Fertiglobe reports first-quarter revenue of $694m

The sales volume of the company's own products during the period rose 9% annually

Abu Dhabi-listed Fertiglobe is a joint venture between Adnoc and Netherlands-listed OCI. Photo: Fertiglobe

Fertiglobe, the world’s largest seaborne exporter of urea and ammonia, reported a first-quarter revenue of $694 million on Tuesday.

Net profit attributable to owners of the company for the three-month period that ended in March stood at $136 million, the company said in a filing to the Abu Dhabi Securities Exchange, where its shares are traded.

The sales volume of the company's own products during the period grew by 9 per cent annually amid a “disciplined selling strategy” focused on demand centres that offer “attractive netbacks”, it said.

“We are pleased to announce our first-quarter earnings for 2023, a quarter where natural gas prices declined sharply due to a mild winter and resulted in lower marginal costs in Europe, causing deferred buying in several key regions,” Fertiglobe chief executive Ahmed El-Hoshy said.

“This, combined with relatively muted industrial demand, led to selling prices well below their levels in the same period last year, impacting first-quarter earnings growth on a year-on-year basis.”

Fertiglobe, a joint venture between Adnoc and Netherlands-listed OCI, raised about $795 million from its initial public offering in 2021, amid strong demand from international, regional and local investors.

The company’s output includes 6.7 million tonnes of urea and ammonia produced each year at four units in the UAE, Egypt and Algeria, making it the largest producer of nitrogen fertilisers in the Mena region.

Fertiglobe's output includes 6.7 million tonnes of urea and ammonia produced each year. Photo: Fertiglobe

“The nitrogen outlook remains favourable in the medium to longer term. New supply that was commissioned in 2022 has been absorbed by the market, and limited major greenfield supply additions are expected in the next four years,” Mr El-Hoshy said.

Agricultural demand is buoyed by attractive farmer economics, “incentivising nitrogen fertiliser application to replenish decade-low grain stocks”, he said.

Fertiglobe plans to pay at least $250 million in dividends for the first half of 2023, equivalent to at least Dh11 fils a share, payable in October.

Mr El-Hoshy also said the company was making progress on several initiatives to support free cash generation, including a manufacturing improvement plan announced last year, “which is on track to deliver operational and ebitda [earnings before interest, taxes, depreciation and amortisation] efficiencies” over the next two to three years.

The company recently launched an initiative to optimise its cost structure and set a target of $50 million in annualised savings in a move designed to “reinforce our top quartile cash cost positioning, and we expect to achieve these savings over the next 12 to 18 months”, he said.

“We also expect a positive impact on our cost base from the recent devaluation of the Egyptian pound,” Mr El-Hoshy said.