Acron Group’s first half 2021 IFRS EBITDA hits record high

23 August 2021

of the Acron group H1 IFRS EBITDA 2021 Achieved a record

Today Acron Group (Moscow Exchange and LSE: AKRN) released its IFRS consolidated financial statements for the first half of 2021.

Key financial data

  • Revenue increased 52% year-on-year to RUB 85,982 million (H1 2020: RUB 56,432 million). In US dollar equivalent, sales increased 42% to $ 1,158 million from $ 813 million.
  • EBITDA * increased 2.6 times year on year to reach RUB 40,271 million (H1 2020: RUB 15,308 million). In US dollar equivalent, EBITDA increased 2.5 times to $ 542 million from $ 221 million.
  • The EBITDA margin stood at 47%, compared to 27% in one year.
  • Net profit amounted to RUB 29,678 million, compared to a loss of RUB 986 million year-on-year. In US dollar equivalent, net profit was $ 400 million.
    • Net debt fell 15% to RUB 84,901 million from RUB 99,579 million as of December 31, 2020. In US dollar equivalent, net debt decreased 13% to $ 1,173 million from RUB 1,348 million. dollars.
    • Net debt / EBITDA LTM ​​** denominated in both rubles and US dollars is 1.4, compared to 2.8 as of December 31, 2020.

Operating results

  • Production of key products amounted to 4.157 million tonnes, up 6% year-on-year.
  • Sales of key products totaled 4.205 million tonnes, up 9% year-on-year.

Alexander Popov, chairman of the board of directors of Acron, commented on the results:

“After record operating results, we are pleased to report on the exceptional financial results of the Acron Group. In the first half of 2021, the Group’s EBITDA increased by a factor of 2.5 in one year to reach $ 542 million. The EBITDA margin increased from 27% to 47%. In addition, the Group reduced its debt and the net debt / EBITDA ratio at the end of the financial year stood at 1.4, compared to 2.8 at December 31, 2020.

“Given the Group’s strong financial position, we stepped up the Talitsky potash project and started preparing for in-depth upgrades of the ammonia 2 unit and urea 1-4 units at our site. Veliky Novgorod. All of these projects are in line with the Group’s ESG principles: improving the efficiency of equipment, preserving natural resources and developing our footprint territories.

“The revised and increased investment budget will not affect our commitment to a stable dividend payment. The benchmark of at least $ 200 million per calendar year in dividends remains unchanged ”.

ANNEX

Notes on key elements of the financial statements

Financial performance

In the first half of 2021, several factors pushed Acron Group’s revenue to grow 52% year-on-year to 85,982 million rubles, including a 9% increase in sales of the group’s key products, global prices plus high dollars for mineral fertilizers and a 7% increase in the average USD-RUB exchange rate.

Average indicative prices, FOB Baltic Sea / Black Sea

USD / ton H1 2021 H1 2020 H1 2021 /
H1 2020
cash
NPK 16-16-16 333 255 31%
A 240 170 41%
UAN 232 134 74%
Urea 343 212 62%
Ammonia 398 209 90%

During the period under review, cost of sales increased by 2% year on year to reach 32,465 million rubles, mainly due to higher sales and prices of potash and electrical and thermal energy, which were largely offset by a reduction in depreciation and a decrease in expenditure for third-party services related to the rock extracted at Oleniy Ruchey.

Selling, general and administrative expenses increased by 16% to 5,390 million rubles, mainly due to higher personnel costs due to salary adjustment and higher personnel costs in foreign currencies to as the ruble fell.

Transportation costs rose 34% to 13,890 million rubles, due to increased sales and a higher logistics cost outside of Russia due to a lower ruble. The increase in sales to Latin America, including transport, also contributed to the change in this item.

EBITDA increased 2.6 times to 40,271 million rubles. Over the period considered, the EBITDA margin reached 47%, compared to 27% in H1 2020.

In the first half of 2021, the Group recorded a net foreign exchange profit of RUB 1,809 million from the revaluation of assets, loans and liabilities, compared to a loss of RUB 7,112 million in the first half of 2020. Over the course of During the reporting period, financial derivatives generated a profit of RUB 2,922 million. , against a loss of 2,442 million rubles in the first half of 2020.

Net profit for the reporting period amounted to 29,678 million rubles, compared to a loss of 986 million rubles in the first six months of 2020.

Cash flow

In the first half of 2021, net operating cash flow increased by 4.0 to RUB 20,431 million compared to RUB 5,114 million in the first half of 2020 due to an increase in net profit. Working capital increased by RUB 11,702 million in H1 2021, while in H1 2020 it was up by RUB 6,090 million.

Net cash used in investing activities in the first half of 2021 increased by 11% to 6,915 million RUB compared to 6,239 million RUB in the first half of 2020. Capital expenditure increased 2% year-on-year to 7 587 million RUB against 7,410 million RUB. In dollar equivalent, capital expenditure amounted to $ 102 million compared to $ 107 million in the first half of 2020.

In the first half of 2021, net cash used in financial activities amounted to RUB 13,633 million, compared to RUB 12,400 million generated by the Group’s financing activities in the first half of 2020. results from a net borrowing of 21 871 million rubles.

Debt burden

As of June 30, 2021, total debt was RUB 100,044 million, down 13% from RUB 115,116 million as of December 31, 2020. In US dollar equivalent, total debt was 1,382 million dollars, down 11% from the 1,558 million dollars at the end of 2020. During the period under review, the Group signed an amendment to extend its structured pre-export syndicated financing, which the share of long-term debt from 68% to 82%.

Net debt at the end of the first half of 2021 was RUB 84,901 million, down 15% from RUB 99,579 million as of December 31, 2020. In US dollar equivalent, net debt amounted to $ 1,173 million, down 13% from $ 1,348 million as of December 31, 2020.

Net debt / EBITDA LTM ​​at the end of H1 2021 stood at 1.4, compared to 2.8 at December 31, 2020. In US dollar equivalent, the ratio was also down to 1.4 compared to 2.8.

Market trends

Global urea prices continued to grow in the second quarter of 2021. At the end of the second quarter, Baltic FOB prices reached $ 450, a record since 2012. This rise is due to several factors, including the continuation strong seasonal demand in Europe and the United States. , urea purchases from India, high grain prices and rising production costs due to rising global natural gas prices. The limited volume of urea available for export from China also contributes to this element. Urea purchases from India and Brazil provide additional market support in the third quarter in the face of the seasonal decline in demand in Europe and the United States.

Second quarter AN and UAN prices hit their highest levels since 2014 due to strong seasonal demand in the northern hemisphere and growth in urea prices, which are used as a benchmark. for other nitrogen fertilizer prices.

NPK prices also increased in the second quarter of 2021, mainly due to higher commodity prices (urea, DAP and potassium chloride). The increase in commodity prices outpaced blends due to their greater liquidity, so the NPK 16-16-16 premium over the commodity basket decreased to 0-5% over the historical average of 20%.

Average indicative prices, USD per tonne, FOB Baltic / Black Sea

Q2 2021 Q1 2021 Q2 2020 Q2 2021 /
Q1 2021
cash
Q2 2021 /
Q2 2020
cash
NPK 16-16-16 353 312 258 13% 37%
A 245 234 153 5% 61%
UAN 250 213 144 17% 73%
Urea 359 326 207 ten% 73%
Ammonia 462 329 197 40% 135%

The full version of the Acron Group financial statements is available at www.acron.ru/fr

Note: The exchange rate used for currency conversion was RUB. 72.3723 in USD 1 to 3June 0 2021 and RUB 73.8757 in USD December 1 to 31, 2020. The average exchange rate of the first six month of 2021 was RUB 74.2781 in USD 1. The average exchange rate for the first six month of 2020 was RUB 69.3714 in USD 1.

* EBITDA is calculated as operating profit adjusted for depreciation and amortization, foreign exchange gains or losses on operating transactions and other non-cash and extraordinary items.

** EBITDA LTM ​​is calculated EBITDA for the last 12 months.

Media contacts:

Sergei Dorofeev
Anastasia gromova
Tatiana Smirnova
Public relations
Telephone: +7 (495) 777-08-65 (ext. 5196)

Investor contacts:

Ilia Popov
Sergey Smirnov
Investor Relations
Telephone: +7 (495) 745-77-45 (ext. 5252)

Background information

Acron Group is one of the leading producers of vertically integrated mineral fertilizers in Russia and the world, with chemical production facilities in Veliky Novgorod (Acron) and in the Smolensk region (Dorogobuzh). The Group owns and operates a phosphate mine in the Murmansk region (North-Western Phosphorous Company, NWPC) and is implementing a potash development project in Perm Krai (Verkhnekamsk Potash Company, VPC). It has transport and logistics infrastructure, including three Baltic seaport terminals and distribution networks in Russia and China. Acron’s subsidiary North Atlantic Potash Inc. (NAP) holds mining leases and an exploration permit for ten parcels of the potassium salt deposit at Prairie Evaporite, Saskatchewan, Canada. Acron also owns a minority stake (19.8%) in the Polish group Grupa Azoty SA, one of the largest producers of chemicals in Europe.

In 2020, the Group sold 7.8 million tonnes of his main products in 74 countries, with Russia, Brazil, Europe and the United States as key markets.

In 2020, the Group recorded consolidated IFRS revenue of RUB 119,864 million ($ 1,661 million), with EBITDA of RUB 35,311 million ($ 489 million). Acron’s shares are traded on the Moscow Stock Exchange and its global certificates of deposit are traded on the London Stock Exchange (ticker AKRN). Acron employs over 11,000 people.

For more information on the Acron Group, please visit www.acron.ru/fr.

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