PHOSAGRO NDR presentation
December, 2014
Disclaimer
These materials have been prepared by OJSC PhosAgro (PhosAgro) solely for your information and may not be copied, reproduced, retransmitted or further distributed, directly or indirectly, by any recipient to any other person or published, in whole or in part, for any purpose or under any circumstances.
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These materials may contain projections and other forward-looking statements regarding future events or the future financial performance of PhosAgro. You can identify forward-looking statements by terms such as "expect," "believe," "estimate," "intend," "will," "could," "may" or "might", or other similar expressions. PhosAgro cautions you that these statements are only statements regarding PhosAgro's intentions, beliefs or current expectations concerning, among other things, its results of operations, financial condition, liquidity, prospects, growth, strategies and the fertilizer and mining industry and are based on numerous assumptions and accordingly actual events or results may differ materially. PhosAgro will not update these statements to reflect events and circumstances occurring after the date hereof. Factors that could cause the actual results to differ materially from those contained in projections or forward- looking statements of PhosAgro may include, among others, general economic and competitive environment conditions in the markets in which PhosAgro operates, market change in the fertilizer and mining industries, as well as many other risks affecting PhosAgro and its operations. Past performance should not be taken as an indication or guarantee of future results, and no representation or warranty, express or implied, is made regarding future performance.
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By accepting a copy of these materials, you agree to be bound by the foregoing limitations.
2
PhosAgro and the global fertilizer industry
3
PhosAgro at a glance
World class integrated phosphate producer
- #1 global producer of high-grade phosphate rock
- #3 global DAP/MAP producer(1)
- Overall fertilizer capacity of 6.4 mln t
Leading global phosphate rock producers (by production)
2013, mln t, excluding Chinese producers | |
26.4 | #1 producer of high-grade |
19 | phosphate rock (>35.7% P2O5) |
Large
high quality apatite-nepheline resources
Self-sufficiency in key feedstocks provides for low costs
Flexible production and sales
Strong financial performance
- 2.05 bln t of ore resources(2) (over 75 years of production)
- Al2O3 resource of 283 mln t
- Substantial resources of rare earth oxides (41% of Russian resources (3))
- 100% self-sufficient in phosphate rock
- 72%-90%self-sufficient in ammonia(4)
- More than 40% self-sufficiency in electricity
- Flexible production lines
- Phosphate fertilizer capacities of 4.3 mln t, 1.85 mln t fully flexible into NPK production
- Leader in Russian fertilizer market growing twice faster than the world consumption
- Net back driven sales model with a global presence
- EBITDA of $752 mln in 2013
- 9M2014 EBITDA of $728 mln
- 9M2014 Net debt/EBITDA: 1.54x
8.3 | 7.7 | 7.7 | 5.3 | |||
3.1 | ||||||
OCP | Mosaic | Vale | PotashCorp | JPMC | Maaden |
Leading global DAP/MAP producers (by capacity)
11.9 | 2013, mln t, excluding Chinese producers | |||||||||
6.4 | ||||||||||
3.6 | 2.9 | 2.4 | 1.9 | |||||||
1.1 | ||||||||||
Mosaic* | OCP | Ma'aden | Eurochem | PotashCorp | Vale |
DAP price dynamics vs EBITDA margin, average DAP price change (%)
700 | ||||
600 | -14% | -18% | +7% | |
500 | ||||
400 | ||||
300 | 35% | 33% | 23% | 30% |
200 | ||||
100 | ||||
2011 | 2012 | 2013 | 9M2014 | |
EBITDA margin, % (RHS) | ||||
DAP, $/t, FOB, TAMPA… |
1
Note: (1) Excluding Chinese producers
(2) PhosAgro, IMC as of June 2011
(3) Russian Academy of Science
(4) self -sufficiency depends on the composition of the products produced by PhosAgro Source: IFA, CRU, companies data, PhosAgro
Source: Argus-FMB, CRU, IFA, companies' data, PhosAgro
4
2013 MAP/DAP production vs consumption, global trade in million tonnes of P2O5
World MAP/DAP demand: 27.8 mn t of P2O5
World MAP/DAP trade:
1.8 0.7
9.9 mn t of P2O5
3 | 0.7 | 2.0 |
2
3.4 | 1.0 |
5.3 | 4 |
3.7 |
0.3 | 2.2 | 6 |
1
8 | 12.6 | ||
5 | 7 | 10.8 | |
0.6 | 1.4 | ||
4.3 |
1 | Latin America | 4 | Europe | 7 | South Asia |
2 | North America | 5 | Middle East | 8 | East Asia |
3 | Russia & CIS | 6 | North Africa |
2.1 |
Production
Consumption
Source: IFA, CRU | 5 |
2013 MAP/DAP regional balances of P2O5, mn t
Consumption | Production | Export |
Import
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
Others | ||
1% | North Africa | 8% |
2% | ||
Middle East | 5% | |
3% | Russia & CIS | |
6% | EU | 7% |
Latin America | 3% | |
12% | 4% | |
13% | North America | 19% |
16% | South Asia | 7% |
45%
39%
East Asia
19%
11%
14%
4%
3%
23%
23%
Others
North Africa
Middle East
Russia & CIS
EU
Latin America
North America
East Asia
Others | |
4% | Middle East |
2% | Russia & CIS |
15% | EU |
27% | Latin America |
6% | North America |
23% | South Asia |
4% | East Asia |
Consumption | Production | Export |
Source: CRU | 6 |
Import
High grain prices driven by market imbalances motivate farmers to use more fertilizers
1400
1200
$US/t | 1000 |
price, | |
basket | 800 |
cerealsand | 600 |
DAP | 400 |
200 | |
0 |
Cereals basket to DAP price spread
High correlation between cereals basket and
DAP prices
10 year correlation
1,400 R2=0.86
1,200
1,000
800
600
400
200
0 | 2008/09 |
Financial Crisis | |
0 200 400 600
New Big Capacities:
- China +5200
- India +1700
- Australia +980
- Morocco +740
Jul-14
Jan-14
Jul-13
Jan-13
Jul-12
Jan-12
Jul-11
Jan-11
Jul-10
Jan-10
Jul-09
Jan-09
Jul-08
Jan-08
Jul-07
Jan-07
Jul-06
Jan-06
Jul-05
Jan-05
Jul-04
Jan-04
Jul-03
Jan-03
Jul-02
Jan-02
Jul-01
Jan-01
Jul-00
Jan-00
Jul-99
Jan-99
250
200 | basket price,% |
150 | |
100 | relative to |
spread | |
50 | DAP |
- Low DAP import in India
- Potash BPC break up
0
DAP, $/t, FOB Tampa | Grain basket price | Spread relative to basket price, % (rhs) | ||
Source: Fertecon, Argus-FMB, FAO, USDA, IFA
7
China: key figures(1)
China is the world's largest MAP/DAP consumer | China is a farming giant in absolute terms | |||||||||||||||||||||||||||||||
and producer | Country | China | India | Brazil Russia | USA | |||||||||||||||||||||||||||
40% | 25,000 | |||||||||||||||||||||||||||||||
38% | 38% | |||||||||||||||||||||||||||||||
Employment in agriculture, % of total | 35 | 47 | 15 | 10 | 2 | |||||||||||||||||||||||||||
38% | ||||||||||||||||||||||||||||||||
35% | ||||||||||||||||||||||||||||||||
Rural population, mn | 636 | 852 | 30 | 38 | 59 | |||||||||||||||||||||||||||
36% | 33% | 20,000 | ||||||||||||||||||||||||||||||
34% | 19,124 | Rural population, % of total | 47% | 68% | 15% | 26% | 19% | |||||||||||||||||||||||||
18,075 | ||||||||||||||||||||||||||||||||
Total population, mn | 1,375 | 1,241 | 197 | 142 | 312 | |||||||||||||||||||||||||||
32% | 15,199 | 16,696 | 15,000 | |||||||||||||||||||||||||||||
30% | Farm Holdings, mn | 201 | 138 | 5 | 23 | 2.2 | ||||||||||||||||||||||||||
28% | 10,000 | |||||||||||||||||||||||||||||||
Value added in agriculture, % of GDP | 10 | 18 | 6 | 4 | < 1 | |||||||||||||||||||||||||||
26% | ||||||||||||||||||||||||||||||||
Arable land per capita, ha | 0.1 | 0.1 | 0.4 | 0.8 | 0.5 | |||||||||||||||||||||||||||
24% | 5,000 | |||||||||||||||||||||||||||||||
22% | ||||||||||||||||||||||||||||||||
Water resources per capita, '000 m3/cap | 2.1 | 1.6 | 42.2 | 31.5 | 9.9 | |||||||||||||||||||||||||||
20% | 0 | |||||||||||||||||||||||||||||||
2010 | 2011 | 2012 | 2013 | |||||||||||||||||||||||||||||
P2O5 consumption, mn t | 16.7 | 6.7 | 4.3 | 0.6 | 4.0 | |||||||||||||||||||||||||||
China MAP/DAP capacity, kt of P2O5 | ||||||||||||||||||||||||||||||||
P2O5 consumption, % of world total | 36% | 15% | 9% | 1% | 9% | |||||||||||||||||||||||||||
% of world MAP/DAP consumption | ||||||||||||||||||||||||||||||||
Capacity closures outpace new capacity additions | Comment | |||||||||||||||||||||||||||||||
10,000 | ||||||||||||||||||||||||||||||||
| China accounted for 6% of world phosphate rock resources and 36% of world | |||||||||||||||||||||||||||||||
P2O5 consumption | ||||||||||||||||||||||||||||||||
5,000 | Chinese population grows with 15 mn babies born annually and net population | |||||||||||||||||||||||||||||||
growth of 6 mn people (equivalent to the population of Belgium). Belgium | ||||||||||||||||||||||||||||||||
0 | consumes 3,690 kcal/capita/day and GDP is $US 45 k per capita, compared to | |||||||||||||||||||||||||||||||
2,990 kcal/capita/day and $US 6 k in China | ||||||||||||||||||||||||||||||||
1998-2002 | 2003-2007 | 2008-20122013F-2017F | ||||||||||||||||||||||||||||||
-5,000 | Chinese government focus on food security appears in solid P2O5 capacity | |||||||||||||||||||||||||||||||
Capacity additions, kmt of P2O5 | growth, though it will continue at a much slower rate | |||||||||||||||||||||||||||||||
Source: World bank, IFA, FAO, CRU | 8 |
Note:(1) data provided for 2012, unless otherwise stated | |
China: a net P importer on the horizon
mn t
Economic growth will affect dietary patterns significantly
+3% | CAGR | ||||||||||
50 | +6% | ||||||||||
40 | +2% | ||||||||||
40 | 35 | ||||||||||
+1% | 33 | ||||||||||
28 | |||||||||||
30 | |||||||||||
20 | 21 | +5% | |||||||||
18 | |||||||||||
20 | 16 | ||||||||||
10 | 7 | 8 | |||||||||
0 | |||||||||||
Sugar | Fresh dairy | Vegetable | Poultry meat | Beef and | |||||||
products | oils | veal (cwe) | |||||||||
2013 | 2020 | ||||||||||
China will continue to increase food imports
100.0 | |
80.0 | CAGR: 13% |
60.0 | |
40.0 | |
20.0 | |
0.0 |
Soybeans import, mln t | Maize import, mln t | ||
Rice import, mln t | Wheat import, mln t | ||
Growing P intakes of imported food | ..lead to potential P net imports | |||||||||||||||||||
4000 | 2500 | |||||||||||||||||||
3500 | 2000 | |||||||||||||||||||
3000 | ||||||||||||||||||||
2500 | 1500 | |||||||||||||||||||
2000 | ||||||||||||||||||||
1500 | 1000 | |||||||||||||||||||
1000 | 500 | |||||||||||||||||||
500 | ||||||||||||||||||||
0 | 0 | |||||||||||||||||||
2008 | 2009 | 2010 | 2011 | 2012 | 2013 | 2014 | 2015 | 2016 | 2017 | 2018 | ||||||||||
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 | ||||||||||||||||||||
China fertilizers exports*, kt of P2O5 | China agro imports**, kt of P2O5 | China P-balance, kt of P2O5 | ||||||||||||||||||
Note: (*) CRU data, (**) calculated as USDA/IGC data about ag imports multiplied on P2O5 removal rate in kg P2O5 per t of primary crops: wheat - 11.3; rice - 6.4; corn - 6.7; barley - 7;
soybean - 17; palm oil - 2; rapeseed - 9 | 9 |
Source: FAO, CRU | |
China: environmental issues coming to the forefront
Chinese ag resources deteriorate with limited arable land
130
120
110
100
1997 | 2002 | 2007 | 2012 |
Arable land, mn ha
Chinese farmers use high-intensity agricultural techniques
High | All pollutants | For |
from pesticides | ||
intensity | 30 | |
and fertilizers | ||
agriculture | years | |
end up in soil | ||
- Water scarcity, contamination and pollution
- Fertilizer burn
- Soil pollution and cadmium contamination
... and water availability decreases
2.3
2.2
2.1
2
1997 | 2002 | 2007 | 2012 |
Fresh water availability per capita, 1000 m³
Tainted rice was discovered in several Chinese provinces
Polluted
Arsenic | Cadmium | Lead rice | ||
rice (As) | rice (Cd) | (Pb) | ||
Source: FAO, Global Times | 10 |
Chinese exports go to India
China exports a significant part of its p-based fertilizers to India ... and India imports correspond with China's "export window"
DAP/MAP exports, mn t of P2O5 | 1600 | 120 | |||||||||||||||||
2.3 | 2.2 | 2.1 | |||||||||||||||||
39% | 1.6 | 1400 | |||||||||||||||||
46% | 100 | ||||||||||||||||||
44% | |||||||||||||||||||
15% | |||||||||||||||||||
5% | 4% | 5% | 1200 | ||||||||||||||||
10% | |||||||||||||||||||
80% | 80 | ||||||||||||||||||
50% | 57% | 46% | 1000 | ||||||||||||||||
% | |||||||||||||||||||
2010 | 2011 | 2012 | 2013 | 800 | 60 | DAP, | |||||||||||||
kt | for | ||||||||||||||||||
India | Brazil | Others | imports,DAP | Exportduty | |||||||||||||||
600 | |||||||||||||||||||
Half of exports from China and Ma'aden go to India | 40 | ||||||||||||||||||
DAP/MAP exports in 2013, mn t of P2O5 | 400 | ||||||||||||||||||
20 | |||||||||||||||||||
0.9 | 2.1 | 200 | |||||||||||||||||
0.4 | 1.7 | 1.0 | |||||||||||||||||
0 | May-10 | May-11 | Aug-11Nov-11Feb-12May-12Aug-12Nov-12Feb-13May-13Aug-13 | May-14 | 0 | ||||||||||||||
x.x | Import volumes, mn t of P2O5 | Feb-10 | Aug-10 | Nov-10 | Feb-11 | Nov-13 | Feb-14 | Aug-14 | Nov-14 | ||||||||||
x.x | Export volumes, mn t of P2O5 | ||||||||||||||||||
India DAP imports, kt (lhs) | |||||||||||||||||||
China export duty, % (rhs) | |
x.x | Trade volumes, mn t of P2O5 |
Source: CRU, FAI, IFA
11
India: key figures(1)
India is the second largest MAP/DAP consumer | Rural population and ag production dominate in India |
and the world largest DAP importer | ||||||
50% | 50% | 48% | 6,000 | |||
40% | 5,000 | |||||
40% | ||||||
5,320 | 5,074 | |||||
4,548 | 4,000 | |||||
26% | 28% | |||||
30% | ||||||
3,444 | 3,585 | 3,000 | ||||
20% | ||||||
2,000 | ||||||
10% | 1,000 | |||||
0% | 0 | |||||
2010 | 2011 | 2012 | 2013 | 2014E |
India MAP/DAP consumption, mn t of P2O5 % of world total DAP imports, P2O5
Country | India China | Brazil Russia | USA | ||
Employment in agriculture, % of total | 47 | 35 | 15 | 10 | 2 |
Rural population, mn | 852 | 636 | 30 | 38 | 59 |
Rural population, % of total | 68% | 47% | 15% | 26% | 19% |
Total population, mn | 1,241 | 1,375 | 197 | 142 | 312 |
Farm Holdings, mn | 138 | 201 | 5 | 23 | 2.2 |
Value added in agriculture, % of GDP | 18 | 10 | 6 | 4 | < 1 |
Arable land per capita, ha | 0.1 | 0.1 | 0.4 | 0.8 | 0.5 |
Water resources per capita, '000 m3/cap | 1.6 | 2.1 | 42.2 | 31.5 | 9.9 |
P2O5 consumption, mn t | 6.7 | 16.7 | 4.3 | 0.6 | 4.0 |
P2O5 consumption, % of world total | 15% | 36% | 9% | 1% | 9% |
Comment
- India accounted for 0% of world phosphate rock resources and 15% of world P2O5 consumption
- 22 mn babies are born annually in India; this is the equivalent of the entire population of Australia. Australia consumes 3,220 kcal/capita/day and GDP is $US 67 k per capita compared to 2,360 kcal/capita/day and GDP of $US 1.5 k in India
- Second largest population in combination with scarcity in phosphate resource make India a major importer of phosphates
- Large number of farm holdings implies their relative small size: limited access to modern farming and agronomic technologies result in imbalanced fertilizer application
Source: World bank, IFA, FAO, CRU, USDA | 12 |
Note:(1) data provided for 2012, unless otherwise stated | |
India's subsidy policy: favouring urea leads to unbalanced fertilization
India introduced a new subsidy system in 2010 | …which lead to increased urea consumption |
450 | 395 | 415 | 433 | ||||
400 | 378 | ||||||
365 | |||||||
354 | |||||||
350 | |||||||
364 | 306 | 294 | |||||
300 | |||||||
246 | 243 | 247 | |||||
bn | 250 | ||||||
Rs | 200 | ||||||
150 | |||||||
100 | |||||||
50 | |||||||
0 | |||||||
2009/10 | 2010/11 | 2011/12 | 2012/13 | 2013/14 | 2014/15 |
Subsidies for urea, Rs bn | Subsidies for P&K fertilizers, Rs bn | |
at expense of DAP consumption | Utilisation rate of local DAP production capacities |
12.0 | 10.9 | 10.2 | was below 50% in 2013 vs. > 95% for urea | |||||
t | 10.5 | 8.9 | 35.0 | |||||
DAP consumption, mn | 10.0 | Urea consumption, mn t | ||||||
32.1 | ||||||||
30.0 | ||||||||
30.4 | ||||||||
8.0 | 29.6 | 30.2 | ||||||
28.1 | 25.0 | |||||||
26.7 | ||||||||
7.5 | ||||||||
6.0 | 7.3 | 20.0 | ||||||
4.0 | 15.0 | |||||||
10.0 | ||||||||
2.0 | ||||||||
5.0 | ||||||||
0.0 | 0.0 | |||||||
2009/10 | 2010/11 | 2011/12 | 2012/13 | 2013/14 2014/15E | ||||
Urea consumption in India, mn t (rhs) |
DAP consumption in India, mn t (lhs)
P2O5 : N ratios, wheat yields | P O | 5 | : N | ratios, rice yields | |||||||
2 | |||||||||||
Normal P2O5 :N ratio | 2700 | Normal P2O5 | :N ratio | ||||||||
55 | |||||||||||
50 | 2500 | 50 | |||||||||
kg/ha | 3000 | %ratio, | kg/ha | 2300 | 45 | ratio,:N% | |||||
1998 | 40 | ||||||||||
40 | 1998 | ||||||||||
Yield,Wheat | Yield,Rice | 2100 | |||||||||
P | 35 | P | |||||||||
:N | 1900 | ||||||||||
2500 | 30 | 5 | |||||||||
5 | O | ||||||||||
30 O | 1700 | 25 | 2 | ||||||||
2 | |||||||||||
2000 | 20 | 1500 | 20 | ||||||||
1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 | |||||||||||
El Nino | Wheat Yield (3 year lag) (lhs) | El Nino | Rice Yield (3 year lag) (lhs) | ||||||||
Normal P2O5/N ratio (rhs) | Current P2O5/N ratio (rhs) | Current P2O5/N ratio (rhs) | Normal P2O5/N ratio (rhs) | ||||||||
Source: IGC, CRU, FAI, USDA, PhosAgro | 13 | ||||||||||
India will remain a primary P2O5 importer in the long term
Population growth is a key driver for ag production | with continuing economic growth |
2.0 | 300 | twice faster than world average | |||||||||||||||
8.0 | |||||||||||||||||
6.7 | |||||||||||||||||
1.5 | 250 | 6.0 | 6.2 | 6.5 | |||||||||||||
200 | 6.0 | 5.3 | |||||||||||||||
4.9 | |||||||||||||||||
t | |||||||||||||||||
% | % | 4.1 | |||||||||||||||
1.0 | 150 | mn | |||||||||||||||
4.0 | |||||||||||||||||
0.5 | 100 | 1.9 | 2.5 | 2.5 | 2.5 | 2.5 | 2.5 | 2.5 | |||||||||
50 | 2.0 | ||||||||||||||||
0.0 | 0 | 0.0 | |||||||||||||||
2001 | 2003 | 2005 | 2007 | 2009 | 2011 | 2013 | |||||||||||
2014 | 2015 | 2016 | 2017 | 2018 | 2019 | 2020 | |||||||||||
World population growth rates, % | |||||||||||||||||
World GDP per capita growth rate, % | |||||||||||||||||
India population growth rates, % | |||||||||||||||||
Ag production in India, mn t | India GDP per capita growth rate, % |
India food consumption is still below average
2006-2008 | USA | ||||||
kcal/capita/day | 3,500 | Russia | EU | ||||
t | |||||||
300 | |||||||
China | Brazil | ||||||
3,000 | |||||||
200 | |||||||
consumption, | 2,500 | World median | mn | ||||
India | |||||||
100 | |||||||
2,000 | |||||||
Food | 0 | ||||||
1,500 | |||||||
0 | 10,000 | 20,000 | 30,000 | 40,000 | 50,000 |
GDP per capita, $US | |
Source: FAO, CRU, USDA, FAO-OECD outlook | 14 |
which leads to increase food consumption
+2% | +6% | CAGR | ||
251 | ||||
222 | 215 | |||
166 | ||||
+1% | +1% | +6% | ||
26 31 | 19 | 25 | 3 | 4 |
Cereals | Sugar | Fresh dairy Vegetable | Poultry | |||||
products | oils | meat | ||||||
2013 | 2020 | |||||||
Brazil: key figures(1)
Brazil is the largest ag exporter among developing countries Brazil is a rising star of world ag production and P consumption
80 | ||||
60 | ||||
40 | ||||
20 | ||||
0 | ||||
-20 | 2005 | 2007 | 2009 | 2011 |
-40 | ||||
-60 | ||||
-80 | Ag | products net exports* from Brazil, $US bn | ||
Ag products net exports from China, $US bn | ||||
Ag | products net exports from India, $US bn |
Country | Brazil | China | India | Russia | USA |
Employment in agriculture, % of total | 15 | 35 | 47 | 10 | 2 |
Rural population, mn | 30 | 636 | 852 | 38 | 59 |
Rural population, % of total | 15% | 47% | 68% | 26% | 19% |
Total population, mn | 197 | 1,375 | 1,241 | 142 | 312 |
Farm Holdings, mn | 5 | 201 | 138 | 23 | 2.2 |
Value added in agriculture, % of GDP | 6 | 10 | 18 | 4 | < 1 |
Arable land per capita, ha | 0.4 | 0.1 | 0.1 | 0.8 | 0.5 |
Water resources per capita, '000 m3/cap | 42.2 | 2.1 | 1.6 | 31.5 | 9.9 |
P2O5 consumption, mn t | 4.3 | 16.7 | 6.7 | 0.4 | 4.0 |
P2O5 consumption, % of world total | 9% | 36% | 15% | 1% | 9% |
Growing P consumption is secured by imports | Comment | |
2,500 | +26% | +16% | CAGR | |
1,957 | 2,097 | 2,137 | ||
2,000 | ||||
1,633 | ||||
1,500 | 1,448 | 1,379 | 1,519 | |
1,171 1,073 | ||||
1,000 | 601 | |||
500 | ||||
0 | ||||
- Brazil accounted for 0.4% of world phosphate rock resources and 9% of world P2O5 consumption
- Agricultural exports are a key driver of Brazil ag production growth
2009 | 2010 | 2011 | 2012 | 2013 | |
MAP/DAP imports to Brazil, | kt of P2O5 | ||||
MAP/DAP consumption in Brazil, kt of P2O5 | |||||
Source: World bank, IFA, FAO, CRU | |||||
Note:(1) data provided for 2012, unless otherwise stated | 15 | ||||
(*) Net export | equals ag production exports less ag production imports |
Brazil is a top ag exporter among developing counties
Exports are a key driver for ag production growth | Soybeans drive ag production in Brazil |
50% | ||||
37% | 39% | |||
27% | 30% | |||
23% | ||||
17% | ||||
8% | 6% 7% | |||
Coffee | Soybeans | Sugar | Corn | Cotton |
% of world's production % of world's exports
mn ha
50 | |
40 | CAGR: 6% |
30
20
10
0
2000 | 2002 | 2004 | 2006 | 2008 | 2010 | 2012 |
Soybeans (harvested area), Ha mn
Corn (harvested area), Ha mn
Domestic food consumption is relatively high
2006-2008 | USA | ||
3,500 | |||
kcal/capita/day | Russia | EU | |
China | Brazil | ||
3,000 |
consumption,Food | 2,500 | World median |
India | ||
2,000 | ||
1,500 |
0 10,000 20,000 30,000 40,000 50,000
GDP per capita, $US
Source: USDA, CRU, FAO, FAO-OECD outlook
16
20
15
t | 10 |
mn | |
5 | |
0 |
Dietary changes are more important
CAGR | |||||||
+2% | +4% | +11% | |||||
16 | 15 | 16 | +11% | ||||
14 | |||||||
9 | 10 | +10% | |||||
7 | 8 | 7 | 8 | ||||
Sugar Fresh dairy | Vegetable | Poultry | Beef and | |||
products | oils | meat | veal (cwe) | |||
2013 | 2020 | |||||
Russia: key figures(1)
PhosAgro dominates domestic phosphate market | Russia has abundant ag resources | ||||||||||
Country | Russia China | India Brazil | USA | ||||||||
Murmansk | |||||||||||
Kirovsk | Employment in agriculture, % of total | 10 | 35 | 47 | 15 | 2 | |||||
Baltic | |||||||||||
sea | |||||||||||
Rural population, mn | 38 | 636 | 852 | 30 | 59 | ||||||
St. Petersburg | |||||||||||
Volkhov | Rural population, % of total | 26% | 47% | 68% | 15% | 19% | |||||
Total population, mn | 142 | 1,375 | 1,241 | 197 | 312 | ||||||
Cherepovets | Farm Holdings, mn | 23 | 201 | 138 | 5 | 2.2 | |||||
Moscow | |||||||||||
Value added in agriculture, % of GDP | 4 | 10 | 18 | 6 | < 1 | ||||||
Arable land per capita, ha | 0.8 | 0.1 | 0.1 | 0.4 | 0.5 | ||||||
Water resources per capita, '000 m3/cap | 31.5 | 2.1 | 1.6 | 42.2 | 9.9 | ||||||
Balakovo | |||||||||||
P2O5 consumption, mn t | 0.4 | 16.7 | 6.7 | 4.3 | 4.0 | ||||||
Novorossiysk | P2O5 consumption, % of world total | 1% | 36% | 15% | 9% | 9% | |||||
Comment
Black | Distribution hubs | Processing operations | Russia accounted for 2% of world phosphate rock resources | |||
sea | Export ports | Mining operations | and just 1% of world P2O5 consumption | |||
Distribution hubs opened in 2014 | ||||||
New branches opened in 2014 | | Ample resources provide a good base for ag production growth | ||||
Top 15 regions of NPK and MAP consumption |
Source: World bank, IFA, FAO, CRU | 17 |
Note:(1) data provided for 2012, unless otherwise stated | |
Russia: potential for significant ag production growth
Growing agriculture land use | ...and increased phosphate application rates | ... will result in higher yields |
2009-2012
Russia 45%
India62%
USA66%
Brazil76%
EU80%
China80%
2009-2012
Russia 10
India | 54 |
USA27
Brazil | 53 |
EU20
China
40kg
2009-2012
Russia2.0
India2.9
USA
Brazil
EU
75 China
6.6
4.2
5.0
5.7
4.4t
Major crops harvested area to arable land ratio, % | Phosphate application rate, kg P2O5/Ha | |
Source: FAO, Integer | 18 | |
Cereals yields, t/ha
Sales focus and Industry developments
2013 Primary phosphate(1) trade flows
World DAP/MAP trade: 21.3 mn t
PhosAgro(2)
3.3 | ||||
6.3 | ||||
3.2 | 22 | |||
35 | 20 | 42 | ||
35 | 16 | 5.0 | ||
3.2 | ||||
20 | 2.5 | 4.0 | 16 | |
45 | ||||
7.1 | 10 | 4.0 | ||
1.3 | 22 | |||
x.x | Import volumes, mn t | |||
x.x | Export volumes, mn t | |||
x.xx | Freight costs, $US | |||
Source: IFA, CRU, USITC, CFMW, PhosAgro estimate | 20 | |||
Note: (1) - DAP/MAP/NPK/NPKS |
(2) - PhosAgro sales volumes
P2O5 : No changes in regional deficits by 2020
mn t P2O5
Supply - demand balance
Oversupply regions | Deficit regions | |||||||||||
2013 | 2020 | 2013 | 2020 | |||||||||
North | South | |||||||||||
Africa | 4.0 | 5.2 | Africa | |||||||||
0.5 | 0.7 | 0.4 | 0.7 | 0.4 | ||||||||
+3.5 | +4.5 | 0.5 | -0.1 | -0.3 | ||||||||
Europe | 2.1 | ||||
3.1 | 2.2 | -0.9 | 3.3 | -1.2 | |
Latin | 7.4 | ||||
America | 6.2 | 2.6 | -3.6 | -4.9 | |
2.6 |
North | Oceania | ||||||||||
America | 4.9 | 7.2 | 4.9 | 7.1 | |||||||
1.3 | 1.4 | 1.0 | |||||||||
+2.4 | +2.3 | 0.7 | -0.6 | -0.4 | |||||||
Middle | South | ||||||||||
Asia | 8.4 | 9.8 | |||||||||
East | 0.8 | 3.8 | 1.0 | 5.2 | (incl. | 5.5 | -2.9 | 5.8 | -4.0 | ||
+3.0 | +4.2 | India) | |||||||||
12.0 | 19.0 | 13.3 | 19.6 | ||||||||
+7.0 | +6.3 | Southea | |||||||||
China | 2.0 | 1.0 | 2.4 | 1.2 | |||||||
st Asia | -1.0 | -1.2 | |||||||||
Demand | Capacities | Demand | Capacities | Demand | Capacities | Demand | Capacities |
Source: IFA; McKinsey demand model; work group analysis | 21 |
Key drivers of P2O5 demand growth in Latin America
Demand growth by country | CAGR '12-'20 | |||||
mn t | kt | Percent | ||||
7.5 | 654 | |||||
1.3% | ||||||
1.2 | 65.0 | |||||
65 or | ||||||
6.0 | 589 | +11% | ||||
0.7 | 0 | |||||
Other | 0.9 | 0.3 | ||||
Argentina | 0.6 | 348 | ||||
Mexico | 0.3 | 1.3% | ||||
35 or | 29 | |||||
313 | +11% | |||||
6 | ||||||
5.3 | ||||||
Brazil | 4.1 | 5,273 | ||||
1,124 or | 526 | 3.0% | ||||
+27% | ||||||
4,149 | 598 | |||||
2012E 2020F | 2012 App. rate | Area | 2020 | |||
Source: McKinsey Fertilizer Demand Model | 22 | |||||
Key drivers
- Main driver - increase in soybean area harvested
- Main driver - increase in area harvested for wheat
- Main driver - increase in area harvested for soybeans
- Secondary driver - increase in P2O5 application rate
Key drivers of P2O5 demand growth in Europe
Demand growth structure | Demand growth |
CAGR '12-'20 | Demand growth | CAGR '12-'20 |
mn t | ||||
3.1 | 3.1 | |||
Other | 1.2 | 1.1 | ||
Czech Republic | 0 | 0 | ||
Benelux | 0 | 0 | ||
0.2 | 0.2 | |||
Italy | ||||
0.2 | 0.2 | |||
United Kingdom | ||||
Germany | 0.3 | 0.3 | ||
Poland | 0.3 | 0.3 | ||
Spain | 0.4 | 0.4 | ||
France | 0.5 | 0.5 | ||
2012E | 2020F |
Source: McKinsey Fertilizer Demand Model
kt | ||
France | ||
499.3 | ||
495.4 | 8.5 | |
4.6 | ||
Poland | ||
336 | ||
0 | ||
1 | ||
335 | ||
United Kingdom | 195.6 | |
194.0 | 2.6 | |
1.0 | ||
2012 App. rate | Area | 2020 |
23 |
Percent | kt | Percent | ||||||||||||||||
Germany | ||||||||||||||||||
285.6 | ||||||||||||||||||
0.1% | ||||||||||||||||||
283.7 | 0.1% | |||||||||||||||||
3.3 | ||||||||||||||||||
1.4 | ||||||||||||||||||
Spain | ||||||||||||||||||
382 | ||||||||||||||||||
0.0% | 377 | 8 | 0.2% | |||||||||||||||
3 | ||||||||||||||||||
Italy | ||||||||||||||||||
171.0 | ||||||||||||||||||
0.1% | 2.0 | 0.1% | ||||||||||||||||
169.0 | ||||||||||||||||||
0 | ||||||||||||||||||
2012 App. rate | Area | 2020 |
Priorities: trade restrictions vs. health
Apatit | |
Sokli | 2.05 |
Siilinjärvi | |
Cadmium restrictions | billion tonnes of |
apatite-nepheline ore |
Urals
European | Maximum limits of cadmium |
countries grouped | in national fertilizers |
by allowable | containing more than 5% |
cadmium level | P2O5, mg/kg P2O5 |
Strict limits | 20 |
Medium limits | ~55 |
Mild limits | 90 |
Heavy metal content, mg/kg P2O5
Phophate | Cd | As | Pb |
rock | |||
Russia (Kola) | 0.05-0.09 | 0.2-0.3 | 0.6-0.8 |
South Africa | 0.2 | 6 | 35 |
USA | 11 | 12 | 12 |
Middle East | 9 | 6 | 4 |
Morocco | 30 | 11 | 7 |
Other N.Africa | 60 | 15 | 6 |
Source: European Council, National Fertilizer and Environmental Research Center, Tennessee Valley; TUV
24
New sales model to improve premium market access
Our new sales strategy
-
Set up local sales offices in São
Paulo and Brussels
Roadmap − sales office in São Paulo will cover Latin America markets
- sales office in Brussels will cover Northern and Eastern Europe and potentially Southern Europe
High probability of selling entire | |
market volume | |
Building a deep understanding of | |
end buyers and market tendencies | |
Rationale | Ability to promote PhosAgro |
products (without cadmium, | |
ammonium NPK)
- Necessity of finding and hiring local managers with a developed client base
New sale offices
Existing sale offices
Source: PhosAgro
Domestic sales platform
Brussel
São Paulo
Singapore
DAP/MAP | NP/NPK/NPS | Urea | ||||
Sales volumes, kt | 2013 | 2020 | 2013 | 2020 | 2013 | 2020 |
Latin America | 500 | +250 | 210 | +110 | 200 | +270 |
Northern and Eastern | 480 | -80 | 270 | +670 | 70 | +330 |
Europe | ||||||
25 |
PhosAgro became the #1 overall supplier of fertilizers to the Russian market in 2013, and continues to grow its market share
Fertilizers sales in Russia, 9M2014 kt
NPK | Ammonium nitrate | Potassium Chloride | |||
MAP/DAP | Urea | ||||
Market share
Percent
9M2014 | 2013 | 2012 |
PhosAgro
Eurochem
Uralchem
SDS-Group
Acron
Rossosh
Kuybishev
639 | 380 | 161 | 24 | 1 204 | ||||||||||||||||||
992 | ||||||||||||||||||||||
69 | 154 | 671 | 98 | |||||||||||||||||||
31 | 552 | 145 | 13 | 742 | ||||||||||||||||||
720 | ||||||||||||||||||||||
642 | 78 | |||||||||||||||||||||
204 | 304 | 70 | 578 | |||||||||||||||||||
155 196 351
282 39 321
22 | 18 | 15 |
18 | 17 | 17 |
13 | 12 | 16 |
13 | 14 | 14 |
10 | 15 | 13 |
6 | 6 | 8 |
6 | 7 | 6 |
Source: RAPU - Russian association of fertilizer producers
26
Recent industry developments
Morocco controls most of world phosphate ore reserves
Russia 2% Others 5%
USA 2%
Jordan 2%
Algeria 3%
Syria 3%
China 5%
Morocco
Iraq 8% and
Western
Sahara
70%
Net addition to phosphate rock production capacities (excl. China) of 14 mn t with 0.8% CAGR
RUSSIA +1 mn t
1.3 bln
CF sold its phos business to | FINLAND +0.5 mn t | ||||||||||||||||
Mosaicin 2013 | Mosaic and Ma'aden announced JV in 2013 | ||||||||||||||||
SYRIA +1.8 mn t | |||||||||||||||||
USA -10 mn t | |||||||||||||||||
JORDAN | +1.5 mn t | ||||||||||||||||
1.4 | MOROCCO +5.9 mn t | 1.5 | 1.8 | 3.7 | |||||||||||||
bln | bln | ||||||||||||||||
bln | bln | ||||||||||||||||
Missphos filed for bankruptcy in 2014 | 50 | CHINA +50 mn t | |||||||||||||||
bln | |||||||||||||||||
SAUDI ARABIA +5 mn t | VIETNAM +1.7 mn t | |
Potash Corp and OCP announced JV in 2014 |
PERU +3 mn t | BRAZIL +2.5 mn t | |
0.24 | 0.31 | |
bln | ||
bln | AUSTRALIA +1.2 mn t | |
- Greenfield | - Brownfield | - Reserves | 0.25 | |||
bln | ||||||
Source: CRU, USGS
27
Estimated MAP/DAP business cash cost curve $US/t FOB(1) Morocco
Weighted by capacity avg. cost : $418/t
Estimated with feedstock prices set forth below: Ammonia: US$ 655/t, CFR, Tampa
US$ 600-620/t, CFR, N.Africa
Sulphur: US$ 129/t, CFR, Tampa
US$ 150-165/t, CFR, N.Africa
DAP FOB Tampa: $455/t
Cash cost, $US/t
MAP/DAP Capacity, mn t
Source: PhosAgro estimates, CRU, Fertecon, Integer, Argus-FMB, PhosAgro
Note: (1) MAP/DAP business cash cost est. are based on feedstock prices in Q4 2014, on site's specific location relative to FOB Morocco and its product nutrient content relative to DAP
USD/RUB exchange rate of RUB 45 applied for calculation MAP/DAP business cash cost | 28 |
Strategy for fertilizer volume growth
Where we are in 2014
Where we are headed (2017-2020)
Phosphate rock
Total: 7.5 mn t
Total: 7.1 mn t
+25%
Overall 8.1 mn t
External 32% sales
Internal 68% consumption
Ammonia
kt
Current deficit
1,186 1,388
Overall 6.5 mn t
AN 0.5
UREA prill 1.0
SOP 0.1
STPP 0.1
MCP 0.2
MAP
DAP 2.6
NPS
APP
PKS 0.1
NPK 1.9
23%
77%
Total: 1,946 kt
plant | Excess for | |||
New | 760 | future growth | ||
Current deficit | ||||
capacity | Deficiency | |||
covered by the | ||||
Current | 1,186 | new ammonia | ||
capacity | ||||
Amm.sulph. 0.3
Ammonia 0.3
UREA gran 0.5MAP/DAP 0.5 NPK/NPS
AN 0.5
UREA prill 1.0
SOP 0.1 MCP STPP 0.10.2
MAP
DAP
NPS 2.6 APP
PKS 0.1
NPK
1.9
Capacity Consumption
Source: PhosAgro
Capacity
15
29
Financial
performance: Strong balance
sheet
Revenue, EBITDA, gross profit and net profit
Revenue
CAGR: 9% | 6,056 | ||||||||||||||||||||
4,692 | 4,953 | 5,338 | 4,694 | ||||||||||||||||||
4,499 | |||||||||||||||||||||
kt | |||||||||||||||||||||
3,542 | |||||||||||||||||||||
3,153 | 2,921 | ||||||||||||||||||||
3,712 | 2,316 | 1,886 | |||||||||||||||||||
3,420 | 3,387 | 3,283 | |||||||||||||||||||
215 | 190 | ||||||||||||||||||||
161 | 2,571 | 2,452 | |||||||||||||||||||
mn | 2,534 | 493 | 626 | ||||||||||||||||||
530 | 122 | ||||||||||||||||||||
171 | 124 | ||||||||||||||||||||
$US | |||||||||||||||||||||
429 | 306 | ||||||||||||||||||||
457 | |||||||||||||||||||||
1,905 | 2,713 | 2,572 | 2,479 | 1,937 | 1,929 | ||||||||||||||||
113 | 82 | 93 | |||||||||||||||||||
2010 | 2011 | 2012 | 2013 | 9M 2013 | 9M 2014 | ||||||||||||||||
Tripolyphosphate | Chemical fertilizers | Phosphate rock | |||||||||||||||||||
Other sales | Downstream sales(1) | Upstream sales(2) | |||||||||||||||||||
EBITDA
Average DAP FOB Tampa, $US/t
Gross profit
620 | -14% | Average DAP FOB Tampa, $US/t | |||||
+24% | |||||||
535 | |||||||
498 | -17% | +2% | 476 | ||||
443 | 466 | ||||||
38% | 44% | 43% | 42% | ||||
35% | 35% | ||||||
$US mn | |||||||
1,508 | |||||||
1,453 | 1,144 | ||||||
964 | 903 | 1,020 | |||||
2010 | 2011 | 2012 | 2013 | 9M 2013 | 9M 2014 | ||
Gross profit | Gross margin | ||||||
Net Profit | |||||||
Average RUB/USD exchange rate | 35.39 | ||||||
$US mn
+24% | 620 | -14% | |
535 | |||
498 | -17% | ||
35% | 33% | ||
27% | |||
1,204 | 1,123 | ||
674 |
443 | 466 | +2% | 476 |
30% | |||
23% | 24% | ||
752 | 629 | 728 |
-3% | +6% | +2% | 31.62 | +12% | |
30.37 | 31.09 | 31.85 | |||
29.39 | |||||
22% | 23% | ||||
16% | |||||
mn | 8% | 11% | |||
$US | |||||
7% | |||||
765 | 788 | ||||
395 | |||||
269 | 288 | 177 | |||
2010 | 2011 | 2012 | 2013 | 9M 2013 | 9M 2014 | |||
EBITDA | EBITDA margin | |||||||
2010 | 2011 | 2012 | 2013 | 9M 2013 | 9M 2014 | |||
Net profit | Net profit margin | |||||||
Note: Applied average USD/RUB exchange rates: 30.37 (2010), 29.39 (2011); 31.09 (2012); 31.85 (2013); 31.62 (9M 2013); 35.39 (9M 2014)
(1) Phosphate-based fertilizers, MCP, STPP and nitrogen fertilizers | 31 |
(2) Phosphate rock | |
Stock/GDR performance
PhosAgro GDR performance
GDR mn
Capital markets day | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
12 | SPO | 16 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
10 | Uralkali announced split with BPC | $US 14 | 14 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
12 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
8 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
10 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Geopolitical unrest | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
6 | 8 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Announcement of GDRs inclusion into the FTSE Global Equity | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
$US | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Index Series and the FTSE All World Equity Index Series | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
ADTV $US4.1 mn | 6 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
or GDR 306 k | ADTV $US3.5 mn | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
4 | or GDR 351 k | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
ADTV $US2.0 | 4 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
mn | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2 | ADTV $US1.7 mn | or GDR 168 k | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
or GDR 141 k | 2 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
0 | 0 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Jul-11 | Oct-11Dec-11Mar-12Jun-12Sep-12Nov-12Feb-13May-13Aug-13 | Nov-13Jan-14Apr-14 | Jul-14Oct-14 |
trade volumes, GDRs mn | PhosAgro GDRs, $US |
Source: Bloomberg (as of October 21, 2014)
33
Global political and economic instability
195 | 50 | ||
Uralkali announced split with BPC | 45 | ||
175 | Ukraine crisis development: | ||
Malaysian Airlines flight shot down | |||
155 | 35 | ||
Russia-Crimea unification | |||
European debt crisis development: | 30 | ||
to 100 | Greek debt restructuring | ||
135 | 25 | ||
Rebased | |||
mn | |||
20 | |||
$US | |||
115 | 15 | ||
Turnover, | |||
10 | |||
95 | Daily | ||
5 | |||
75 | 0 |
Daily Turnover | PhosAgro GDRs | MSCI Russia | MICEX | FTSE IOB Russia | |||||||
% Performance | PhosAgro | FTSE IOB Russia | MSCI Russia | MICEX | |||||||
Since Russia-Crimea unification | 7.8% | (5.4%) | (6.3%) | 7.0% | |||||||
1 month | (6.2%) | (6.8%) | (8.1%) | (2.7%) | |||||||
1 week | 1.4% | (1.7%) | (1.6%) | (0.1%) |
Source: Bloomberg (data as of 21 October 2014), PhosAgro analysis | 34 |
EV/EBITDA performance relative to peers
16.0 | Current discount to peer EV/EBITDA |
average: 35% | |
14.0 | Uralkali announced split with BPC |
12.0 | |
10.0 | |
Discount to | 35% |
peer EV/EBITDA 8.0 | |
average:43% | |
6.0 | |
4.0 | |
2.0 | |
0.0 |
Mosaic EV/EBITDA | PhosAgro EV/EBITDA | Peer EV/EBITDA average | |||
Potash Corp EV/EBITDA | Uralkali EV/EBITDA | ||||
Source: Bloomberg (data as of 30 Sep 2014), PhosAgro analysis
35
PhosAgro: the only pure play phosphates producer
Gross profit breakdown by segment | Phosphate segment gross profit margin | |||||
Average gross profit breakdown by segment for 2011-2013 | Average gross profit margin of phosphate segment for 2011-2013 | |||||
14% | 7% | |||||
18% | ||||||
18% | 39% | |||||
52% | 60% | |||||
31% | ||||||
47% | 25% | |||||
54% | 22% | |||||
86% | ||||||
18% | ||||||
48% | 27% | |||||
35% | ||||||
21% | ||||||
13% | ||||||
Mosaic(1) | ICL | Agrium(2) PotashCorp | ICL | Agrium(2) | (1) | |
PotashCorp Mosaic |
Phosphates | Nitrogen | Potash | Other |
Source: Companies' reports
Note: (1) Calendarised
(2) Excluding resale, retail and advanced technologies
36
Source: Companies' reports
Note: (1) Calendarised
(2) Wholesale
Appendix
RUB devaluation: EBITDA sensitivity(1) | |||||||
1,600 | |||||||
1,400 | |||||||
mn | 1,200 | ||||||
$US | 1,000 | ||||||
EBITDA, | 800 | ||||||
600 | |||||||
400 | |||||||
200 | |||||||
0 | |||||||
400 | 420 | 440 | 460 | 480 | 500 | 520 DAP, $US | |
RUB/USD: 46 | RUB/USD: 37 |
in mln USD | 2014E DAP FOB Baltic price, $/tonne | |||||||||||||
400 | 420 | 440 | 460 | 480 | 500 | 520 | ||||||||
37 | 652 | 746 | 839 | 932 | 1,026 | 1,119 | 1,212 | |||||||
39 | 740 | 834 | 927 | 1,020 | 1,114 | 1,207 | 1,300 | |||||||
RUB/USD | 41 | 820 | 913 | 1,007 | 1,100 | 1,193 | 1,287 | 1,380 | ||||||
exchange rate | 43 | 892 | 985 | 1,079 | 1,172 | 1,265 | 1,359 | 1,452 | ||||||
45 | 958 | 1,051 | 1,145 | 1,238 | 1,331 | 1,425 | 1,518 | |||||||
Current market conditions | ||||||||||||||
46 | 989 | 1,082 | 1,175 | 1,269 | 1,362 | 1,455 | 1,549 | |||||||
Source: PhosAgro | 38 | |||||||||||||
Note: (1) EBITDA estimations are based on average Y2014 feedstock prices (ammonia, sulphur and | potash) |
Dividend history
Post-IPO dividends | per share, | per GDR, | per GDR, | ||
RUB | RUB | US$ | |||
2011 April-December | 57.50 | 19.17 | 0.61 | ||
Dividends | |||||
2012 | 82.90 | 27.63 | 0.88 | ||
2013 | 34.75 | 11.58 | 0.35 | ||
1H2014 | 25.00 | 8.30 | 0.23 | ||
9M2014 recommended | 20.00 | 6.67 | 0,17 | ||
Net profit attributable to | |||||
Post-IPO dividends | Dividends, | PhosAgro shareholders, | Payout ratio, % | ||
paid | RUB bln | RUB bln | |||
2011 (April-December) | 7.2 | 14.6 | 49% | ||
2012 | 10.4 | 21.3 | 49% | ||
Total paid | 2013 | 4.5 | 7.6 | 59% | |
1H2014 | 3.2 | 7.9 | 41% | ||
Total | 25.3 | 51.4 | 49% |
Source: PhosAgro
Note: (*) - for 9M2014 recommended dividends per share applied USD/RUB exchange rate: 39.39
39
Payment Schedule
Repayment of principle | ||||||||||
US$ mn | 700 | |||||||||
594 | ||||||||||
600 | ||||||||||
500 | ||||||||||
387 | ||||||||||
400 | ||||||||||
289 | 276 | |||||||||
300 | ||||||||||
200 | ||||||||||
106 | ||||||||||
100 | ||||||||||
25 | 0 | 7 | ||||||||
0 | ||||||||||
2015 | 2016 | 2017 | 2018 | 2019 | 2020 | 2020 | ||||
2014 | ||||||||||
Q4 | after | |||||||||
Source: PhosAgro |
40 | Note: (1) maturity profile as of August 21, 2014 |
applied USD/RUB exchange rate : 36.22 | |
Debt Maturity Profile(1)
Debt Repayment Plan/ Outstanding Debt
Debt Outstanding
mn | 1800 | ||||||||
1,683 | |||||||||
US$ | 1600 | 1,577 | |||||||
1400 | |||||||||
1,288 | |||||||||
1200 | |||||||||
1000 | |||||||||
901 | |||||||||
800 | |||||||||
625 | |||||||||
600 | |||||||||
400 | |||||||||
200 | |||||||||
32 | 7 | 7 | |||||||
0 | |||||||||
Q3 2014 | Q4 2014 | Y2015 | Y2016 | Y2017 | Y2018 | Y2019 | Y2020 | ||
40
High quality production assets
ApatitResources(1)
Apatite-nepheline ore: 2 060 mt
Al2O3: 283 mln t
REO(2): 7.5 mln t
Murmansk
Kirovsk
Cherepovets production complex - largest in Europe
PhosAgro Cherepovets
Capacity by product |
MAP/DAP/NPK/NPS: 3.1 mln t |
Ammonia: 1,150 kt |
Capacity by product
Phosphate rock: 7.8 mln t
Nepheline: 1.7 mln t
Highlights
- Largest standalone global producer of high grade phosphate rock(3)
- Standard grade - P2O5 content of 39%
- Superior grade - P2O5 content of 40%
- Lowest hazardous element content among the major phosphate rock producing regions; benefits from low levels of radioactivity
Balakovo Mineral fertilizers (BMF)
Capacity by product
MAP/DAP/NPS: 1.2 mln t
Feed phosphate (MCP): 240 kt
Highlights
- Leading European producer of feed phosphate MCP
- The only Russian producer of MCP
St. Petersburg
Baltic ports
Volhov
Cherepovets
AN/AN-based: 450 kt | |
Urea: 500 kt | |
Highlights | APP: 140 kt |
AIF3: 24 kt |
Largest standalone phosphate fertilizers producer in |
Europe |
Moscow
Balakovo
Novorossiysk
| Largest standalone producer of sulphuric and |
phosphoric acids in Europe | |
| One of the largest standalone producers of urea, |
ammonia, AN/AN-based fertilizers in Russia |
Agro-Cherepovets
Capacity by product
Urea: 480 kt
Highlights
- One of the most modern urea capacity in Russia
Distribution hubs | Top 15 regions of NPK |
Export ports | and MAP consumption |
Metachem
Capacity by product
PhosAgro-Trans (Transportation)
- Operates around 7,000 rail cars, of which the majority are mineral hoppers
PhosAgro-Region (Domestic distribution)
- Owns and operates eight distribution centres in Russia located in proximity to major agricultural regions of Russia (processed over 1.2mn tonnes in 2012, largest distributor in Russia)
Sulphuric acid: 215 kt Phosphoric acid: 80 kt of P2O5 Sulphate of potash (SOP): 80 kt
Sodium tripolyphosphate (STPP): 130 kt
Highlights
- Unique SOP granulating technology in Russia
- Close proximity to Saint-Petersburg sea port
Source: PhosAgro (capacity as of December 31, 2011), CRU, European Commission | |||
Note: (1) Measured and indicated, PhosAgro, IMC, JORC report June 2011 | |||
(2) | Rare earth oxides | ||
2 | (3) | Defined as phosphate rock with P2O5 content over 35.7% | 41 |
Flexible production capacity
PhosAgro production capacities | Capacity growth 2011-2013 | ||||||||||||||||||
2013(1), mln t | |||||||||||||||||||
MAP/DAP | 2011 - 2013, mln t(2) | ||||||||||||||||||
DAP/MAP/NPK/NPS | 2.45 | 1.85 4.3 | |||||||||||||||||
NPK | 2013 | 1.85 | |||||||||||||||||
+9% | |||||||||||||||||||
MAP/DAP/NPK: | capacities | 2011 | 1.7 | ||||||||||||||||
Urea | 0.98 | ||||||||||||||||||
fully flexible production | 2011 - 2013, mln t(2) | ||||||||||||||||||
lines with NPK production | |||||||||||||||||||
AN/AN-based fertilisers | |||||||||||||||||||
0.45 | capacity of 1.85 mln t | Urea | 2013 | 0.98 | |||||||||||||||
Liquid fertiliser (APP) | 0.14 | and NPS production | capacities | 2011 | 0.48 | +104% | |||||||||||||
capacity up to 1 mln t | |||||||||||||||||||
End | |||||||||||||||||||
products | |||||||||||||||||||
Sulphate of potash (SOP) | 0.08 | 2011 - 2013, MW(2) | |||||||||||||||||
Sodium triphosphate (STPP) | 0.13 | Electricity | 2013 | 183 | |||||||||||||||
+21% | |||||||||||||||||||
capacities | 2011 | 151 | |||||||||||||||||
Feed phosphates | 0.24 | ||||||||||||||||||
Aluminum fluoride (ALF3) | 0.02 | 2011 - 2013, mln t(2) | |||||||||||||||||
Sulphuric | 2013 | 4.83 | |||||||||||||||||
+5% | |||||||||||||||||||
Phosphate rock | 7.8 | acid | 2011 | 4.61 | |||||||||||||||
capacities | |||||||||||||||||||
Feed | Nepheline | 1.7 | 2011 - 2013, mln t of P O (2) | ||||||||||||||||
stock | |||||||||||||||||||
2 5 | |||||||||||||||||||
Ammonia | 1.15 | Phosphoric | 2013 | 1.94 | |||||||||||||||
acid | +4% | ||||||||||||||||||
2011 | 1.86 | ||||||||||||||||||
capacities | |||||||||||||||||||
Nitrogen fertilizers | Phosphate-based fertilizers and feed phosphates | Metachem capacities | |||||||||||||||||
Source: PhosAgro | Source: PhosAgro | ||||||||||||||||||
Note: (1) production capacities as of 31 December 2013 |
(2) as of 31 December 2011 and 31 December 2013 | 42 |
Strong demand fundamentals for fertilizers
Population growth and decrease of arable land per capita | Yield Indexed to USA |
8 | 0.30 | 2012 | |||||||
Fertilizers are | 0.27 | Rice | |||||||
widely under- | 7 | 0.24 | 0.25 | ||||||
Soybean | |||||||||
applied and/or | 0.23 | 0.22 | India | ||||||
inefficiently | Corn | ||||||||
0.20 | |||||||||
applied in | 6 | 0.19 | 0.20 | Wheat | |||||
developing | 5.3 | ||||||||
countries | 5.7 | 6.1 | 6.5 | 6.9 | 7.3 | ||||
5 | 0.15 | Rice | |||||||
Russi | |||||||||
1990 | 1995 | 2000 | 2005 | 2010 | 2015 | Soybean | |||
World population, bln people (lhs) | a | Corn |
Projected Average Annual Growth of | Wheat | |||||||||||||||||||||
Agricultural Production 2012-2030 | Rice | |||||||||||||||||||||
0.0% | 1.0% | 2.0% | 3.0% | |||||||||||||||||||
Soybean | ||||||||||||||||||||||
Brazil | ||||||||||||||||||||||
total average | Corn | |||||||||||||||||||||
High growth | Wheat | |||||||||||||||||||||
fruits,… | ||||||||||||||||||||||
rates for corn | ||||||||||||||||||||||
pulses | ||||||||||||||||||||||
and seed oil | Rice | |||||||||||||||||||||
crops, both | sugar crops | |||||||||||||||||||||
Soybean | ||||||||||||||||||||||
major | China | |||||||||||||||||||||
fibre crops | ||||||||||||||||||||||
Corn | ||||||||||||||||||||||
consumers of | ||||||||||||||||||||||
oilseeds total | Wheat | |||||||||||||||||||||
phosphate | ||||||||||||||||||||||
fertilizers | soybean | Rice | ||||||||||||||||||||
grains total | ||||||||||||||||||||||
USA | Soybean | |||||||||||||||||||||
rice | ||||||||||||||||||||||
Corn | ||||||||||||||||||||||
corn | ||||||||||||||||||||||
Wheat | ||||||||||||||||||||||
wheat | ||||||||||||||||||||||
0.0 | 0.5 | 1.0 | ||||||||||||||||||||
Source: United Nations, IMF, USDA, FAO
43
India depends on P2O5 imports
India is the major purchaser of DAP/MAP…
World DAP/MAP Imports : ~9.5 mln t of P2O5 per annum(1)
… and importer of feedstock for phosphates production Global Phosphoric Acid Imports of 3.9 mln t P2O5
FSU 2%
Oceania
5%
Middle | East Asia |
East | 13% |
4% |
India 18%
India
Europe
Asia (excl. India)
Middle East
Latin America
North America
Africa
Others
1.9
Indian imports of phosphoric acid equal to 4.1 mln t of
DAP
Other South
Asia
6%
Latin America
26%
Global Phosphate Rock Import of 26.3 mln t
Africa 5%
Europe
15%
North America
6%
India
Europe
Asia (excl. India)
North America
Latin America
FSU
Middle East
Oceania
Africa
Others
6.8
Indian imports of phosphate rock equal to 4.5 mln t of
DAP
Source: PhosAgro, FAI, IFA, Fertecon, Argus-FMB
44
Uncertain policy for nutrient subsidies in India decrease fertilizer imports and unbalance fertilization
Evolution of N : P2O5 : K2O ratio in India
N | P2O5 | K2O | |
Balanced ratio | 4.0 | 2.0 | 1.0 |
2010/11 | 4.3 | 2.0 | 1.0 |
2011/12 | 6.9 | 3.1 | 1.0 |
2012/13 | 7.7 | 3.0 | 1.0 |
Nutrient Based Subsidy (NBS) Rates in India (Rs/kg nutrient)
N | P2O5 | K2O | |
2011/12 | 27.153 | 32.338 | 26.756 |
2012/13 | 24.0 | 21.804 | 24.0 |
2013/14 | 20.875 | 18.679 | 18.833 |
2014/15 | 20.875 | 18.679 | 15.5 |
2014/2011 Change | -23% | -42% | -42% |
India DAP imports and Rupee exchange rate
Unbalanced fertilization
0.5
0.5
0.4
ratio/N | 0.3 |
5 | 0.2 |
O | |
2 | |
P | |
0.1 | |
0 |
2008 2009 2010 2011 2012 2013
P2O5 /N ratio | P2O5 /N balanced ratio |
Indian domestic price is twice above the current subsidy level
9 | 65 | 800 | ||||||||||||||||||||
7.8 | ||||||||||||||||||||||
8 | ||||||||||||||||||||||
6.9 | 600 | |||||||||||||||||||||
7 | 6.2 | 60 | ||||||||||||||||||||
6 | US$ | |||||||||||||||||||||
t | 5 | 3.7 | 55 | 400 | 65% | |||||||||||||||||
mln | 4 | Rs | ||||||||||||||||||||
3 | ||||||||||||||||||||||
1.3 | 50 | 200 | ||||||||||||||||||||
2 | ||||||||||||||||||||||
1 | 45 | 0 | ||||||||||||||||||||
0 | ||||||||||||||||||||||
Apr-10 | Aug-10 | Dec-10 | Apr-11 | Aug-11 | Dec-11 | Apr-12 | Aug-12 | Dec-12 | Apr-13 | Aug-13 | Dec-13 | Apr-14 | Aug-14 | |||||||||
2010 | 2011 | 2012 | 2013 | Jan-Jul | 40 | |||||||||||||||||
2014 | ||||||||||||||||||||||
Subsidy, US$/t |
India DAP imports | USDINR exchange rate | Import Price, US$/t, CFR | ||
Source: PhosAgro, FAI, IFA, Fertecon, Argus-FMB | 45 |
India DAP import demand set to rise
Quarterly DAP imports to India | |||||||||||
Average annual DAP import for 2010-2013: 5.8 mln t | 3,028 | Expected DAP import | |||||||||
3,000 | volumes to India of more than | ||||||||||
2,500 | 5 mln t | ||||||||||
2,000 | |||||||||||
1,500 | 1,488 | ||||||||||
kt | |||||||||||
1,000 | 950 | ||||||||||
500 | 422 | ||||||||||
140 | |||||||||||
0 | |||||||||||
1Q | 2Q | 3Q | 4Q | ||||||||
2010-2013 average | 2014E | ||||||||||
Source: FAI, Argus-FMB
11
46
Premium/discount to the most affordable Moroccan phosphate rock
- Phosphate ore affects production costs associated with impurities
- The benchmark: K10 phosphate rock, made by OCP (Morocco)
- Important characteristics included:P2O5 content, CaO content, MER, F and Cl
- Important characteristics not included: product variability, content of organic matter, and the maintenance cost implications of different rock characteristics.
High grade phosphate rock Apatit (PhosAgro)
China | USA | Morocco | Others | ||||||
Source: CRU 'Phosphate Rock Cost Report' 2014 edition
47
Need for a combination of feedstocks and complexity of production process act as barriers to entry
Integrated phosphate-based production model (1)
Phosphateore | 15.9 mln t | Beneficiation | 4.60 mln t (39% P2O5) | ||
(12.9% P2O5) | |||||
Sulphur | 1.39 | Sulphuricacid | 4.20 | Phosphoricacid | |||||
mln t | mln t | ||||||||
1.70 | |||||||||
mln t | |||||||||
Naturalgas | Ammonia | End products | |||||||
800 | 0.73 | ||||||||
DAP / MAP /NPS | |||||||||
mln m3 | mln t | ||||||||
2.45 mln t | |||||||||
NPK | ||
Potash | 1.85 mln t | |
0.77 mln t | ||
Source: PhosAgro, Maaden, Fertecon, Integer, Reuter
Note: (1) Based on PhosAgro's consumption ratios
(2) Bloomberg, as of April 201448
(3) CAPEX for the Phosphate Project
Replacement cost
Ma'aden
Key products | DAP | MAP, DAP, NPK, NPS, | |||
Urea, AN | |||||
Production | Capacity, | CAPEX, mln | Capacity, | Replacement | |
facilities | mln t p.a. | $US | mln t p.a. | cost, | |
mln $US | |||||
Mining and | 5.0 | 1,330 | 7.8 | 2,697 | |
beneficiation | |||||
Sulphuric acid | 4.7 | 620 | 4.8 | 642 | |
Phosphoric acid | 1.5 | 523 | 1.9 | 740 | |
Ammonia | 1.09 | 951 | 1.15 | 1,000 | |
Phosphate | 2.9 | 486 | 4.3 | 716 | |
fertilizer | |||||
Nitrogen fertilizer | - | - | 1.4 | 684 | |
Infrastructure and | |||||
~ 2,000 | ~ 4,000 | ||||
other | |||||
Total | ~ US$ 6 bln | ~ US$ 10 bln | |||
Current | US$ 4.6 bln(2) | ||||
capitalization | |||||
Ma'aden - total est. CAPEX(3): US$ 6 bln
Construction period: 6 years +
Over US$ 2,000/tonne
Access to abundant local resources
Russian Federation
Potash Consumption in Russia - 2.1 mln.t
PhosAgro - Biggest consumer
PhosAgro | current supply | Uralkali |
Potash Production - 9.0 mlt t | ||
34% | ||
Farmers
10%
others
2%Acron
23%
Uralchem | ||
7% | ||
Eurochem | Minudobrenia- | |
Belaruskali | Rossosch | |
8% | ||
16% | ||
Potash Production - 8.0 mlt t | ||
Belarus | potential supply | |
Potash Consumption | ||
in Belarus - 1.6 mln t | ||
Sulphur Consumption in Russia - 3.6 mln.t
PhosAgro - Biggest consumer
PhosAgro | |
44% | Merchant S. Acid - 0.7 mln.t S |
GazpromSulphur - 2.6 mln.t S | |
others | |
56% | Import (Kazakhstan) - 0.3 mln.t S |
Source: IFA, Belstat, PhosAgro. Data for 2012
49
Commissioning phosphate rock and phosphoric acid capacities
Delays in addition of new phosphate rock capacities (excl. China)Changes in world fertilizer capacities (excl. China)
mln t
180 | |
170 | |
160 | 5 years |
150 | 4 years |
140 | |
130 |
120
2008 | 2009 | 2010 | 2011 | 2012 | 2013 | 2014 | 2015 | 2016 | 2017 | ||
IFA-2008 | IFA-2013 | ||||||||||
Delays in commissioning phosphoric acid capacities (excl. China)
mln t P2O5
mln t nutrients
30
25
20
15
10
5
0
42
40
38
36
34
32
30
5 years
-5
2002-20072007-20122012-2017
Nitrogen Phosphates
- Less new projects are announced in phosphates
- Commissioning of new capacities is delayed
- Shutdown in phosphate fertilizer capacities was more significant while less new commissioning in the past 5 years in comparison with nitrogen and potash sectors
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
IFA-2008IFA-2013
Source: IFA, PhosAgro | 50 |
Timing and completion of new capacities is uncertain
mln t of P2O5
1.5 | 0.5 | 6.7 | 6.7 | ||
0.9 | Utilization | ||||
2.9 | |||||
rate of 82% | |||||
Utilization | - 4.6 |
rate of 71% |
OCP seeks to extract the maximum value from its phosphate ore reserve.
Management has recently
40.557.0 indicated that they will match production to market demand
Joint Venture Mosaic and Ma'aden estimated
cost USD 7 bln | 52.4 | 45.6 |
TotalTotal
Production Capacities
20122012
Closures | OCP firm | Maaden II | Other | Probable/ | Total | Total |
firm | Speculativ | Expected | Expected | |||
2013-2018 | 2014-2018 | 2016-2018 | ||||
projects | e | Capacities | Production | |||
USA, China | ||||||
2018 | 2018 |
Source: CRU, companies' data | 51 |
Control of world's premium phosphate resource base
Higher cadmium | 100 | Phosphate rock | ||||||
100 | GCT | |||||||
content in | with MER > 0.10 | |||||||
29% | ||||||||
sedimentary | Mosaic | significantly | ||||||
OCP | 32% | |||||||
rocks | 28.5% | increases costs | ||||||
ppm | PCS | CF Industries | for production of | |||||
10 | 29.5% | DAP | ||||||
29% | ||||||||
in | ||||||||
content | 10 | Agrium | 33% | |||||
Cadmium | 1 | |||||||
Average | 1 | |||||||
Eurochem | ||||||||
0 | 39-40% | 37-38% | ||||||
00.00 | 0.02 | 0.04 | 0.06 | 0.08 | 0.10 | 0.12 | 0.14 | |
0.00 | 0.02 | 0.04 | 0.06 | 0.08 | 0.10 | 0.12 | 0.14 | |
Average Minor Element Ratio (MER) |
Note: Size of the bubble represents P2O5 content in phosphate rock in excess of 28%, which is recognized as a minimum for production of high quality phosphate fertilizers
Source: FERTECON, PhosAgro, companies' data
9 | 52 |
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