URALCHEM, OJSC reports IFRS financial results for the year 2013

  • Revenue decreased to 72.15 bln RUB, compared to 75.33 bln RUB in 2012.
  • Operating profit amounted to 16.5 bln RUB, compared with 22.73 bln RUB in 2012.
  • Adjusted EBITDA comprised 20.12 bln RUB, compared to 25.99 bln RUB in 2012.

URALCHEM, OJSC (hereinafter URALCHEM or the Company), the Russian holding company of the URALCHEM Group, one of the largest producers of nitrogen and phosphate fertilizers in Russia, announced its audited IFRS financial results for the year 2013.

The Group’s Key Financial Figures for 2013 and 2012 (million RUB)

Year 2013

Year 2012

Year-on-year change, %





Gross profit




Gross profit margin



Operating profit




Operating profit margin



Net profit




Net profit margin



Adjusted EBITDA




Adjusted EBITDA margin



Cash generated from operating activities




Dmitry Konyaev, CEO of URALCHEM, OJSC, commented on the Company’s results for the year 2013, “2013 proved to be a difficult year for fertilizer manufacturers. The decline in world prices affected the financial results of all the major players in the industry and URALCHEM was no exception. Against the background of adverse market developments, we worked actively to improve the efficiency of business processes, to increase productivity, profitability and to reduce operating costs. We managed to strengthen our leadership in the nitrogen segment, by showing an increase in production and sales of key products. Thanks to its chosen strategy, URALCHEM has continued to maintain a leading position among Russian producers in terms of margins, with the EBITDA margin at 28% in 2013.”

Financial Results

Revenue for 2013 decreased by 4% to 72.15 bln RUB, compared to 73.33 bln RUB in 2012. Operating profit amounted to 16.5 bln RUB (23% of revenue) compared with the operating profit of 22.73 bln RUB (30% of revenue) in 2012.

Adjusted EBITDA reached 20.12 bln RUB, compared to 25.99 bln RUB in 2012, a decrease of 23%.

The adjusted EBITDA margin for 2013 comprised 28% of revenue, compared with 34% of revenue for 2012.


In 2013, the global fertilizer market was affected by a number of unfavourable factors. Among them were the reduction of fertilizer subsidies in India and the depreciation of regional currencies in the countries of South and Southeast Asia, the leading importers of mineral fertilizers. During the year Thai baht and Indian rupee lost 10% against the US dollar. On the Brazilian and Turkish markets (traditionally important for the Russian fertilizer exports), the real and the lira decreased by 15% and 19% against the US dollar, respectively. Restructuring of potash sales and a deficiency of natural gas for the nitrogen sector in Egypt, South-East and South Asia, and Latin America also added to the uncertainty.

As a result, continuing high demand for fertilizers under worsening general macroeconomic conditions was not supported by solvency of the major importers. This was reflected in falling prices of the major fertilizers and created the prerequisites for a general decline in prices in the short and medium terms. China’s increasing role as a supplier of fertilizers, coupled with the expectation that the country’s costs will remain stable (or even reduce slightly) will significantly constrain other producers’ opportunities to increase prices, even seasonally. The US move away from the import of nitrogen products to domestic production will increase competition in other regions and will also put additional pressure on prices.

The price of ammonia FOB Yuzhny Port during 2013 decreased from US $600 per tonne in January to US $385 to US $425 per tonne in December. The main factors influencing the negative trend in world prices for ammonia were: a drop in demand from Indian manufacturers of fertilizers, moderate demand from industrialized countries in Asia, the weakening of phosphate fertilizer market and lower prices for urea. During the same period, ammonia deficit increased in the countries of Southeast Asia, Europe and Latin America, which gave rise to the need for additional purchases of fertilizers from other regions. Also in 2013, industrial demand for ammonia remained high.

The price of urea FOB Yuzhny Port decreased by 24% during the reporting period to US $312 per tonne compared with US $408 per tonne in 2012. The most significant factor in the reduction in prices was the rise of China in the export markets, while the cost of production of urea in China significantly decreased due to the decrease in coal prices.

Steady growth of quotations of ammonium nitrate at the beginning of the year was replaced by a fall in mid-March. In late May prices stabilized, helped by repair works at plants in the CIS. By the end of the 2nd quarter, prices in the CIS received support from the industrial segment. Since the end of September, prices for ammonium nitrate started to restore due to the reduction of exports from Ukraine and the early-season purchases in the domestic markets of the CIS. During 2013 quotes for ammonium nitrate averaged $287 tonne, which was 6% lower than a year earlier (FOB Baltic).

In the phosphate fertilizers segment there was global decline in prices due to a lack of current demand. The main factor for the price reduction was a sharp drop in import demand in India due to the accumulation of significant reserves of phosphate and compound fertilizers in the country. Increased stocks were the result of low phosphorus usage in 2012 due to the drought that hit the country during the application season. Also, a significant reduction in imports was brought about by lower government subsidies and depreciation of the rupee against the dollar. At the same time, on the expectation of falling prices, importers in other regions adopted a policy of procurement to meet current needs only. The price of phosphate fertilizers on the basis of FOB Tampa averaged US $443 per tonne in 2013, which was 17.4 % lower than in 2012.


Comparative sales figures of the URALCHEM Group for the years 2013-2012 (thousand tonnes):

Name of product

Year 2013

Year 2012

Year-on-year change,%

Ammonium nitrate and its derivatives












Phosphate fertilizers




NPK fertilizers




Other chemicals, including ammonium nitrate for industrial use








Financial Situation

Cash generated from operating activities in 2013 amounted to 14.47 bln RUB, compared to 20.63 bln RUB in 2012.

As at 31 December 2013, the Company’s net debt amounted to 148.997 bln RUB. The increased size of the debt is largely due to a loan of 126.27 bln RUB which the Company obtained from VTB Capital to finance the purchase of 19.99% of shares in OJSC "Uralkali" in December 2013.

The Company’s US dollar-denominated loan portfolio amounts to more than 140.89 bln RUB. The weighted average interest rate of the loan portfolio in dollars equals 3.7% annually.

Annex to the press release about the financial results for 2013

EBITDA is a profit / loss from financial and economic activities during the reporting period, before deduction of income tax on profits, income and interest costs, depreciation and amortization. "Adjusted EBITDA" is EBITDA for the reporting period before goodwill, profit / loss from associates, profit / loss on foreign exchange differences arising on financial performance and profit / loss on operations with derivative financial instruments. Adjusted EBITDA is operating profit before depreciation and amortization and financial results of operations with derivative financial instruments. In accordance with International Financial Reporting Standards ("IFRS"), depreciation and amortization are included in cost structure, and in the selling, general and administrative expenses. IFRS does not require the disclosure and does not describe the calculation of EBITDA and adjusted EBITDA, among other financial indicators, so they can not substitute for net profit for the period when evaluating the results of operations or the measure of cash provided by operating activities when evaluating liquidity. Approach to the calculation of EBITDA and adjusted EBITDA, as described earlier, may not coincide with the approaches used by other companies, therefore, comparability may be limited. We believe that EBITDA and adjusted EBITDA provide useful information to investors because they are indicators of the stability and efficiency of our business and our ability to fund discretionary spending such as capital expenditures, the acquisition of subsidiaries and other investments, as well as indicators of our ability to incur and service debt. IFRS classifies depreciation and amortization to operating costs, while in fact they are distributed to the current period non-cash expenses for the acquisition or creation of fixed assets, incurred in previous periods, and are not affiliated with the movement of funds.

Calculation of EBITDA for year 2013 and year 2012 (mln RUB)

Year 2013

Year 2012

Net profit




Income tax

Interest and other financial income

Interest and other financial costs










Gain of associates



Loss on impairment of fixed assets



Gain on change in fair value of the share in the associate


(4 ,41)

Foreign exchange loss (gain) from financing activities



Adjusted EBITDA