Fertiglobe, the world’s largest maritime exporter of urea and ammonia, said it’s net profit nearly quadrupled in the second quarter as higher selling prices and product sales boosted earnings.
Net profit attributable to owners of the company for the three-month period to the end of June climbed to $429.4 million, from $113.3m recorded a year earlier, the company said in a statement on Monday to the Abu Dhabi Securities Exchange, where its shares are traded.
Adjusted net profit for the April to June period surged more than 270 percent to $438m.
Revenue at the end of June rose 105 percent on an annual basis to $1.47 billion, while adjusted earnings before interest, taxes, depreciation and amortization rose 155 percent year-on-year to $770m.
“Q2 2022 marks another quarter of solid performance, driven by a favorable price backdrop supported by strong in-season demand, tight market balances, and elevated gas prices in Europe, as well as higher sales volumes due to a phasing of some shipments from Q1 2022 to this quarter,” said Ahmed El-Hoshy, chief executive of Fertiglobe.
“We continue to focus on operational excellence and utilising our young, world-scale production assets efficiently while fully capitalising on global supply chains — in partnership with OCI — to capture the highest netbacks.”
Fertiglobe announced a first-half dividend of $750m, above the company’s previous guidance of at least $700m, driven by its strong earnings, healthy cash conversion and robust capital structure.
The company, a joint venture between Adnoc and Netherlands-listed OCI, raised about $795m in its initial public offering last year, amid strong demand from international, regional and local investors. The listing was the third largest on the ADX at the time.
Fertiglobe, the largest producer of nitrogen fertilisers by production capacity in the Middle East and North Africa region, sold more than 1.145 billion shares through the public float, representing 13.8 percent of its share capital.
The company said the outlook for the fundamentals of nitrogen end-markets continues to be underpinned by “tight supply, healthy farm economics and low grain stocks globally that incentivize the use of nitrogen fertilizes.
“Forward curves imply that natural gas prices in Europe will remain at elevated levels through 2023 and beyond, setting breakeven pricing well above historical average global prices for ammonia and urea,” Mr. El-Hoshy said.
With nitrogen prices expected to remain above historical averages, Fertiglobe’s assets are favourably positioned on the global cost curve, and the company is benefitting from a higher global gas price environment.
Q2 2022 marks another quarter of solid performance, driven by a favourable price backdrop supported by strong in-season demand, tight market balances and elevated gas prices in Europe, as well as higher sales volumes due to phasing of some shipments from Q1 2022 to this quarter
Ahmed El-Hoshy, chief executive, Fertiglobe.
Fertiglobe has a significant competitive advantage with “favourable gas price supply agreements, including fixed prices in Abu Dhabi and profit-sharing mechanisms in North Africa”, the company said.
Going forward, Fertiglobe will aim to fill “supply gaps to help address global food security concerns”, Mr. El-Hoshy added.
The company generated a free cash flow of $789m in the April-June period, more than double of $328m recorded in the second quarter of last year. Its net cash at the end of June reached $445m which could support growth opportunities.
The Abu Dhabi-based company is investing in several initiatives to produce low and zero-carbon ammonia to help the world reduce its carbon footprint by helping existing and new clients looking to use hydrogen in the form of ammonia for marine fuels, power generation, and other industrial applications, Mr. El-Hoshy told The National in a January interview.
Ammonia allows for the easy transport of hydrogen, the blue form of which is derived from gas and the green version from splitting water into hydrogen and oxygen using renewable sources.
Fertiglobe, which produces 6.7 million tonnes of urea and merchant ammonia, has several projects in the pipeline that will significantly increase its capacity, he said at the time.
In June, Moody’s Investors Service assigned a Baa3 long-term issuer rating to Fertiglobe with a “stable outlook”, while Fitch Ratings allocated a first-time long-term Issuer Default Rating (IDR) of BBB with a stable outlook. It is also rated BBB- by S&P Global Ratings.
In March, Fertiglobe was announced as a constituent of the FTSE ADX 15 Index. The FTSE ADX 15 Index comprises the 15 largest and most liquid companies on the ADX. It was included in the FTSE emerging market Index in June.
