URALCHEM HOLDING P.L.C. Reports IFRS Financial Results for the Year 2012

    MOSCOW, RUSSIA, March 15, 2013 /24-7PressRelease/ -- - Revenue increased to US $ 2,423 million, compared to US $ 2,080 million in 2011.
- Operating profit increased to US $ 734 million, compared with US $ 659 million in 2011.
- Adjusted EBITDA grew to US $ 839 million, compared to US $ 750 million in 2011.
- Net profit amounted to US $ 665 million, compared with US $ 445 million in 2011.

URALCHEM HOLDING P.L.C. (hereinafter URALCHEM Holding or the Company), a Cypriot holding company of the URALCHEM Group (hereinafter the Group), one of the largest producers of nitrogen and phosphate fertilizers in Russia, published its audited IFRS Financial Statements for the year 2012.

Key Financial Figures of the Group for 2012 and 2011 (US $ million)

2012 2011 Increase
Revenue 2,423 2,080 16%
Gross profit 1,400 1,212 16%
Gross profit margin 58% 58% -
Operating profit 734 659 11%
Operating profit margin 30% 32% -6%
Net profit 665 445 49%
Net profit margin 27% 21% 29%
Adjusted EBITDA 839 750 12%
Adjusted EBITDA margin 35% 36% -3%
Cash generated from operating activities 669 523 28%

Dmitry Konyaev, CEO of URALCHEM, OJSC (a Russian holding company of the Group), commented on the 2012 results, "Thanks to the programmes for the modernization of production facilities, which we have successfully implemented in recent years, as well as our efforts to improve the management of the company, the year 2012 was a success for URALCHEM Holding. During the year, we maintained an optimal balance of production, oriented towards current demand, which allowed us to be responsive to the needs of the market. These factors enabled the company to show good operational and financial performance over the past year."

Financial Results

Revenue for the year 2012 grew to US $ 2,423 million, compared to US $ 2,080 million in 2011. Operating profit amounted to US $ 734 million, or 30% of the revenue, compared with the operating profit of US $ 659 million, or 32% of the revenue in 2011. Net profit for the year 2012 amounted to US $ 665, compared to US $ 445 million in 2011.

During the year 2012, adjusted EBITDA reached US $839 million, compared to US $750 million the year before, a rise of 12%. Adjusted EBITDA margin for the year 2012 comprised 35% of the revenue compared with 36% of the revenue for the year 2011.

Markets

After the fall of the price of ammonia in the first quarter due to lower demand from industrial consumers, prices started to recover in late March and early April. This recovery occurred due to the delayed launch of new facilities and close-down repairs at a number of major enterprises in the Middle East, as well as restrictions on the supply of gas in Trinidad. The same factors determined growth in prices during the second and third quarters. In the fourth quarter, there was a decline in prices associated with the reduction in demand from the industrial consumers in the US, Asia, and North Africa. Over the year, average prices for ammonia on the basis of FOB Yuzhny port grew by 5.2% compared to the same period in 2011.

The urea market remained relatively stable in the first half of the first quarter. However, a sharp rise in prices began later, due to high demand in the United States, backed by demand in Latin America and India. In the second half of the second quarter, prices fell due to the end of seasonal demand in the Northern Hemisphere. During the third quarter, prices were relatively stable, with a tendency to growth towards the end of the quarter, due to increased demand in major markets, which coincided with the closure of a number of CIS and the Middle East facilities for repairs. In the fourth quarter, prices fell due to low buying activity. Overall, in the second half of the year the market was under pressure from massive Chinese exports. As a result, the average price of prilled urea on the basis of FOB Yuzhny port decreased by 3.5% compared to 2011.

The prices of ammonium nitrate in 2012 basically followed the dynamics of the urea price. The price increase in the first quarter was driven by demand in the domestic market of the CIS. Until the middle of the second quarter, prices grew mainly due to the support from price of urea. From the middle of the second quarter, prices fell under the influence of the seasonal decrease in demand and also the pressure of prices for urea. In the third quarter, prices were relatively stable. Near the end of the quarter there was a strong growth in prices due to the lack of available products as a result of a number of enterprises switching to the production of commercial ammonia, as well as due to increased demand in the domestic market of the CIS. Falling prices in the first half of the fourth quarter is associated with pressure from the price of urea. From the middle of the quarter, there was a recovery in prices for ammonium nitrate in the ports of the CIS because of redistribution of the product to the domestic market, as well as switching of production to the manufacture of ammonia. Overall for the year 2012, there was a 2% decline in the prices of ammonium nitrate in the ports of CIS compared to the average price in 2011.

During the first quarter, the price of phosphate fertilizers slightly decreased due to the extremely low market activity. In the second quarter, the signing of the Indian contracts stabilized prices. During the quarter, the market showed a moderate recovery due to demand in Latin America and a number of "niche" markets. The third quarter was characterized by stable prices and low market activity. By the end of the quarter there was a tendency to a slight decrease in prices due to lack of demand in the South Asian markets and the purchasing tactics used by Latin American buyers based on current needs. In the fourth quarter, the downward trend in prices continued. The main reason for the decline in prices remained a lack of demand from South Asia, the low demand activity in Latin America, as well as increasing export supply from the US due to the end of the phosphate season. In 2012 the price of phosphate fertilizers in the CIS ports decreased by more than 12% compared to the average price in 2011.

Sales

Against the background of steady high demand for the Group's fertilizers in Russia and abroad, the sales in 2012 rose by 18% compared to 2011, amounting to a total of 5,796 thousand tons. Sales of urea increased by 128%, sales of commercial ammonia grew by 50%.

Sales of Commercial Products of URALCHEM Group in 2012-2011 (thousands of tons)

Name of Product 2012 2011 Increase
Ammonium nitrate and its derivatives 2,043 2,169 -6%
Urea 1,188 521 128%
Ammonia 673 449 50%
Phosphate fertilizers 508 543 -6%
Complex fertilizers 587 584 1%
Other chemicals, including ammonium nitrate for industrial use
797
654 22%
Total 5,796 4,920 18%

Financial Situation

Due to the increase in revenue, cash generated from operating activities amounted to US $669 million for the year 2012, compared to US $523 million the year before.

On 31 December 2012, the Company's net debt amounted to US $830 million compared to US $931 million at the end of the previous year. The weighted average interest rate in the loan portfolio of the Group for the year 2012 amounted to 5.2% annually compared to 5.9% annually for the year 2011.

URALCHEM HOLDING P.L.C. is a holding company of the URALCHEM Group, which includes four fertilizer manufacturing facilities in Russia. URALCHEM Group is one of the largest producers of nitrogen and phosphate fertilizers in Russia and the CIS with production capacities of over 2.5 million tons of ammonium nitrate, 2.8 million tons of ammonia, 0.8 million tons of MAP and DAP, 0.8 million tons of complex fertilizers and 1.2 million tons of urea per year. URALCHEM Group is the second largest ammonium nitrate producer in the world and number one in Russia, the second largest producer of nitrogen fertilizers in Russia. URALCHEM Group's key production assets include Azot Branch of URALCHEM, OJSC in Berezniki, Perm Region; OJSC Minudobrenia, Perm; MFP Kirovo-Chepetsk Chemical Works, OJSC Branch in Kirovo-Chepetsk, Kirov region; Voskresensk Mineral Fertilizers, OJSC in Voskresensk, Moscow region.

Website: http://www.uralchem.com

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