URALCHEM HOLDING P.L.C. Reports The First Half Of Year 2011 Unaudited IFRS Financial Results

    MOSCOW, RUSSIA, August 12, 2011 /24-7PressRelease/ -- - 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

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, %
Revenue 1 035,5 663,5 56,1%
Gross profit 576,7 302,6 90,6%
Gross profit margin 55,7% 45,6% 10,1%
Operating profit 288,0 82,5 249,1%
Operating profit margin 27,8% 12,4% 15,4%
Net profit (net loss) 244,0 (13,5) -
Net profit margin 23,6% - -
Adjusted EBITDA 336,8 136,9 146,0%
Adjusted EBITDA margin 32,5% 20,6% 11,9%
Cash generated from operating activities 193,5 45,1 329,0%

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 / EBITDA 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.

Markets

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.

Sales

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 4,4%
NPK fertilisers 319 256 24,7%
Phosphate fertilisers 289 224 29,2%
Urea 275 265 3,7%
Ammonia 219 239 -8,4%
Other chemicals, including porous and waterproof ammonium nitrate 198 168 18,3%
Total 2 609 2 405 8,5%

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.

URALCHEM HOLDING P.L.C. is a holding company of the URALCHEM Group, which includes three fertilizer manufacturing facilities in Russia. URALCHEM is one of the largest producers of nitrogen and phosphate fertilisers in Russia and the CIS with production capacities of over 2.5 million tonnes of ammonium nitrate, 2.2 million tonnes of ammonia, 0.8 million tonnes of MAP and DAP, 0.8 million tonnes of complex fertilisers and 0.5 million tonnes of urea. URALCHEM is the second largest ammonium nitrate producer in the world and number one in Russia. URALCHEM's key production assets include Azot Branch of URALCHEM, OJSC in Berezniki, Perm Region; MFP Kirovo-Chepetsk Chemical Works, OJSC Branch in Kirovo-Chepetsk, Kirov region; Voskresensk Mineral Fertilisers, OJSC in Voskresensk, Moscow region.

Website: http://www.uralchem.ru

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