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URALCHEM posts multifold increase in the financial results for the first nine months of 2011

Revenue increased to US $1,556 million, compared to US $980 million
in the first nine months of 2010.
Operating profit increased to US $487 million, compared to US $126 million in the first nine months of 2010.
Adjusted EBITDA grew to US $560 million,


WEBWIRE

URALCHEM HOLDING P.L.C. REPORTS THE FIRST NINE MONTHS OF YEAR 2011 UNAUDITED IFRS FINANCIAL RESULTS 
 

  1. Revenue increased to US $ 1,556 million, compared to US $ 980 million
    in the first nine months of 2010.
  2. Operating profit increased to US $ 487 million, compared to US $ 126 million
    in the first nine months of 2010.
  3. Adjusted EBITDA grew to US $ 560 million, compared to US $ 205 million
    in the first nine months of 2010.
  4. Net profit amounted to US $ 289 million, compared to US $ 12 million in the first nine months of 2010.

 
Moscow, Russia - URALCHEM Holding P.L.C. (hereinafter URALCHEM Holding or the Company), a Cypriot holding company of the URALCHEM Group (hereinafter called the Group), one of the largest producers of nitrogen and phosphate fertilisers in Russia, announced its unaudited IFRS financial results for the first nine months of 2011 ending 30 September 2011.
 
Dmitry Konyaev, CEO of URALCHEM, OJSC (part of the Group), commented on the results for the first nine months of 2011: “Preliminary data suggest that 2011 will be a very successful year for our company. Both stable demand for fertilizers in Russia and abroad and favourable price conditions have allowed us to increase sales and show strong financial results in the first nine months of 2011.”
 
Financial Results

Revenue in the first nine months of 2011 grew to US $ 1,556 million, compared to US $ 980 million in the first nine months of 2010. Operating profit amounted to US $ 487 million, or 31% of the revenue, compared with operating profit of US $ 126 million, or 13% of the revenue in the first nine months of 2010.
 
In the first nine months of 2011 net profit amounted to US $ 289 million, compared with US $ 12 million in the same period in 2010.
 
In the first nine months of 2011 adjusted EBITDA reached US $ 560 million compared to US $ 205 million for the same period last year, an increase of 173%. Adjusted EBITDA margin in the first nine months of 2011 comprised 36% of revenue, compared with 21% of revenue in the first nine months of 2010.
 
Markets

During the first nine months of 2011, the volume of export sales increased by nearly 74%, reaching US $ 1,023 million compared to US $ 589 million in the first nine months of 2010. During the first nine months of 2011 revenues from sales to the domestic market amounted to US $ 339 million, compared with US $ 243 million in the first nine months of 2010.
 
The dynamics of the urea market during January - September 2011 were significantly different from the corresponding period in 2010. The traditional market weakening in the first quarter gave way to sharp price increases that lasted throughout the second quarter and amounted to almost $ 200 / t. Then, after a brief downward correction, prices restored and stabilized within the limits of $ 480 - $ 500 / t FOB Port of Yuzhny. The main reason for the sharp rise in prices was the imbalance between limited supply and strong demand from the markets in Asia, Latin America and Africa.
 
The ammonium nitrate market largely repeated the market dynamics of urea during the first half of the year. However, in the third quarter, influenced by lower demand in all major markets, prices for ammonium nitrate significantly decreased – down to the level of the beginning of the year. During August – September marked price fluctuated within $ 310 - $ 330 / t FOB CIS, reflecting market participants’ uncertainty concerning of the world economic outlook.

Since the beginning of 2011, the global market of phosphorus fertilisers has shown a stable shortage, which is related to decrease in supply from major sources. Since the beginning of 2011, there was a steady rise in prices for phosphate fertilisers; the prices in September 2011 exceed the prices in the same period last year by 33%.
 
Supported by high prices for nitrogen, phosphate and potash fertilisers, the prices for NPK fertilisers grew throughout the first nine months of the year.
 
Sales

Due to high demand for fertilisers both in Russia and abroad, the volume of sales of the Group in the first nine months of 2011 increased by 6% compared to the same period in 2010 and totalled 3.815 million tons of products. Sales of “other chemicals” increased by 76% mainly due to increased sales of ammonium nitrate for industrial use. The sales volume of urea increased by 18%. Sales of ammonia decreased by 8% due to the increase of the share of dry products.
 
 
Financial Situation

Due to increased revenue, cash generated from operations (before tax and interest) in the first nine months of 2011 amounted to US $ 330 million compared to US $ 64 million in the same period last year.
 
On September 30 2011 the Company’s net debt amounted to US $ 1129 million. The weighted average interest rate in the loan portfolio during the first nine months of 2011 comprised 7.9% per annum compared to 9.6% in the same period last year. The net debt/EBITDA ratio is 1.7. By the end of the year 2011 the Company plans to reduce the net debt to US $ 1000 million thereby reducing the net debt/EBITDA ratio to less than 1.5.
 
***
For more information, please visit the company web site www.uralchem.com or use the following contact information:
 
PR department
URALCHEM, OJSC
tel  +7 (495) 721 89 89
pr@uralchem.com
 
Eva Smit,
URALCHEM PR representative in the UK and Ireland
tel +44 (0)7538 978986
eva.smit@holdensmit.com

URALCHEM HOLDING P.L.C. is a holding company of the URALCHEM Group, which includes three fertilizer manufacturing facilities in Russia. The Group is one of the largest producers of nitrogen and phosphate fertilizers in Russia and the CIS with production capacities of over 2.5 million tons of ammonium nitrate, 2.2 million tons of ammonia, 0.8 million tonnes of MAP and DAP, 0.8 million tons of complex fertilizers and 0.5 million tons of urea. URALCHEM Group is the second largest ammonium nitrate producer in the world and number one in Russia, the second largest producer of nitrogen fertilizers in Russia. The company’s key production assets include Azot, OJSC in Berezniki, Perm region; Kirovo-Chepetsk Chemical Works, OJSC in Kirovo-Chepetsk, Kirov region; Voskresensk Mineral Fertilizers, OJSC in Voskresensk, Moscow region.
 
Some of the information in this press release may contain projections or other forward-looking statements regarding future events or the future financial performance of URALCHEM. We wish to caution you that these statements are only predictions. We do not intend to update these statements and our actual results may differ materially from those contained in our projections or forward-looking statements, including, among others, the achievement of anticipated levels of profitability, growth, cost and synergy of our recent acquisitions, the impact of competitive pricing, the ability to obtain necessary regulatory approvals and licenses, the impact of developments in the Russian economic, political and legal environment, financial risk management and the impact of general business and global economic conditions.

 
 
Annex to the press release about the unaudited financial results for the first nine months of 2011
 
EBITDA is a profit / loss from financial and economic activities during the reporting period, before deduction of income tax on profits, income and interest costs, depreciation and amortization. “Adjusted EBITDA” is EBITDA for the reporting period before goodwill, profit / loss from associates, profit / loss on foreign exchange differences arising on financial performance and profit / loss on operations with derivative financial instruments. Adjusted EBITDA is operating profit before depreciation and amortization and financial results of operations with derivative financial instruments. In accordance with International Financial Reporting Standards (“IFRS”), depreciation and amortization included in cost structure, and in the selling, general and administrative expenses. IFRS does not require the disclosure and does not describe the calculation of EBITDA and adjusted EBITDA, among other financial indicators, so they can not substitute for net profit for the period when evaluating the results of operations or the measure of cash provided by operating activities when evaluating liquidity. Approach to the calculation of EBITDA and adjusted EBITDA, as described earlier, may not coincide with the approaches used by other companies, therefore, comparability may be limited. We believe that EBITDA and adjusted EBITDA provide useful information to investors because they are indicators of the stability and efficiency of our business and our ability to fund discretionary spending such as capital expenditures, the acquisition of subsidiaries and other investments, as well as indicators of our ability to incur and service debt. IFRS classifies depreciation and amortization to operating costs, while in fact they are distributed to the current period non-cash expenses for the acquisition or creation of fixed assets, incurred in previous periods, and are not affiliated with the movement of funds.



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