Despite softer pricing and market volatility, Abu Dhabi-based Fertiglobe reported revenue of $552 million, adjusted EBITDA of $223 million, and adjusted net profit of $119 million for the first quarter of 2024.
Fertiglobe is the world’s largest seaborne exporter of urea and ammonia combined, and an early mover in sustainable ammonia. It produces 6.6 million tons of urea and merchant ammonia at four subsidiaries in the UAE, Egypt and Algeria, making it the largest producer of nitrogen fertilizers in the Middle East and North Africa (MENA).
Ammonia prices retreated from their levels in Q4 2023 on easing supply disruptions and lower gas prices, while urea prices were impacted by mixed trends due to favourable weather incentivising demand in North America coinciding with delayed planting in Europe, as well as lower-than-expected tender uptake in India. This was partially offset by healthy demand in other key regions including Brazil and Australia.
Ahmed El-Hoshy, CEO of Fertiglobe, commented: “We are pleased to report a strong quarter, marked by a 5 percent year-on-year increase in our own-produced sales volumes, driven by higher production and lower ending inventories, which led to a 22 percent and 1 percent increase in ammonia and urea own-produced sales volumes, respectively.
“This demonstrates continued efforts by our manufacturing and commercial teams to prioritise our key strategic objectives by capitalising on our robust in-house capabilities and logistics footprint. It is worth noting that these results were delivered in an environment of market volatility and softer prices in Q1, on lower crop and energy prices as well as reduced imports from India and Europe. All these coupled with an improved supply situation with recent curtailments being reversed.”
El Hoshy was confident of improved operational efficiency through Fertiglobe’s ongoing Manufacturing Improvement Plan (MIP) and its efforts to embrace technology. The company said it had potential to generate approximately $150 million of incremental EBITDA by the end of 2025, representing an approximately 15 percent increase compared to 2023.
The company has continued to make progress on its cost optimisation program, having achieved 60 percent ($29 million) of its $50 million run rate target implemented by the end of March 2024, and remains on track to realise the full target by the end of 2024.
Fertiglobe is investing in the integration of Artificial Intelligence (AI) throughout its operations to unlock value, enhance efficiencies, and reduce emissions. The company is harnessing data integration and predictive analytics applications to support business objectives by improving the performance of equipment, processes, and facilities, while also implementing AI-powered analytics at its sites to enhance safety and reliability.
ADNOC’s decision to acquire OCI’s 50 percent stake in the company (subject to regulatory approval and expected to complete later this year) should also boost Fertiglobe’s performance in the future.
“Fertiglobe is about to embark on an exciting new chapter of growth and value creation following ADNOC’s acquisition of OCI’s 50 percent equity stake, which will take ADNOC’s ownership to a majority 86.2 percent. Together, we have immense confidence in Fertiglobe’s ability to continue passing milestones and setting new standards for our industry,” El Hoshy concluded.
As of 31 March 2024, Fertiglobe reported a net debt position of $743.4 million as on 31 March, implying net debt/LTM adjusted EBITDA of 0.8x. In April 2024, shareholders approved the H2 2023 dividend of $200 million, equivalent to 9 fils per share, bringing the total dividends for 2023 to $475 million.
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