MENA-based Fertiglobe reports strong Q1 2024

Fertiglobe, the seaborne exporter of urea and ammonia, and nitrogen fertiliser producer from the Middle East and North Africa region, reported Q1 2024 revenue of US$552mn, adjusted EBITDA of US$223mn, and adjusted net profit of US$119mn

In Q1 2024, ammonia prices retreated from their levels in Q4 2024 on easing supply disruptions and lower gas prices compared to the previous quarter, while urea prices were impacted by mixed trends due to favourable weather incentivising demand in North America coinciding with delayed planting in Europe, as well as lower-than-expected tender uptake in India, partially offset by healthy demand in other key regions including Brazil and Australia.

Ahmed El-Hoshy, CEO of Fertiglobe, commented, “We are pleased to report a strong quarter, marked by a 5% year-on-year increase in our own-produced sales volumes, driven by higher production and lower ending inventories, which led to a 22% and 1% increase in ammonia and urea own-produced sales volumes, respectively. This demonstrates continued efforts by our manufacturing and commercial teams to prioritise our key strategic objectives, paving the way for further operational milestones over the course of the year, by capitalising on our robust in-house capabilities and logistics footprint. It is worth noting that these results were delivered in an environment of market volatility and softer prices in Q1, on lower crop and energy prices as well as reduced imports from India and Europe, coupled with an improved supply situation with recent curtailments being reversed.

"Fertiglobe has continued to make good progress on its cost optimisation programme, having achieved 60% of its US$50mn run rate target implemented by the end of March 2024, and remains on track to realise the full target by the end of 2024. In addition, there is potential to generate at least US$100mn in incremental annual EBITDA by the end of 2025 compared to 2023, driven by improved production and energy efficiency within its ongoing manufacturing improvement plan (MIP). Together, these two initiatives have potential to generate US$150mn of incremental EBITDA by the end of 2025, representing an approximately 15% increase compared to 2023.

"These initiatives bolster Fertiglobe's cash flow generation across cycles, supporting the company’s already healthy free cash flow conversion and robust balance sheet, and enabling Fertiglobe to balance growth spending on value accretive projects and dividend payments.

"In addition, Fertiglobe remains firmly focused on technology, innovation and digitalisation, and is investing in the integration of Artificial Intelligence (AI) throughout its operations to unlock value, enhance efficiencies, and reduce emissions. The company is harnessing data integration and predictive analytics applications to support business objectives by improving the performance of equipment, processes, and facilities, while also implementing AI-powered analytics at its sites to enhance safety and reliability.

“I would like to extend my sincere appreciation to our exceptional team, whose dedication has been instrumental in our achievements. Their unwavering commitment to safety and excellence has been pivotal in our transformation into a leading global enterprise, which is about to embark on an exciting new chapter of growth and value creation following ADNOC’s acquisition of OCI's 50% equity stake, which will take ADNOC's ownership to a majority 86.2%. Together, we have immense confidence in Fertiglobe's ability to continue passing milestones and setting new standards for our industry.”