Acron Group’s Commercial Output Up 1% in Q1 2020

22 April 2020

Acron Group’s Commercial Output Up 1% in Q1 2020

Group’s consolidated output (including operating results for Acron, Dorogobuzh and North-Western Phosphorous Company)

Note: Commercial output is output less in-house consumption.

Comments from Chairman of Acron’s Board of Directors Alexander Popov:

"In the first quarter of 2020, Acron Group increased output of its main commercial products to a record high of 1,948,000 tonnes, up 1% year-on-year.

Ammonia output decreased 1% to 677,000 tonnes, while its processing into finished products increased 7% and set a new record of 634,000 tonnes.

"Because our operations are flexible, we adjusted the final product structure to increase our output of premium products. In the reporting quarter, prices for UAN liquid fertiliser were the weakest among all nitrogen fertilisers, so we focused on manufacturing technical-grade AN, NPK, and industrial-purpose urea. As a result, mineral fertiliser output decreased 3%, while output of commercial products surged 19%”.

Market Trends

In Q1 2020, global urea prices recovered after a setback in the second half of 2019. Baltic prices, which sank to USD 210 in late 2019, rose to USD 230 towards the end of Q1, driven by strong demand from countries in the northern hemisphere, in particular the United States, in advance of the sowing season, as well as by decreased Chinese exports due to logistics issues caused by the Covid-19 outbreak. In April, India renewed active purchases of urea, and the United States is maintaining strong demand. However, between May and October, the nitrogen fertiliser market usually faces low-season demand which prevents prices from growing further. In addition, such factors as lower global gas prices and weaker currencies in developing countries also put pressure on the nitrogen fertiliser market.
Supported by recovering urea prices and a strong Russian market, AN prices also regained momentum in Q1 2020, while UAN prices continued to spiral down. NPK prices remained relatively stable amid higher prices for nitrogen and phosphate fertilisers and lower prices for potash fertilisers. However, since NPK prices declined in the previous quarter, average prices in Q1 2020 were lower compared to Q4 2019.
Currently, the Covid-19 pandemic has had a minor impact on the mineral fertiliser industry in terms of demand and supply, since food security is among the top priorities of governments worldwide. At the same time, the industry is facing certain logistics challenges due to new restrictions, but these issues can be dealt with because of the sector’s priority status.
Due to lockdown measures in some countries, consumers of our industrial products are facing a shortage of manpower and production interruption or curtailment. For instance, demand for industrial-purpose urea and AN has fallen noticeably, but at this point it is not significant and does not affect the Group’s capacity utilisation.
The slump in oil prices this March and April could have a detrimental effect on fertiliser consumption in the biofuel segment.

Average Indicative Prices, USD/t, FOB Baltic/Black Sea

Media Contacts:

Sergey Dorofeev
Anastasia Gromova
Tatiana Smirnova
Public Relations
Phone: +7 (495) 777-08-65 (ext. 5196)

Investor Contacts:

Ilya Popov
Investor Relations
Phone: +7 (495) 745-77-45 (ext. 5252)

Background Information

Acron Group is a leading vertically integrated mineral fertiliser producer in Russia and globally, with chemical production facilities in Veliky Novgorod (Acron) and the Smolensk region (Dorogobuzh). The Group owns and operates a phosphate mine in Murmansk region (North-Western Phosphorous Company, NWPC) and is implementing a potash development project in Perm Krai (Verkhnekamsk Potash Company, VPC). It owns transportation and logistics infrastructure, including three Baltic port terminals and distribution networks in Russia and China. Acron’s subsidiary, North Atlantic Potash Inc. (NAP), holds mining licences for 11 parcels of the potassium salt deposit at Prairie Evaporite, Saskatchewan, Canada. Acron also holds a minority stake (19.8%) in Polish Grupa Azoty, one of the largest chemical producers in Europe.

In 2019, the Group sold 7.6 million tonnes of various products to 78 countries, with Russia, Brazil, Europe and the United States as key markets.

In 2019, the Group posted consolidated IFRS revenue of RUB 114,835 million (USD 1,774 million) and net profit of RUB 24,786 million (USD 383 million). Acron’s shares are on the Level 1 quotation list of the Moscow Exchange and its global depositary receipts are traded at the London Stock Exchange (ticker AKRN). Acron employs over 11,000 people.

For more information about Acron Group, please visit www.acron.ru/en.