URALCHEM HOLDING P.L.C. reports the first half of year 2011unaudited IFRS financial results

  • Revenue increased to US $ 1.035 billion, compared to US $ 663 million in H1 2010
  • Operating profit increased to US $ 288 million, compared to US $ 83 million in H1 2010
  • Adjusted EBITDA grew to US $ 337 million, compared to US $ 137 million in H1 2010
  • Net profit amounted to US $ 244 million, compared to net loss of US $ 13 million in H1 2010

Moscow, Russia, August 11, 2011 - URALCHEM Holding P.L.C. (hereinafter URALCHEM Holding or the Company), a Cypriot holding company of the URALCHEM Group (hereinafter called the Group), one of the largest producers of nitrogen and phosphate fertilisers in Russia, today announced its unaudited IFRS financial results for the 1st half of 2011 ending 30 June 2011.

Key financial figures in H1 2010-2011 ($ million)


H1 2011

H1 2010

Year-on-year change, %


1 035,5



Gross profit




Gross profit margin




Operating profit




Operating profit  margin




Net profit (net loss)




Net profit margin




Adjusted EBITDA




Adjusted EBITDA margin




Cash generated from operating activities




Dmitry Konyaev, CEO of URALCHEM, OJSC (part of the URALCHEM Group), commented on the results for the 1st Half of 2011: "In the first six months of 2011 the Company significantly increased its revenues, net income and adjusted EBITDA. The net debt[1] / EBITDA[2] ratio comprises 1.8. Both market conditions and the results for the reporting period suggest that 2011 will be a very successful year for the URALCHEM Group."


Financial Results

Revenue in H1 2011 grew to US $ 1035 million, compared to US $ 663 million in H1 2010. Operating profit amounted to US $ 288 million, or 28% of the revenue, compared with operating profit of US $ 83 million, or 12% of the revenue in H1 2010.

In H1 2011 net profit amounted to US $ 244 million, compared with net loss of US $ 13 million in H1 2010.

In H1 2011 adjusted EBITDA reached 337 million US $ compared to US $ 137 million for the same period last year, the increase by 146%. Adjusted EBITDA margin in H1 2011 comprised 33% of revenue, compared with 21% of revenue in H1 2010.


During H1 2011 revenues from export sales increased by 65%, reaching US $ 747 million compared to the volume of export sales of US $ 452 million in H1 2010. Export sales comprised more than 70% of total sales in monetary terms. During H1 2011 revenues from sales to the domestic market amounted to US $ 247 million, compared with US $ 179 million in H1 2010.

The dynamics of the urea market in H1 2011 were significantly different from the corresponding period in 2010: the traditional market weakening in the first quarter gave way to sharp price increases that lasted throughout the second quarter and amounted to almost $ 200 / t. The main reason for the sharp rise in prices was the imbalance between strong demand from the markets in Asia, Latin America, Africa and limited supply.

The market of ammonium nitrate largely repeated the market dynamics of urea. In the first quarter minor price fluctuations were related to low volumes of trade, due to lack of available supplies, primarily in the CIS markets. In April there was a noticeable, in comparison with the first quarter, decrease of prices due to seasonal drop in demand. From May, due to increased demand in Latin America and Turkey, prices started rising again, supported by the rapid rise in urea prices.

Since the beginning of 2011 the global market of phosphorus fertilisers demonstrated stable shortage, related to decrease in supply from major sources - the U.S., China, North Africa. As a result, throughout the first half of the year there was a steady rise in prices for phosphate fertilizers, the prices in June 2011 exceed the prices in the same period last year by more than 40%.

Supported by high prices for nitrogen, phosphate and potash fertilizers, the prices for NPK fertilisers grew throughout the first half of the year.



During the first six months of 2011, sales of commercial products of the Group increased by 8.5% compared to the same period in 2010 and totaled 2.6 million tons. The considerable growth in sales was due mainly to high demand for fertilisers both in Russia and abroad. The sales volume of phosphate fertilisers increased by 29.2%, and NPK fertilisers by 24.7% in H1 2011. Sales of ammonia decreased by 8.4% due to the increase of the share of dry products.

Sales of commercial products URALCHEM in H1 2010-2011 (thousands of tons)

Name of product

H1 2011

H1 2010

Year-on year change

Ammonium nitrate and its derivatives

1 309

1 253


NPK fertilisers




Phosphate fertilisers












Other chemicals, including porous and waterproof ammonium nitrate





2 609

2 405



Financial situation

Cash generated from operations (before tax and interest) in H1 2011 amounted to  US $ 194 million compared to US $ 45 million in H1 2010. This largely resulted from increased revenue, which occurred as a result of significant growth in demand and prices in the fertiliser market.

On June 30, 2011 the Company's net debt amounted to US $ 1233.7 million. The weighted average interest rate in the loan portfolio during the six months of 2011 comprised 8.0% per annum compared to 9.6% in the same period last year.

By the end of the year 2011 the Company plans to reduce the net debt to US $ 1 150.0 million.

Annex to the press release about the unaudited financial results for H1 2011

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 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 H1 2011 and EBITDA for H1 of 2010 (Thousands of US dollars)


H1 2011

H1 2010

Net income

243 981

(13 481)


Profit tax
Interest income

Interest costs




66 160

(12 937)


(1 162)



63 606

78 680


48 827

54 364





(Gain) / loss from associates


1 165

Foreign exchange (gain) loss

arising as a result of financial activities

(84 237)

29 823

Adjusted EBITDA

336 843

136 908

[1] Net debt is calculated as the sum of liabilities of the Company for credit, loans and finance leases less cash and cash equivalents.

[2]     For the purposes of this indicator the annual EBITDA is equal to the adjusted EBITDA (by doubling) for the six months of 2011