- Fertiglobe reported adjusted net profit of $219 million for H1 2023, generating free cash flows of $331 million, in line with market estimates
- Management proposing H1 2023 dividends of at least $250 million, in line with guidance, implying one of the highest dividend yields in the market at approximately 6%, and demonstrating Fertiglobe's commitment to creating and returning shareholder value
- Cost optimization program is making good progress and on track to deliver $50 million in annualized run rate savings by year-end 2024, of which 25-30% are planned to be realized by the end of 2023
- Favorable market outlook for upcoming quarters, with nitrogen prices finding a floor in Q2 and starting to rebound strongly into Q3 (urea Egypt prices up 60% since June 2023), underpinned by demand recovery, record low inventories and tightening supply
- Successfully advancing sustainability-focused projects and is expected to start the Front End Engineering Design (FEED) process for its green hydrogen projects in the UAE and Egypt during H2 2023
Abu Dhabi, UAE – Fertiglobe (ADX: FERTIGLB), the strategic partnership between ADNOC and OCI Global, the world’s largest seaborne exporter of urea and ammonia combined, the largest nitrogen fertilizer producer in the Middle East and North Africa (“MENA”) region, and an early mover in sustainable ammonia, today reported H1 2023 revenues of $1.2 billion, adjusted EBITDA of $516 million, adjusted net profit of $219 million and free cash flows of $331 million. The Company reported Q2 2023 revenues of $552 million and adjusted EBITDA of $218 million, in line with market estimates. Adjusted net profit for the quarter was $84 million, generating free cash flows of $60 million. Q2 2023 results were impacted by lower selling prices, as volatility in European gas prices continued while markets saw increased supply from capacities commissioned in 2022, coinciding with the end of the demand season in the northern hemisphere.
In view of its solid balance sheet position and healthy cash flows, Fertiglobe’s management is proposing H1 2023 dividends of at least $250 million or the equivalent of at least AED 11 fils per share, subject to board approval in September 2023 and with payment expected to follow in October 2023. The Company continues balance future growth opportunities and dividend pay-out.
During the second quarter, Fertiglobe made strong progress on its cost optimization program, aimed at reinforcing the Company’s first quartile cost positioning and optimizing its cost structure. The program is well on track to achieve $50 million in recurring annualized savings by the end of 2024, with 25-30% of these savings planned to be realized this year. Fertiglobe’s key focus areas include operating model enhancements and improvements in logistical capabilities as well as operational cost and spending efficiencies. In addition, Fertiglobe is already starting to see positive results from its manufacturing improvement plan, which is set to deliver significant operational and cost efficiencies by 2025.
Ahmed El-Hoshy, CEO of Fertiglobe, commented:
“We are pleased to see that nitrogen markets bottomed during the second quarter and are tightening rapidly, with a strong price trajectory in recent weeks despite the traditional summer lull for fertilizers. Looking ahead, we believe that limited incremental supply additions over the next several years, coupled with healthy farm economics, which incentivize nitrogen fertilizer application, and elevated marginal production costs in Europe continue to support a favorable nitrogen outlook in the medium to longer term. Going into H2 2023, we are well positioned to service the demand emerging from key regions, leveraging our centralized distribution capabilities. In alignment with our commercial strategy, we continue to target demand centers that offer attractive netbacks, and expect the reinstatement of urea and ammonia import duties into Europe to have a positive impact on our netbacks.
“We are also actively implementing several management initiatives aimed at supporting our free cash generation across cycles, which include our cost optimization program and manufacturing improvement plan. Both initiatives are already starting to see positive results and are well on track to deliver operational and cost efficiencies, supported by a continued commitment to best-in-class safety, performance and excellence standards across our operations.”
Fertiglobe is continuing to diversify its product offering via Diesel Exhaust Fuel (DEF) sales from its plants in Egypt into Europe, where demand for the product is supported by increasingly stricter emission regulations. The Company also continues to progress its sustainability-focused projects, including the Ta'ziz 1mtpa low carbon ammonia project and the low carbon ammonia pilot in the UAE. The final investment decision (FID) on the Ta'ziz low carbon ammonia project is expected in the coming months. Fertiglobe also expects to commence the Front End Engineering Design (FEED) process for its green hydrogen project in the UAE and its full scale green hydrogen project in Egypt during H2 2023. The Company continues to take significant steps towards achieving a more sustainable footprint for its production, with more updates to be provided in the coming months.
Dividends and capital structure
As at the end of June 2023, Fertiglobe reported a conservative net debt position of $66 million, allowing the Company to balance future growth opportunities and dividend pay-out. Fertiglobe's management is proposing H1 2023 dividends of at least $250 million, in line with guidance, subject to board approval in September 2023. Payment will follow in October 2023.
-Ends-
About Fertiglobe:
Fertiglobe is the world’s largest seaborne exporter of urea and ammonia combined, and an early mover in sustainable ammonia. Fertiglobe’s production capacity comprises of 6.6 million tons of urea and merchant ammonia, produced 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), and benefits from direct access to six key ports and distribution hubs on the Mediterranean Sea, Red Sea, and the Arab Gulf. Headquartered in Abu Dhabi and incorporated in Abu Dhabi Global Market (ADGM), Fertiglobe employs more than 2,700 employees and was formed as a strategic partnership between OCI Global (“OCI”) and the Abu Dhabi National Oil Company (“ADNOC”). Fertiglobe is listed on the Abu Dhabi Securities Exchange (“ADX”) under the symbol “FERTIGLB” and ISIN “AEF000901015. To find out more, visit:www.fertiglobe.com.
For additional information, contact:
| Fertiglobe Investor Relations: | For additional information on Fertiglobe: |
| Hans Zayed |
