Today, Acron Group (Moscow Exchange and LSE: AKRN) released its consolidated IFRS financial statements for 9M 2021.
Key Financials
Revenue was up 59% year-on-year to RUB 137,215 million (9M 2020: RUB 86,088 million). In US dollar equivalent, revenue was up 52% to USD 1,854 million from USD 1,216 million.
EBITDA* increased by a factor of 2.9 year-on-year to RUB 69,185 million (9M 2020: RUB 24,116 million). In US dollar equivalent, EBITDA increased by a factor of 2.7 to USD 935 million from USD 341 million.
EBITDA margin was up to 50%, against 28% year-on-year.
Net profit was RUB 50,934 million, against a loss of RUB 4,161 million year-on-year. In US dollar equivalent, net profit was USD 688 million.
Net debt was down 26% to RUB 74,022 million, against RUB 99,579 million as of 31 December 2020. In US dollar equivalent, net debt was down 25% to USD 1,017 million from USD 1,348 million.
Net debt/LTM EBITDA** denominated both in roubles and US dollars was 0.9, down from 2.8 as of 31 December 2020.
Operating Results
Output of key products was 6.315 million tonnes, up 6% year-on-year.
Sales of key products totalled 6.188 million tonnes, up 4% year-on-year.
Alexander Popov, Chairman of the Acron Board of Directors, commented on the results:
‘We are pleased to present Acron Group’s record-breaking financials. In 9M 2021, the Group's EBITDA increased by a factor of 2.7 year-on-year to USD 935 million. EBITDA margin increased from 28% to 50%. The Group reduced its debt burden. The net debt/EBITDA ratio at the end of the reporting period was 0.9, down from 2.8 as of 31 December 2020.
‘Acron Group is a responsible producer that has always prioritised the domestic market, even as global prices continue to rise. In July 2021, the Group and other top fertiliser producers voluntarily agreed to fix domestic prices till the year-end and in November extended the freeze till the end of the spring sowing season to ensure that their products are affordable for Russian growers.. Deliveries have been made in full.
‘We are taking advantage of a lower debt burden to gradually accelerate capital expenditures. The active phase of the Talitsky potash project is underway: we are purchasing major equipment and conducting construction and installation operations for the project’s surface and underground facilities and infrastructure.
‘Our chemical division has an investment programme through 2023 that includes highly effective brownfield projects. We are already exploring both brownfield and greenfield projects for the next investment cycle based on their anticipated impact on the Group’s ESG agenda and carbon footprint’.
APPENDIX
Notes on Key Items in the Financial Statements
Financial Performance
In 9M 2021, several factors drove Acron Group’s revenue up 59% year-on-year to RUB 137,215 million, including 4% higher sales of the Group’s key products, growing global dollar–denominated prices for mineral fertilisers, and a 5% increase in the average USD–RUB exchange rate.
Average Indicative Prices, FOB Baltic Sea/Black Sea
USD/t
9M 2021
9M 2020
9M 2021/9M 2020 change
NPK 16-16-16
366
254
44%
AN
265
167
58%
UAN
258
127
103%
Urea
380
218
74%
Ammonia
463
202
130%
In the reporting period, the cost of sales was up 5% year-on-year to RUB 49,770 million, mainly due to higher sales and prices for potash and the increased cost of the mineral extraction tax on phosphates, which were significantly offset by reduced depreciation and amortisation and a decline in expenses for third–party services related to rock mined at Oleniy Ruchey.
Selling, general, and administrative expenses were up 9% to RUB 7,072 million, mainly due to higher personnel costs.
Transportation expenses were up 20% to RUB 20,227 million, driven by increased sales, higher freight and container–shipping rates denominated in US dollars, and higher logistics costs outside Russia due to a weaker rouble. Increased sales to Latin America on terms including transportation also contributed to the change in this item.
EBITDA increased by a factor of 2.9 to RUB 69,185 million, and the Group’s EBITDA margin reached 50%, against 28% in 9M 2020. EBITDA margin was 52% at the Group’s Acron facility in Veliky Novgorod, 46% at Dorogobuzh, and 47% at NWPC.
In the reporting period, the Group posted a net exchange profit of RUB 1,990 million from revaluation of assets, loans, and liabilities, against a loss of RUB 15,763 million in 9M 2020. Financial derivatives generated a gain of RUB 4,919 million, against a loss of RUB 2,551 million in 9M 2020.
Net profit in the reporting period was RUB 50,934 million, against a loss of RUB 4,161 million in 9M 2020.
Cash Flow
In 9M 2021, net operating cash flow increased by a factor of 4.6 to RUB 41,241 million from RUB 8,949 million in 9M 2020 because of an increase in net profit. Working capital reached RUB 13,438 million in 9M 2021, up from RUB 10,649 million in 9M 2020.
Net cash used in investing activities in 9M 2021 was up 16% to RUB 12,262 million from RUB 10,558 million in 9M 2020. Capital expenditures increased 21% year-on-year to RUB 14,107 million from RUB 11,667 million in 9M 2020. In dollar equivalent, capital expenditures were USD 191 million, against USD 165 million in 9M 2020.
In the reporting period, net cash used in financial activities was RUB 28,006 million, against RUB 7,861 million generated by the Group’s financing activities in 9M 2020. Cash outflow in the reporting period mainly consisted of RUB 23,117 million in repaid net borrowings, while cash inflow in 9M 2020 resulted from net borrowings of RUB 30,783 million.
Debt Burden
As of the end of the reporting period, total debt was RUB 90,279 million, down 22% from RUB 115,116 million on 31 December 2020. In US dollar equivalent, total debt was USD 1,241 million, down 20% from USD 1,558 million as of the end of 2020. The share of long–term debt increased from 68% to 91%.
Net debt as of the end of 9M 2021 was RUB 74,022 million, down 26% from RUB 99,579 million as of 31 December 2020. In US dollar equivalent, net debt was USD 1,017 million, down 25% from USD 1,348 million on 31 December 2020.
Net debt/LTM EBITDA denominated both in roubles and US dollars at the end of 9M 2021 was 0.9, against 2.8 on 31 December 2020.
Market Trends
Global urea prices continued to grow in Q3 2021 and surged in Q4 2021. In November 2021, Baltic FOB prices exceeded USD 800, surpassing the 2008 record–high. In some markets they even reached USD 1,000. This rise was driven mainly by limited supply due to an energy crisis in Europe that led several producers to suspend operations. Chinese government actions limiting fertiliser exports also contributed to higher prices. Demand for urea remains strong because of high grain prices, India’s urea purchases, and the start of high season in the Northern Hemisphere. Demand for industrial urea continues to recover, as well.
The continuing growth of AN and UAN prices is supported by higher urea prices, which serve as a benchmark for other nitrogen fertilisers. In November 2021, Baltic FOB prices for these products surpassed USD 600 and beat the 2008 record.
NPK prices continued to climb as well, mainly driven by higher prices for basic products (urea, DAP, and potassium chloride). In November 2021, the price of NPK 16-16-16 hit USD 600, a record high since 2008.
Average Indicative Prices, USD per t, FOB Baltic/Black Sea
Q3 2021
Q2 2021
Q3 2020
Q3 2021/ Q2 2021 change
Q3 2021/ Q3 2020 change
NPK 16-16-16
425
353
253
20%
68%
AN
309
245
162
26%
91%
UAN
306
250
114
22%
168%
Urea
445
359
231
24%
93%
Ammonia
578
462
186
25%
210%
The full version of Acron Group’s financial statements is available at www.acron.ru/en.
Note: The exchange rate used for currency conversion was RUB 72.7608 to USD1 as of 30 September2021 and RUB 73.8757 to USD1 as of 31 December2020. The average exchange rate for nine months of 2021 was RUB 74.0073 to USD1. The average exchange rate for nine months of 2020 was RUB70.7778to USD1.
* EBITDA is calculated as operating profit adjusted for depreciation and amortisation, foreign exchange gain or loss on operating transactions, and other non-cash and extraordinary items.
** LTM EBITDA is EBITDA calculated for the past 12 months.
Acron Group is a leading vertically integrated mineral fertiliser producer in Russia and globally, with chemical production facilities in Veliky Novgorod (Acron) and 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 seaport terminals and distribution networks in Russia and China. Acron subsidiary North Atlantic Potash Inc. (NAP) holds mining leases and an exploration permit for ten parcels of the potassium salt deposit at Prairie Evaporite, Saskatchewan, Canada. Acron also holds a minority stake (19.8%) in Polish Grupa Azoty S.A., one of the largest chemical producers in Europe.
In 2020, the Group sold 7.8 million tonnes of its main products to 74 countries, with Russia, Brazil, Europe and the United States as key markets.
In 2020, the Group posted consolidated IFRS revenue of RUB 119,864 million (USD 1,661 million), with EBITDA of RUB 35,311 million (USD 489 million). Acron’s shares are traded on 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.
