MOSCOW, August 23, 2017 /PRNewswire/ --
The Board of Directors of PhosAgro (Moscow Exchange, LSE: PHOR),
one of the world's leading vertically integrated phosphate-based
fertilizer producers, today heard a report by Andrey Guryev about
the results of his four years as Chief Executive Officer of the
Company, and received information about the development of the
Company's strategy to 2025, as well as about implementation of the
strategy to 2020.
In his report addressed to the Board of Directors on the results
of PhosAgro's performance over the past four years during which he
was CEO, 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.
"We intend to continue to strengthen Company's position on
domestic and international markets. We have gig plans for
PhosAgro's development. Our role in the global food chain will
grow, as we produce a high-quality product that is unique in its
purity."
The key investment project under the Company's strategy to 2020
is the construction of a high-tech ammonia production facility with
a capacity of 760 ths tonnes/year 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 ths
tonne/year urea shop. Completion of these two large-scale
projects may enable PhosAgro to increase its
production capacity from 2016 levels by nearly
24%, to 9.2
mln tonnes, by 2020.
Other facilities that were constructed and commissioned in the
last four years include:
- Aluminium fluoride facility, the production capacity of which
increased from 23 ths tonnes/year to 43 ths tonnes/year at
PhosAgro's Cherepovets production site;
- Complex PKS fertilizers line with a capacity of up to 100 ths
tonnes/year at the Company's Volkhov production site;
- Liquid ammonia storage facility with a capacity of 8 ths tonnes
at the Balakovo production site;
- The second Yuksporsky tunnel, main shaft No. 2 and expansion of
the ANOF-3 beneficiation plant from 6.5 mln tonnes to 7.7 mln
tonnes at Apatit, with the mid-term possibility of increasing
capacity to 9 mln tonnes;
- The brand 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
about 5-10% per year. The Company expects fertilizer production
to have increased by 40% by the end of 2017, from 5.9
million tonnes in 2013 to 8.3 mln tonnes this
year. Phosphate rock production is expected to have
increased by 22%, from 7.7 mln tonnes in 2014 to 9.4 mln
tonnes 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 tonnes in 2016. The Company's sales
network is active in 60 regions of Russia.
Supported in a large part by state policy and support of Russian
farmers by the Russian Fertilizer Producers Association, which
Andrey Guryev has headed since 2016, domestic agricultural
producers were able to significantly increase fertilizer purchases
and make Russia the world's top
wheat exporter last year.
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 kept the promises it made to investors during the
IPO and SPO, and has paid dividends representing from 39% to 50% of
net income. Thanks to the company's robust cash flows and ability
to maintain a solid balance sheet throughout a major investment
cycle, the Company has provided investors with dividend
income of USD 3.1 per share since
2013. Total dividends paid out during the
period amounted to around USD 1.2
billion, and the average daily trading volume of
PhosAgro GDRs on the London Stock Exchange has increased from
USD 2 million in 2013 to USD 7 million in 2017.
Despite the fact that the average price for DAP (FOB Tampa) has
decreased since 2013 from USD 446 per
tonne to USD 346 per tonne in 2016,
the Company has successfully overcome these difficulties, and its
EBITDA margin for the same period has grown from 23% in 2013 to 39%
for 2016. The Company's EBITDA has increased from RUB 23.9 billion in 2013 to RUB 72.4 billion last year. Moreover, the
production capacity increases achieved to date bring an additional
USD 180 million in EBITDA every
year.
The Company's energy efficiency programme deserves special
attention. PhosAgro has reduced its per-unit energy costs by
40% over the last four years. After
commissioning its own generating capacities, combined with
newly-built mineral fertilizer production units, a number of
PhosAgro's enterprises can almost fully meet their own electricity
needs.
Along with effective economic activity in regions where it is
present, PhosAgro has a corporate housing programme, and
participates in a number of major social programmes in the fields
of education, health, youth policy and support of sports. Annual
outgoings on charitable and social projects total more than
RUB 2.5 billion. PhosAgro is one
of the biggest taxpayers in the regions where it is active, with
consolidated tax payments increasing by 1.5 times in the last year
alone to RUB 18 billion. The company
is the leading taxpayer in the Murmansk and Vologda regions.
In all cities where the company is active, it supports
educational programmes as part of Educated and Healthy Children of
Russia programme ("DROZD"). DROZD
aims to address issues identified by the presidential programme for
the development of physical education and sports to raise a healthy
younger generation, developing children's sports, and healthy
lifestyles for a harmonious upbringing.
The company is engaged in the training of highly-qualified
engineering personnel, with an educational process that follows the
'school-technical college-university' progression. Practically all
graduates from PhosAgro classes continue their education in the
country's best technological universities and colleges, and then go
on to work at PhosAgro or at other high-tech enterprises in
Russia.
With the aim of developing tourism and creating a basis for
forming new areas of economic growth, PhosAgro has partnered with
the government of the Murmansk region and the mayor's office in
Kirovsk to build the Bolshoi Vudyavr ski resort, which has become
the flagship project of the region's tourism cluster.
Between 2013 and 2016, investment in major
projects in the tourism, skiing and recreation spheres amounted
to RUB 3.2 billion. As a result,
aggregate tourism traffic has increased by more than 300%
over a five-year period.
With the direct involvement of Andrey Guryev, the PhosAgro has
been in partnership with UNESCO since 2013, supporting talented
young scientists who are engaged in research in the field of green
chemistry, protecting the environment and human health. This
programme is unique because it is the first time in the long
history of UNESCO and the entire UN that such an initiative is
being implemented on an extra-budgetary basis with financing from a
Russian business.
For many years, the company has acted as a strategic sponsor for
chess and, in particular, the Russian Chess Federation, at which
Andrey Guryev is a member of the Board of Trustees. PhosAgro was
the official sponsor of the World Chess Championship held in Sochi
in 2014 and in New York in 2016,
where Sergey Karyakin from
Russia faced the reigning
champion, Magnus Carlsen from
Norway.
Over the last four years,
PhosAgro's GDRs have been included in
MSCI Russia and other indexes, and the Company became the only
Russian winner of grand prix at the Russian Business
Leaders: Dynamics and Responsibility competition.
The members of 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 their 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.
About PhosAgro
PhosAgro is one of the leading global vertically integrated
phosphate-based fertilizer producers. The Company focuses on the
production of phosphate-based fertilizers, feed phosphate and
high-grade phosphate rock (P2O5 content of
not less than 39%), as well as ammonia and nitrogen-based
fertilizers.
The Company is the largest phosphate-based fertilizer producer
in Europe, the largest producer of
high-grade phosphate rock worldwide and the third largest MAP/DAP
producer in the world (excluding China), according to Fertecon. PhosAgro is
also one of the leading producers of feed phosphates (MCP) in
Europe, and the only producer in
Russia.
PhosAgro has 2.1 billion tonnes of resources (according to JORC)
of high quality apatite-nepheline ore. The Company's mines and
phosphate rock production facilities are located in the mountainous
areas of the Kola Peninsula in the Murmansk region of northwest
Russia, whereas its fertilizer and
feed phosphate production assets are located near the city of
Cherepovets in the Vologda region and near the city of Balakovo in
the Saratov region of southwest part of European Russia.
PhosAgro's 2016 IFRS revenue was over USD
2.8 bln and EBITDA was USD 1.08
bln.
For further information on PhosAgro please visit:
www.PhosAgro.com