operation.
- The active stage of Talitsky mine construction commenced.
- Distribution companies were set up in Brazil and Argentina.
Commercial output was up 2.5% to hit a new record high of 7.5 mn t. In 2018, Acron paid dividends of RUB 337 per share in three installments.
82 160 91 199 224 212 50 100 150 200 250 2013 2014 2015 2016 2017 2018 USD mn
DIVIDENDS PAID IN CALENDAR YEAR
5.3 5.4 5.7 6.5 7.3 7.5 3 4 5 6 7 8 2013 2014 2015 2016 2017 2018 Mn t
COMMERCIAL OUTPUT
Note: Excl. Hongri Acron, sold in 2016
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KEY FINANCIALS
RUB mn USD mn 2018 2017 YoY 2018 2017 YoY
Revenue
108,062 94,342 +15% 1,723 1,617 +7%
EBITDA
37,053 29,817 +24% 591 511 +16%
EBITDA margin
34% 32% +2 p.p. 34% 32% +2 p.p.
Net profit
13,318 14,260
- 7%
212 244
- 13%
Net profit margin
12% 15%
- 3 p.p.
12% 15%
- 3 p.p.
Total debt
84,485 74,523 +13% 1,216 1,294
- 6%
Net debt
74,025 60,221 +23% 1,066 1,045 +2%
Net debt / EBITDA
2.0 2.0 – 1.8 2.0
- 0.2
Net cash flow from operating activities
28,406 16,634 +71% 453 285 +59%
Capital expenditures
14,542 11,299 +29% 232 194 +20%
Leveraged free cash flow
13,864 5,335 +160% 221 91 +142%
Dividend paid to shareholders
13,278 13,047 +2% 212 224
- 5%
Sales volume (kt)
7,265 7,279 0%
Note: The exchange rate was 69.4706 RUB/USD as of 31 December 2018 and 57.6002 RUB/USD as of 31 December 2017; the average annual exchange rate was 62.7078 RUB/USD in 2018 and 58.3529 RUB/USD in 2017.
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284 291 308 316 150 200 250 300 350 1Q 2018 2Q 2018 3Q 2018 4Q 2018 1900 1849 1879 1887 1810 1855 1783 1818
1 250 1 450 1 650 1 850 2 050 2 250
1Q 2018 2Q 2018 3Q 2018 4Q 2018
Production Sales
423 410 434 457 200 300 400 500 1Q 2018 2Q 2018 3Q 2018 4Q 2018 140 124 151 176 50 100 150 200 1Q 2018 2Q 2018 3Q 2018 4Q 2018 186 166 213 186 100 150 200 250 1Q 2018 2Q 2018 3Q 2018 4Q 2018
PRODUCTION & SALES (kt) EBITDA (USD mn) INDICATIVE PRICES: NPK 16-16-16 FOB FSU (USD/t) INDICATIVEPRICES: AMMONIUM NITRATE FOB BALTICS (USD/t) REVENUE (USD mn)
56.9 61.8 65.5 66.5 40 50 60 70 1Q 2018 2Q 2018 3Q 2018 4Q 2018
RUB/USD DYNAMICS
Sources: Fertecon, FMB, CBR, company data
QUARTERLY RESULTS
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7 279 7 265 4 000 5 000 6 000 7 000 8 000 9 000 2017 2018 kt 0%
GROUP’S SALES
REVENUE DYNAMICS
265 193 145 218 267 300 188 179 251 288 100 200 300 400 NPK AN UAN Urea Ammonia USD/t, FOB Baltic/Black Sea 2017 2018 + 13% + 15% + 8% + 23%
- 3%
AVERAGE INDICATIVE PRICES OPERATING RESULTS
- The Group’s sales remained unchanged at 7.3 mn t.
- The Group’s output was up 2.5% to 7.5 mn t due to
increased processing capacity at Acron.
- Acron: commercial output was up 5%.
- Dorogobuzh: commercial output was down 4%.
- NWPC: apatite concentrate output was up 4%.
94 342 108 062 60 000 80 000 100 000 120 000 2017 2018 RUB mn + 15%
REVENUE
58.4 62.7 40 50 60 70 2017 2018 + 7%
AVERAGE USD/RUB
Sources: Fertecon, FMB, CBR, company data
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NPK + Bulk Blends: 42% Ammonium nitrate*: 18% UAN: 15% Urea*: 8% Ammonia: 7% UFR: 3% Apatite concentrate: 2% Other: 5%
0% 5% 10% 15% 20% 25% 30% 35% 40% 2014 2015 2016 2017 2018
NPK premium to the basket**
Average: 20%
- 15%
- 10%
- 5%
0% 5% 10% 15% 20% 25% 30% 2014 2015 2016 2017 2018
AN premium/discount to Urea by nutrient
Average: 13%
- 10%
- 5%
0% 5% 10% 15% 20% 25% 2014 2015 2016 2017 2018
UAN premium/discount to Urea by nutrient
Average: 4%
* Including agricultural and industrial products ** Calculated via urea, DAP and potash
REVENUE BREAKDOWN
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Acron Group in 2018
- #1 AN exporter to Brazil (50% of AN imports)
- #1 UAN exporter to US (30% of UAN imports)
- #2 NPK exporter to Brazil (29% of NPK imports)
- #2 NPK exporter to China (22% of NPK imports)
- #2 NPK supplier to Russia (20% of NPK sales)
SALES MARKETS: LEADERSHIP AND DIVERSIFICATION
China: 7% Thailand: 5% Other: 7%
Europe: 19% Asia: 19% Latin America: 21% USA and Canada: 13% Africa: 4% CIS: 6% Russia: 18%
Note: sales in monetary terms
Brazil: 14% Other: 7%
SALES TO
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COUNTRIES
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COST SIDE
COGS BREAKDOWN
COMMENTS
- COGS was up 5% due to:
- higher potash feedstock prices,
- increased D&A on the back of the investment
programme.
- Increase in cash costs was limited to 3%.
30% 29% 12% 12% 15% 17% 14% 14% 10% 12% 6% 6% 14% 11% 10 000 20 000 30 000 40 000 50 000 60 000 2017 2018 RUB mn Other Repairs and maintenance Potash Fuel and energy D&A Staff costs Natural gas 54 444 + 5% 51 909
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EBITDA ANALYSIS
EBITDA BRIDGE EBITDA & NET PROFIT
29 817 6 942 7 069
- 2 419
- 3 987
- 368
37 053 10 000 20 000 30 000 40 000 50 000 RUB mn 37 053
- 9 026
- 2 890
1 283
- 7 043
- 4 988
- 1 071
13 318 10 000 20 000 30 000 40 000 50 000 RUB mn
* Excl. D&A
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3% 31% 29% 32% 2% 35% 31% 35% 0% 10% 20% 30% 40% 50% Other Mining NWPC Dorogobuzh Acron
EBITDA MARGIN
2018 2017
GROUP SEGMENTS
7% 9% 24% 60% 4% 9% 23% 64% 0% 10% 20% 30% 40% 50% 60% 70% Other Mining NWPC Dorogobuzh Acron
CONTRIBUTION TO THE GROUP’S EBITDA
2018 2017
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COMMENTS
- CAPEX was up 29% (up 20% in dollar equivalent to
USD 232 mn).
- Increased investments at Novgorod-based Acron
and at Dorogobuzh were associated with investment projects under the Development Strategy.
- CAPEX at NWPC was down following the
completion of a railway line.
- VPC’s CAPEX increased as it entered the active
phase of construction at the Talitsky mine.
- Target CAPEX for 2019 is approximately USD 300
mn.
CAPEX
4 558 7 368 897 2 613 4 233 2 055 1 125 1 778 486 728 3 000 6 000 9 000 12 000 15 000 2017 2018 RUB mn
CAPEX BREAKDOWN
Other VPC (Talitsky mine) NWPC (Oleniy Ruchey mine) Dorogobuzh Acron + 29% 14 542 (USD 232 mn) 11 299 (USD 194 mn)
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CASH FLOW
OPERATING CASH FLOW VS. CAPEX & DIVIDENDS
28 406 14 542 13 278 5 000 10 000 15 000 20 000 25 000 30 000 RUB mn Dividend paid to shareholders CAPEX Net operating cash flow
COMMENTS
- CAPEX and dividends were fully covered by
- perating cash flow.
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DEBT POSITION
74 523 84 485 25 000 50 000 75 000 100 000 31.12.2017 31.12.2018 RUB mn + 13%
TOTAL DEBT
60 221 74 025 25 000 50 000 75 000 100 000 31.12.2017 31.12.2018 RUB mn + 23%
NET DEBT
2.0 2.0 1 2 3 31.12.2017 31.12.2018 In RUB equivalent 0%
NET DEBT / EBITDA
USD loans: 68% RUB loans and bonds: 26% EUR loans: 6%
DEBT CURRENCY STRUCTURE AS OF 31 DECEMBER 2018
- Net Debt / EBITDA in dollar equivalent:
1.8, up from 2.0 as of 31 December 2017.
- Debt portfolio duration: 1.9 years
- Weighted average interest rate:
5.5%, down from 6.0% as of 31 December 2017.
- Credit ratings: Moody’s Ba3/stable, Fitch BB-/stable.
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2019: MARKET
Source: IFA, February 2019
Consumption, mn t 2018 2019F YoY Nitrogen fertilisers, N 105.7 106.9 +1.1% Phosphate fertilisers, P2O5 45.3 46.0 +1.6% Potash fertilisers, K2O 36.9 37.6 +1.9% Total 187.9 190.5 +1.4% Cash Costs & Urea Price in China
150 200 250 300 350 FOB, $/t Anthracite based cash costs Price Source: Acron estimates
Nitrogen Fertilisers
- The urea demand and supply balance is improving.
- Urea prices have been decreasing since February because this is a season of low
demand globally. Prices are expected to start recovering mid-year. The high cost of production in China will continue to support global prices.
Market Overview
- Global mineral fertiliser consumption will continue to grow.
- Global crop prices decreased in the beginning of the year; however, they
tend to recover.
Potash Fertilisers
- Prices are expected to remain close to the current level throughout the year due to producer discipline.
Phosphate Fertilisers
- In Q2, seasonal demand is expected to rise in Latin America, India, and the US. However,
strong demand will be offset by higher output in Morocco and Saudi Arabia.
- DAP prices decreased due to lower prices for sulphur and ammonia. Throughout the year,
DAP prices are expected to remain close to the current level.
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2019: COMPANY
Acron Group continues to implement investment projects at its Novgorod-based Acron and Dorogobuzh sites under the
Development Strategy for 2017 – 2025. It expects to complete the following projects in 2019:
- Construction of two nitric acid units and capacity expansion of AN and NPK units by 250 and 70 ktpa, respectively
- Expansion of ammonia unit capacity by 130 ktpa at Dorogobuzh
- Construction of a 700-ktpa urea granulation unit
Construction of an underground mine at the Oleniy Ruchey phosphate mining and processing facility and of the Talitsky
potash mining and processing facility is underway.
The Group can adjust its CAPEX by annually reviewing and updating the list of projects in the Development Strategy. This
allows for a focus on dividend payouts, while keeping the Group's debt burden under control.
On 11 March 2019, Acron’s Extraordinary General Meeting approved dividends of RUB 130 per share.
199 224 212 80 50 100 150 200 250 2016 2017 2018 2019 YTD* USD mn
DIVIDENDS PAID IN CALENDAR YEAR
7.3 10.2 2 4 6 8 10 12 2017 2026F Mn t + 40%
COMMERCIAL OUTPUT
* Approved
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